Commissioner Disagrees with SEC’s Landmark Rejection of Bitcoin ETF Application

Hester M. Peirce, a Commissioner at the US Securities and Exchange Commission (SEC) has released a statement laying out her formal dissent after the securities regulator on Thursday July 26th rejected the Winklevoss twins’ bid for a Bitcoin Exchange-Traded Fund (ETF).

The latest rejection of ETF bid follows the 2017 rejection of a proposal the brothers made to the SEC in June 2016. The brothers had then asked the commission to allow it to list and trade shares of a Bitcoin ETF under the name Winklevoss Bitcoin Trust. After the initial rejection, the brothers petitioned for a “review of the disapproval by delegated authority,” which the agency is now rejecting again.

All through the week leading to the rejection, Bitcoin had seen soaring prices as talk of the impending decision had a positive impact on the crypto. However, following the commission’s unexpected decision, bitcoin prices registered a fall of up to 6% in value.

In stating her dissenting opinion to the position taken by securities agency, Commissioner Peirce said the commission “erred fundamentally” on three aspects. To begin with, Peirce argues that the body sidestepped its “limited role” and instead chose to zero in on the characteristics of a bitcoin market rather than “the derivative the applicant sought to list.”

Peirce’s position was that:

“The Commission erroneously reads…the [Securities Exchange] Act, which requires…that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices…’ [It] focuses its decision not on the ETP shares to be listed …but on the underlying bitcoin spot market….[instead of] the ability of BZX…to surveil trading of and to deter manipulation in the ETP shares listed and traded on BZX.”

Peirce also argued that the “concerns underlying the [SEC] disapproval order go to the merits of bitcoin [itself] as an investment,” and that “if the disapproval order’s rigorous standard were applied consistently, many [other] commodity-based ETPs would be in peril, as rumors of manipulation plague many commodity markets.”


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