The U.S. Securities and Exchange Commission (SEC) continues its quest to thwart the advancement of cryptocurrency investment and innovation. The financial regulator has a perfect track record of rejecting any proposal for a crypto-based exchange traded fund (ETF), and has denied yet another proposal. The latest had been submitted by the NYSE Arca exchange, and the rejection has caused commissioner Hester Peirce, aka Crypto Mom, to reassert her belief that the agency is out of line.
The NYSE Arca exchange had wanted to launch the United States Bitcoin and Treasury Investment Trust in conjunction with Wilshire Phoenix out of New York. As with all of its previous denials, the SEC (erroneously) asserts that the potential for market manipulation is too great, and the absence of surveillance-sharing agreements would make the viability of the ETF too risky. It added in its ruling (in pdf), “The Commission concludes that NYSE Arca has not established that the relevant bitcoin market possesses a resistance to manipulation that is unique beyond that of traditional security or commodity markets such that it is inherently resistant to manipulation. The Commission further concludes that NYSE Arca has not established that an actor trying to manipulate the proposed ETP [exchange-traded products] would be reasonably likely to trade in the CME bitcoin futures market.”
It added, “And the Commission concludes that NYSE Arca has not established that it has a surveillance-sharing agreement with the Constituent Platforms or that the Constituent Platforms constitute a regulated market, such that it has established that it has entered into a surveillance sharing agreement with a regulated market of significant size with respect to bitcoin.”
Peirce has been an advocate of crypto ETFs in the past, if only because she feels that the SEC’s arguments for denying them are not justified per the agency’s regulatory guidelines. She released a statement following the latest rejection, renewing her consternation with the continued denials and explaining 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 further offered, “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.”
The SEC continues to waste time and resources going through the motions of proposal review, knowing that it has no intention of approving any crypto ETF that crosses its desk. Despite multiple attempts at working with regulators to ensure the proposals meet financial guidelines and restrictions, the SEC appears to be more satisfied suppressing innovation and allowing other countries to help foster a responsible Bitcoin ecosystem.
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