The United States Securities and Exchange Commission (SEC) announced the approval of the first spot bitcoin exchange-traded funds (ETFs) on Wednesday 11th Jan 2024, eliciting excitement from many cryptocurrency advocates but also sharp criticism from others about the painfully long road to this point.
Keypoints
- The SEC finally approved spot Bitcoin ETFs after over 10 years of rejections, but Commissioner Hester Peirce criticized the agency for “squandering a decade” in the process.
- Peirce said the SEC’s actions have diminished public trust, wasted staff resources, muddled understandings of the SEC’s role, and “alienated a generation of product innovators.”
- She believes that if the SEC had followed its normal approval process, Bitcoin ETFs would have been allowed years ago without all the “circus atmosphere.”
- A court ruling in August said the SEC needed a “coherent explanation” for denying Bitcoin ETFs, seemingly forcing the agency’s hand after a decade of rejections.
- Peirce commended the “decade-long persistence” of applicants trying to launch Bitcoin ETFs in the face of SEC obstruction.
SEC Commissioner Hester Peirce issued a scorching dissent focused less on the ETF approvals themselves than on the unreasonable foot-dragging that preceded them. “We squandered a decade of opportunities to do our job,” she wrote. “If we had applied the standard we use for other commodity-based ETPs, we could have approved these products years ago.”
The first application for a spot bitcoin ETF was submitted over 10 years ago back in 2013, but faced serial rejections from the SEC over the subsequent decade. If allowed to trade on public markets, bitcoin ETFs would have opened the door to greater mainstream investment and provided simpler access for regular investors.
Each time, the SEC claimed that bitcoin markets were too volatile and prone to manipulation. However, Peirce believes the agency failed to provide satisfactory reasoning to justify blocking their approval for so long. A court ruling in August seemingly forced the SEC’s hand, directing it to provide a “coherent explanation” for further denial or else green-light bitcoin ETFs.
It’s out: https://t.co/tgI9yE4i83
— Hester Peirce (@HesterPeirce) January 10, 2024
In Peirce’s view, this painfully long road has severely damaged public trust in the SEC, wasted untold staff resources, muddled understandings of the agency’s intended role, and dissuaded innovation in the crypto asset space. She also believes it created an “artificial frenzy” and “circus atmosphere” around bitcoin ETFs that could have been avoided by following standard approval processes.
Further, she commended the “decade-long persistence” of the many applicants who continually attempted to launch bitcoin ETFs in the face of constant SEC rejections. Their perseverance finally paid off this week. However, Peirce lamented the “costly legal battle” needed to get the SEC to reverse its long-held position.
While bitcoin ETF approvals may unlock wider mainstream investment, Peirce’s dissent suggests deep distrust in the SEC’s approach that could impact future crypto regulatory decisions.
Nevertheless, many investors are celebrating the chance to easily access bitcoin exposure through public markets over a decade after these products were first proposed.
