Yesterday, the Winklevoss twins were once again denied by the SEC for approval of their “Winklevoss Bitcoin Trust” in a 3-1 ruling. The lone dissenter in the decision, Hester Peirce, has gone to Twitter to reiterate her opposition to the Commission’s ruling. Peirce’s Twitter following has since exploded from 1,700 to over 10,000 following her published public statement on the SEC website regarding the decision. She’s also been given an unofficial new nickname: ‘Crypto Mom’.
Apparently, bitcoin is not ripe enough, respectable enough, or regulated enough to be worthy of our markets. I dissent: //t.co/gH5zXaKtmj
— Hester Peirce (@HesterPeirce) July 26, 2018
Public Statement of Dissent
“I respectfully dissent from the Commission’s order disapproving a proposed rule change, as amended, to list and trade shares of the Winklevoss Bitcoin Trust on Bats BZX Exchange, Inc. (“BZX”),” the statement reads. “Contrary to the Commission’s determination, I believe that the proposed rule change satisfies the statutory standard and that we should permit BZX to list and trade this bitcoin-based exchange-traded product (“ETP”). Accordingly, I would set aside the action the staff took by delegated authority in this matter and approve the proposed rule change.”
Following the denied ruling yesterday, the SEC cited a number of concerns regarding Bitcoin ETFs which focused mainly on issues surrounding the cryptocurrency market as a whole rather than the proposed ETF itself. They listed a number of buzz words like “investor protection”, “fraud” and “price manipulation in the market” among other things.
Pierce’s detailed statement, however, makes the case that much of the cryptocurrency market’s current drawbacks are precisely due to a lack of government oversight on the part of the SEC.
“I am concerned that the Commission’s approach undermines investor protection by precluding greater institutionalization of the bitcoin market. More institutional participation would ameliorate many of the Commission’s concerns with the bitcoin market that underlie its disapproval order. More generally, the Commission’s interpretation and application of the statutory standard sends a strong signal that innovation is unwelcome in our markets, a signal that may have effects far beyond the fate of bitcoin ETPs.”
‘Crypto Mom’ and the Need for Government Support
Pierce’s position that government has a responsibility to support innovation in the marketplace through sensible regulation, a position which has since earned her the title of ‘Crypto Mom’, reflects a progressive perspective that’s gaining traction in some of the world’s biggest crypto markets like China and South Korea.
China and Korea have both allocated hundreds of millions of dollars for research programs surrounding cryptocurrency and blockchain technology. A story published yesterday points out that while Korean lawmakers are by no means in support of cryptocurrency investments, they recognize the obvious need for cryptocurrency legislation.
Has the SEC Overstepped its Bounds?
Furthermore, Pierce contends that not only is the SEC stifling an innovative new market, but that the SEC has overstepped its bounds by basing its ruling on a controversial assessment of the cryptocurrency marketplace as a whole, rather than focusing on the legality of the proposed ETF.
“[The role of the commission is to] 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,’” states Pierce. “The Commission steps beyond this limited role when it focuses instead on the quality and characteristics of the markets underlying a product that an exchange seeks to list.”
Pierce is convinced that the Winklevoss Bitcoin Trust, a project which has been repeatedly denied SEC approval since its creation in 2016, sufficiently meets government listing standards and should therefore be approved.
Her rapidly increasing notoriety will likely serve to bolster her argument. With a number of other Bitcoin ETFs soon awaiting SEC approval, the cryptocurrency community will no doubt be hoping ‘Crypto Mom’s’ influence will force the remaining members of the SEC to reconsider if their current ruling has crossed a line.