SEC’s Hester Peirce Mentions Bitcoin 15 Times in Speech at University of Michigan
Hester Peirce Mentions Bitcoin 15 Times in Speech at University of Michigan
Peirce mentioned ‘bitcoin’ a total of 15 times during her speech on September 24 in front of the University of Michigan Law School. The text of the speech was published online earlier today. Peirce tweeted a link to the speech via her Twitter, describing it as “A Buckeye’s visit to Michigan.”
A Buckeye's visit to Michigan: https://t.co/TkRcTmAtDP
— Hester Peirce (@HesterPeirce) October 3, 2018
Peirce’s speech echoed similar statements she has made in the past. The SEC Commissioner famously dissented from her colleagues earlier this summer when she insisted that the bitcoin ETF proposed by the Winklevoss twins should have been accepted.
The SEC denied that bitcoin ETF proposal. To date, the SEC has denied all bitcoin ETF proposals that have come across its desk. Hester Peirce addressed the issue during her speech at the University of Michigan:
“Another area that has drawn much attention recently is our decision with respect to the Winklevoss Bitcoin Trust. The SEC recently considered and rejected a proposed rule change for an exchange that would have enabled the listing of a Bitcoin exchange-traded product—a security that would give investors indirect exposure to bitcoin”
Peirce has been outspoken about her personal opinion on bitcoin ETFs. She believes the SEC should have approved the ETF proposed by the Winklevoss twins to be listed on their New York-based Gemini crypto exchange:
“While a majority of the Commissioners disapproved the proposed rule change—meaning the security cannot trade on the exchange—I dissented from this decision.”
Peirce Believes the SEC’s Approach to Bitcoin ETFs is Fundamentally Flawed
Peirce takes issue with the way the SEC has handled the bitcoin ETF debate. Peirce has previously stated that she feels the SEC has backed itself into a corner based on the reasons it has disapproved bitcoin ETF proposals.
Specifically, the SEC has created a situation where if they ever do approve a bitcoin ETF, they’re indirectly verifying that they approve of bitcoin as an investment. Here’s how Peirce explained it in her speech at the University of Michigan:
“To me, the rejection was a product of the pressure the Commission feels to make decisions for investors in order that they will not hurt themselves. The Commission’s decision focused on purported flaws in the bitcoin markets. A request for comment issued by the staff last week in conjunction with another bitcoin exchange-traded product raised similar concerns about the underlying bitcoin markets. One problem with such an approach is that it means if we ever do approve a bitcoin-based security, investors will interpret that approval as a blessing on bitcoin itself and the markets in which it trades.”
Peirce also explains that she feels the SEC is overstepping its bounds by denying bitcoin ETFs when there is clearly investor interest in the subject.
Investors have demonstrated increased demand in bitcoin investment products. The SEC has the power to allow those products to be traded on regulated, secure markets that would provide the best protection for investors. Instead, they’ve chosen to continue denying bitcoin ETFs to the detriment of investors. Here’s how Peirce explained it:
“In the meantime, investors will seek out other markets—markets not governed by our disclosure rules—in which they can get access to bitcoin and other cryptocurrencies.”
Hester Peirce, for the record, hasn’t expressed her personal support of bitcoin’s technology or anything else specifically about bitcoin’s protocol. Instead, she simply believes the SEC should not deny a bitcoin ETF exclusively due to risk. All investments are inherently risky, and investors have a duty to research risk on their own:
“I raise my recent dissent here not to hammer on arguments I have made elsewhere, but because I worry my colleagues’ misdirected attention may influence how other new products are evaluated. Bitcoin, and the bitcoin market, because of their novelty and volatility—which, incidentally, are almost inextricably related—send shivers up the spine of the average securities regulator. The fact that an investment is new, volatile, or even downright unadvisable is, frankly, none of our business.”
Peirce is Confident that New Technology Can Help Police Uncertain Markets Like Bitcoin
Ultimately, Peirce ended her speech on an optimistic tone:
“I am confident, however, that new technology will make our capital markets work better for investors, open new opportunities for a whole generation of innovators, and enable us as securities regulators to be better at tracking down the wolves and holding them to account.”
The SEC, if it ever does approve a bitcoin ETF or other bitcoin-related investments, will be able to use technology to police those markets and ensure investors have safe and easy access. While the SEC is concerned about the safety of investors, future technology will make it easier than ever for regulators to protect investors.
You can view the full text of SEC Commissioner Hester Peirce’s speech here: https://www.sec.gov/news/speech/speech-peirce-092418.