SEC commissioner Hester Peirce files dissent to agency's rejection of bitcoin ETF proposal

The U.S. Securities and Exchange Commission (SEC) has once again rejected a bitcoin exchange-traded fund – and one of the agency's commissioners has publicly disagreed with the move.

On Wednesday, the SEC rejected the proposed rule change, as submitted by NYSE Arca, that would have allowed the listing and trade of the United States Bitcoin and Treasury Investment Trust from the New York-based firm Wilshire Phoenix. As in the past, the agency cited market manipulation fears and a lack of surveillance-sharing agreements.

Peirce notably broke with her fellow commissioners in the summer of 2018 when the SEC rejected a proposed rule change that would have allowed the listing of the Winklevoss Bitcoin Trust on the Bats BZX Exchange.

In her latest published dissenting statement, Peirce stated that "the Commission once again disapproved a proposed rule change that would give American investors access to bitcoin through a product listed and traded on a national securities exchange subject to the Commission's regulatory framework."

She went on to write::

"This order is the latest in a long string of disapproval orders that the Commission has issued regarding bitcoin-related products. This line of disapprovals leads me to conclude that this Commission is unwilling to approve the listing of any product that would provide access to the market for bitcoin and that no filing will meet the ever-shifting standards that this Commission insists on applying to bitcoin-related products—and only to bitcoin-related products."

Specifically, Peirce's dissent falls into two buckets: that the SEC has created a "unique, heightened standard" for proposals that related to cryptocurrencies and digital assets, and that the SEC's overall mindset "impedes institutionalization and innovation." 

"The Commission's approach to these bitcoin exchange-traded products is frustrating because it evinces a stubborn stodginess in the face of innovation," she concluded in her dissent. "The irony is that, in taking this approach, the Commission wanders into the unbounded, dangerous territory of merit regulation for which the Commission is ill-equipped. Because the Commission’s order applies an inappropriate standard under Section 6(b)(5) of the Exchange Act, I respectfully dissent."

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