The U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce, also known as CryptoMom, has given a speech in which she talks about the approval of a Bitcoin exchange-traded fund (ETF).
A few days ago, SEC Commissioner Robert J. Jackson shared his thoughts about a Bitcoin ETF. He mentioned that an ETF would be eventually approved. Because of what he said, the market was able to recover part of the value that it lost during the last few weeks.
During a speech that Peirce gave at the University of Missouri School of Law, she criticized her fellow commissioners regarding the positions they have on virtual currencies. She received the title CryptoMom after being against the decision taken by the SEC to reject the Bitcoin ETF proposed by the Winklevoss twins.
About it, she said during the speech:
“As I have mentioned in the past, I am concerned that our approach with respect to such products borders on merit-based regulation, which means that we are substituting our own judgment for that of potential investors in these products. We rightfully fault investors for jumping blindly at anything labelled crypto, but at times we seem to be equally impulsive in running away from anything labelled crypto.”
Peirce has also said that the SEC is acting as an investment advisor rather than considering matters such as the fair operation of capital markets or investor protection. Until now, there was no ETF approved by the SEC.
Indeed, the proposal presented by the Cboe and VanEck was withdrawn after the government shutdown.
The SEC is also worried about different issues. Some of these things include valuation, liquidity, custody, arbitrage, potential manipulation, and other risks. Now, Fidelity Digital Assets and Bakkt are working in order to provide infrastructure for institutional investors that want to enter the market. Indeed, these companies might play an important role in improving the conditions of the market.
The VanEck SolidX Bitcoin ETF has also been presented at the beginning of the current month as well. Additionally, it seems that it has addressed many of the issues that were a problem for the SEC.
One of the main areas that Peirce is focusing on is related to exchange regulation. She said that interactions with cryptocurrencies are not limited to questions regarding the regulation of token sales and disclosures. She mentioned that there are some companies that want to register with the SEC and that she is eager to make progress on this front.
Although the SEC has been operating in the market in a more active way during the last months, the regulatory agency still has to improve its understanding.
She then talked about how to regulate Initial Coin Offerings (ICOs). Back in 2017, when Bitcoin was reaching its all-time high, several projects started to release tokens to the market to fund their operations and release new services or products. However, hundreds (if not thousands) of them were scams and fake ICOs.
This is why the SEC has decided to start regulating the market. Back in 2018, the regulatory agency announced two enforcement actions against two ICOs: Paragon and AirFox.
One of the main worries for the SEC is related to the fact that ICOs were launching unregistered securities to the market. To determine what is a security or not, the SEC focuses on the Howey Test. Hester Peirce believes that although the Howey Test could be very positive for some ICO cases, there are others that might not fit well into this test.
It might be possible for a new framework to be created and to address all the grey and black areas related to virtual currencies, securities, and ICOs. The Basis project had to return $133 million to investors since it was not able to comply with the securities regulations imposed by the SEC.
Apparently, this year, the votes related to a Bitcoin ETF this year might be tighter than previously expected. At the moment, the SEC has four members. One of them is Jay Clayton, who is an independent Commissioner. Peirce is a Republican Commissioner that follows the libertarian tradition. Elad Roisman is the third commissioner. Finally, Robert J. Jackson is the only Democrat at the SEC.
A few days ago, Jackson commented:
“Eventually, do I think someone will satisfy the standards that we’ve laid out there? I hope so, yes, and I think so.”
Now, the cryptocurrency market is waiting for more regulations to take place. The intention is to create a safer market for investors. Although this is not easy, ti can be achieved in the near future with a lot of work from Commissioners such as Hester Peirce.