US SEC Commissioner Dissents From Agency’s Rejection of Winklevoss Bitcoin ETF

U.S. Securities and Exchange (SEC) Commissioner Hester M. Peirce has posted an announcement of authority dissent from the office’s second disapproval with the Winklevoss brothers’ application for a Bitcoin (BTC) exchange-traded fund(ETF) yesterday, July 26.

The Winklevoss’ Bats BZX Exchange, Inc. (BZX) had documented a proposed rule change with the SEC in June 2016 to enable it to list and trade offers of a Bitcoin ETF called the Winklevoss Bitcoin Trust, which was dismissed by the office in March 2017. Following the disapproval with the initial suggestion, the team filed an appeal to looking for a review of the disapproval by the appointing authority, which the SEC formally dismissed Thursday, July 26.

Alluding to the latest dismissal, SEC Commissioner Peirce argued that the SEC has on a very basic level blundered with its most recent choice on three grounds. First of all, Peirce argues that the office violated ” its limited role” when it concentrated on the qualities of the hidden Bitcoin market instead of the subsidiary the applicant tried to list:

“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.”

She strengthens her point by including 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 rumours of manipulation plague many commodity markets.”

Besides, Peirce argues that yesterday’s decision courts the dangerous precedent:

“When we do finally approve an ETP on bitcoin…investors may reasonably — but incorrectly — conclude that the investment carries with it the SEC’s imprimatur because the Commission has performed due diligence on the underlying market and, through its approval, is certifying the quality of that market.”

Peirce’s two additional points argue that the SEC’s disapproval request will probably hinder the regulation of the Bitcoin market, something she sees as fundamental so as to address the organization’s worries:

“[The disapproval] precludes investors from accessing Bitcoin through an exchange-listed avenue that offers predictability, transparency, and ease of entry and exit….[they] will be relegated to the spot market, which will not benefit from the increased institutional discipline that approval of this product would bring.”

Finally, she contends that the dismissal “demonstrates a skeptical view of innovation,” which she contends could lead to adverse impacts “well beyond this particular product,” stating that:

“I reject the role of gatekeeper of innovation — a role very different from (and, indeed, inconsistent with) our mission of protecting investors, fostering capital formation, and facilitating fair, orderly, and efficient markets.”

Cryptocurrency markets took a sharp tumble today in response news of the SEC’s objection, seeing a confounding $12 billion wiped from the total market capitalization.

on July 24 the SEC postponed its choice on a different Bitcoin ETF application from investment firm Direxion, on that same day as digital asset manager Bitwise filed its own application with the regulator for an ETF that would track a list of ten cryptocurrencies.