Hester Peirce, commissioner of the U.S. Securities and Exchange Commission (SEC), center, listens during a House Financial Services Committee hearing in Washington, D.C., U.S., on Tuesday, Sept. 24, 2019.
Andrew Harrer | Bloomberg | Getty Images
Hester Peirce is perplexed.
For years, the Securities and Exchange Commission, of which Peirce is a member, has denied applications by the nation’s exchanges and financial firms to list securities that track the performance of popular digital currency bitcoin.
Earlier — say, 10 years ago — concerns about potential market manipulation and liquidity may have made sense, but things have changed.
“That is the probably the biggest, the most-often-asked question that I get: When will the SEC approve a bitcoin exchange-traded product?” Commissioner Peirce said in an interview with CNBC on Thursday.
“I thought that if we had applied our standards as we have applied them to other products, we would already have approved one or more of them,” she said. “With each passing day, the rationale that we have used in the past for not approving seems to grow weaker.”
The SEC applies a “unique, heightened standard” to filings related to digital assets, she wrote in 2020. And she has argued that the agency is asking exchanges and would-be ETF sponsors for assurances beyond what it asks for traditional, equity-based products.
“People of a regulatory mindset, when they encounter something new like this, say, ‘Oh, wait a minute: The market for bitcoin looks a bit different than the markets we’re used to,'” Peirce said Thursday.
Now, she added, the bitcoin market looks more like an established market that has more participation from institutional and mainstream retail investors.
“So, I think the markets have matured quite a bit,” Peirce said.
Renewed calls for an SEC-approved bitcoin ETF come just weeks after the regulator said it would again delay its decision on whether to approve an application by VanEck to list shares of its Bitcoin Trust on the Chicago Board of Exchange’s BTZ Exchange.
Regulators said in a letter dated June 16 that they would take additional time to seek comments from the public. Specifically, the SEC is asking investors and academics for their opinions on whether bitcoin ETFs could be vulnerable to manipulation, or whether bitcoin itself is sufficiently dispersed and therefore resistant to similar underhanded tampering.
But Peirce, a Republican appointed as one of the SEC’s five commissioners by former President Donald Trump, has long decried what she sees as a double standard at her own agency when it comes to bitcoin products.
Perhaps her most pointed objection came in a 2018 dissent, when she argued that the SEC should have approved an application filed by the Chicago Board of Exchange’s Bats BTZ Exchange to list and trade shares of the Winklevoss Bitcoin Trust.
“By precluding approval of cryptocurrency-based ETPs for the foreseeable future, the Commission is engaging in merit regulation,” she wrote at the…