SEC Shouldn't Hold Back Approving Crypto Products Says Commissioner

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SEC Shouldn't Hold Back Approving Crypto Products Says Commissioner

By Ryan Warner
September 18th, 2018

SEC Commissioner Heather Perice says government should not limit new products in crypto markets due to the perceived weakness in Bitcoin.

Peirce said that the SEC should not force cryptocurrency markets to the comprehensive government regulations in place just to launch new products.

“The Commission should not default to a demand that the crypto markets be subject to comprehensive government regulation as a precondition to allowing products linked to those markets to be traded in markets that we regulate.”

The Winklevoss Twins Bitcoin ETF was rejected due to the SEC's belief that there are flaws relating to cryptocurrency infrastructure, she emphasized.

The SEC rejected the Winklevoss ETF by stating the evaluation of blockchain technology or Bitcoin as an innovation or investment was not evaluated by the SEC, she described in her letter of dissent.

Essentially, the SEC rejection of the Winklevoss ETF had no connection to the evaluation of Bitcoin or other crypocurrencies as an asset class.

The rejection of the ETF shows the focus of the SEC on Bitcoin markets rather than the ETF she said.

“The Commission’s order included an assurance that the ‘disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.’ The order, however, seemed to do almost that. It focused on the alleged flaws with bitcoin markets, rather than on whether the exchange proposing to trade shares of the trust had taken steps to ensure the orderly trading of those shares,” Peirce said.

Peirce explained that many investors find that cryptocurrency exchange markets are inaccessible and that it requires specific knowledge in order to invest in the crypto marketplace. Adding:

“This complexity means that only a very particular type of investor can pursue the diversification opportunities such assets can provide. Entrepreneurs are developing new products through which people can access cryptocurrencies indirectly or hedge their cryptocurrency holdings. Bitcoin futures, for example, began to trade recently.”