Even though Bitcoin‘s price did not experience the expected volatility, the approval for a spot Bitcoin ETF has arrived. The commission members did the right thing. Three commission members shared their comments on the decision for the spot Bitcoin ETF today. Peirce is the first in line and the happiest member of the commission. Now let’s take a look at what these three members think about this decision. Since the Commission approved the ETF with a 3 to 2 vote, every comment is significant.
Hester Peirce
Starting her message by saying that today marks the end of an unnecessary but important saga, Peirce will be remembered as a supporter of crypto even on the worst days. Including the FTX collapse, she stood on the opposite side of crypto opponents and said that the right thing to do is to write rules that will protect investors.
“More than ten years after the first Spot Bitcoin ETF application was made, the Commission has finally approved multiple applications made by exchanges to list and trade spot Bitcoin ETPs.
If it weren’t for the GBTC case, this story would likely have stretched over more than a decade. Compared to the many other ETP applications that have been routinely made and approved over the last decade, you don’t need to be an experienced securities lawyer to see the difference in treatment for bitcoin-related ETP applications.
ETPs are an important innovation. Investors can be exposed to securities and non-security assets like precious metals through a suitable vehicle. Even if the risk is available elsewhere, the ETP structure offers its own advantages.
One of the most frequently asked questions since I became a Commission Member six years ago is ‘When will the Commission approve a spot bitcoin ETP?’ For reasons I have explained many times before, the logic behind the long-standing rejections is confusing.
Bitcoin-based products have been trading under other regulatory regimes for years. For example, in 2017, CME and CBOE, regulated by the Commodity Futures Trading Commission, listed bitcoin futures. Foreign jurisdictions have long allowed spot bitcoin ETPs to trade. The Commission should have been comfortable with the successful launch and smooth trading of these products despite market stress and fluctuations. Instead, the Commission has continued its reluctance to allow spot bitcoin ETPs into the U.S. markets until today.
Today’s decision does not eliminate many of the harms created by the differential treatment of spot bitcoin products.
Firstly, our arbitrary and capricious treatment in this area will continue to damage our reputation far beyond crypto.
Secondly, our disproportionate attention to these applications has diverted limited staff resources from other critical tasks.
Thirdly, our actions here have muddied people’s understanding of what the SEC’s role is.
Fourthly, by not following our normal standards and processes in evaluating spot bitcoin ETPs, we have created an artificial frenzy around them.
Fifthly, we have alienated a generation of product innovators in our field.
I appreciate the persistence of the applicants in the face of the Commission’s obstacles for a decade.”
Caroline Crenshaw
There were two dissenting votes, and one of them was Caroline. If Gensler had not come to reason and voted “yes,” Caroline Crenshaw would have been one of the three causing the ETF’s rejection. The crypto-opposing member says this decision is definitively wrong.
“The Commission’s actions are neither robust nor historical. Worse, they put us on a path that could further sacrifice investor protection. I do not agree that these actions serve our legal or fundamental investor protection duties, and therefore I dissent from today’s Decision. I am deeply concerned about today’s actions. I am worried about these products attracting great interest in the markets and filling up the retirement accounts of U.S. households who can least afford to lose their savings due to widespread fraud and manipulation in the spot bitcoin markets. I fear that today we are setting ourselves up for tomorrow’s failure, and ultimately, those who will pay the price are the investors we are obligated to protect.”
Mark Uyeda
Gensler, Peirce, and Uyeda voted in favor of approving the ETF applications. Uyeda, one of the trio that pleased crypto investors, expresses various concerns at length and concludes his comment by saying;
“It is important for the Commission to provide transparency in the analysis and rationale of its decisions. In this context, I would have preferred the rationale set forth in the Approval Order to be closer to the analysis presented in this statement. However, I have independent reasons for concluding that the applications meet the approval standards specified in the Exchange Act, and although I object to the legal analysis stated in the Order, I support the issuance of the Approval Order.”
