SEC Commissioner Hester Peirce said a bitcoin ETF is overdue and argued that its prior rejections for such funds is a kind of double standard. The SEC should have approved a bitcoin ETF a long time ago, she said.

https://www.cnbc.com/2021/07/02/bitcoin-etf-should-be-approved-already-sec-regulator-says.html

Hester Peirce is perplexed.

For years, the Securities and Exchange Commission, of which Peirce is a member, has denied applications by the nation’s exchanges and financial firms to list securities that track the performance of popular digital currency bitcoin.

Earlier — say, 10 years ago — concerns about potential market manipulation and liquidity may have made sense, but things have changed.

“That is the probably the biggest, the most-often-asked question that I get: When will the SEC approve a bitcoin exchange-traded product?” Commissioner Peirce said in an interview with CNBC on Thursday.

“I thought that if we had applied our standards as we have applied them to other products, we would already have approved one or more of them,” she said. “With each passing day, the rationale that we have used in the past for not approving seems to grow weaker.”

The SEC applies a “unique, heightened standard” to filings related to digital assets, she wrote in 2020. And she has argued that the agency is asking exchanges and would-be ETF sponsors for assurances beyond what it asks for traditional, equity-based products.

“People of a regulatory mindset, when they encounter something new like this, say, ‘Oh, wait a minute: The market for bitcoin looks a bit different than the markets we’re used to,’” Peirce said Thursday.

Now, she added, the bitcoin market looks more like an established market that has more participation from institutional and mainstream retail investors.

“So, I think the markets have matured quite a bit,” Peirce said.

Despite the currency’s volatile price swings, Peirce remains convinced that a bitcoin ETF is overdue.

It’s not the SEC’s job to approve or reject applications based on the merits of the investment itself, she said Thursday, especially if exchanges are meeting statutory requirements for protecting investors from fraud.

“Bitcoin now is so decentralized. The number of nodes that are involved in Bitcoin is large, and the number of people who have an interest in keeping that work decentralized is very large,” she said. “People should make their own decisions: If people don’t want to buy bitcoin because they think it’s manipulated, they shouldn’t buy bitcoin.”