‘Crypto Mom’ Concerned about SEC’s Merit-Based Approach Towards Crypto ETFs

Hester Peirce, who shot to limelight, when she dissented against the Securities and Exchange Commission (SEC) decision to reject Winklevoss twins’ application for bitcoin Exchange Traded Funds (ETF) said that delays in establishing crypto regulation will provide the crypto industry with more freedom to grow and develop independently.

Dubbed as ‘Crypto Mom’, post her strong-worded dissent, Peirce who is a commissioner at the SEC had said, “The Commission erroneously reads the requirements of Section 6(b)(5). The disapproval order focuses on the characteristics of the spot market for bitcoin, rather than on the ability of BZX—pursuant to its own rules—to surveil trading of and to deter manipulation in the ETP shares listed and traded on BZX. Section 6(b)(5), however, instructs the Commission to determine whether “[t]he rules of the exchange” are, among other things, “designed to prevent fraudulent and manipulative acts and practices [and] to promote just and equitable principles of trade,” and “are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers.” It says nothing about looking at underlying markets, as the Commission often has done in its orders.”

While delivering a speech at the University of Missouri School of Law last week, Peirce said, “Ambiguity is not all bad, of course. We might be able to draw clearer lines once we see more blockchain projects mature.” She opined that if SEC commissioners act appropriately, they can encourage innovation.

‘Crypto Mom’ further said, “Enforcement actions are not my preferred method for setting expectations for people trying to figure out how to raise money. For this reason, it is important for the Commission, in conjunction with Congress and its fellow regulators, to offer something more concrete and carefully considered.”

She added that she was concerned about the SEC’s merit-based approach to ETFs and other cryptocurrency-based projects. She said, “We rightfully fault investors for jumping blindly at anything labeled crypto, but at times we seem to be equally impulsive in running away from anything labeled crypto. We owe it to investors to be careful, but we also owe it to them not to define their investment universe with our preferences.”

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