Bitcoin ETF Approvals Do Not Undo Many Harms Created by SEC: Commissioner Peirce

Hester Peirce, also known as ‘crypto mom,’ didn’t mince her words in a statement responding to the approval of spot Bitcoin exchange-traded products by her agency after a decade of rejecting them.

“Today marks the end of an unnecessary, but consequential, saga,” she said on Jan. 10.

The saga likely would have spanned well beyond a decade were it not for the Grayscale court victory against the SEC last year, she added. 

“You need not be a seasoned securities lawyer to spot the difference in treatment of bitcoin-related ETP applications compared to the many other ETP applications that have been routinely filed and approved over the past decade.”

Lambasting The SEC

The pro-crypto politician also stated that the agency has “alienated a generation of product innovators within our space.”

These comments and accusations of “regulatory prejudice against new products and services” were highlighted by Coinbase CEO Brian Armstrong. 

“[W]e have alienated a generation of product innovators within our space. Our unreasonable approach to these applications has signaled that regulatory prejudice against new products and services can lead us to sidestep the law and unreasonably delay product launches. The industry…

— Brian Armstrong 🛡️ (@brian_armstrong) January 11, 2024

However, Peirce did not stop there. The SEC subjected crypto ETPs to more scrutiny and higher standards than comparable commodity-based ETPs. This disparate treatment harmed the SEC’s reputation, she said.

Moreover, resources were diverted from other work to analyze and reject Bitcoin ETPs repeatedly over the years. The drawn-out process also created an “artificial frenzy,” she added.

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“Today’s order does not undo the many harms created by the disparate treatment of spot Bitcoin products.”

Peirce concluded that she would not celebrate the approvals but the “right of American investors to express their thoughts on Bitcoin by buying and selling spot Bitcoin ETPs.”

SEC Commissioner @HesterPeirce does not mince words. You are 100% correct and you are one of the reasons why many of us, including me, never gave up on the #Bitcoin #ETF effort.

“Today’s order does not undo the many harms created by the disparate treatment of spot bitcoin… https://t.co/yBGVn7noiJ

— Gabor Gurbacs (@gaborgurbacs) January 10, 2024

Moreover, the approval of spot Bitcoin ETFs sets a positive precedent for potential future approvals of other crypto ETPs, she said. 

Commissioner Crenshaw Disagrees 

However, her SEC colleague Commissioner Caroline Crenshaw was of the opposite opinion. Echoing sentiments from other anti-crypto politicians and bankers, she said she was “deeply concerned about today’s actions.” 

“I am concerned that these products will flood the markets and land squarely in the retirement accounts of U.S. households who can least afford to lose their savings to the fraud and manipulation that appears prevalent in the spot Bitcoin markets and will impact the ETPs.”

Crenshaw, a former securities lawyer who joined the SEC in 2013, also expressed concern over the lack of regulatory oversight for crypto markets, product confusion, and lack of investor protection. 

Nevertheless, the SEC failed to protect investors when its social media account was hacked the day before the official announcement.