SEC's Hester Peirce: Bitcoin ETF 'Lesson Will Certainly Stick'

By Stephen Graves

U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce said that the lessons learned by the regulator while approving spot Bitcoin ETFs "will certainly stick with us."

In a recent interview with Coinage, Peirce said that the SEC had "heard from a court that the approach we were taking was wrong, in the sense of not showing the kind of consistency that a regulator needs to show." SEC chair Gary Gensler had, she said, "reacted accordingly" upon receiving the court's analysis.

While Peirce refused to be drawn on the status of applications for a spot Ethereum ETF, she did express her hope that future crypto ETF applications wouldn't face a drawn-out process of court cases and appeals.

"That's not how we're going to do our approvals," Peirce said, adding that the regulator should apply "the same kind of consideration that we apply to similar products. We shouldn't need a court to tell us that our our approach is arbitrary and capricious in order for us to get it right."

Peirce cautioned that, "I don't want to predict what will happen with any particular exchange-traded product, the facts and circumstances do matter." She added that it takes a long time and "a lot of work" to get an exchange-traded product ready for market, including "making sure that the disclosures are lining up with how the product actually works."

The SEC's approval of the Bitcoin ETFs was thrown into confusion when the regulator's Twitter account was "compromised," posting a fake tweet claiming that Bitcoin ETFs had been approved, a day before the actual approvals were announced. The fake tweet and its retraction caused upheaval in the crypto markets, with the price of Bitcoin plunging on the news.

Peirce took aim at the regulator's "problematic" handling of the ETF approval for generating so much anticipation around one regulatory decision deadline.

"We wouldn't have been in this place where someone would even think to do something like that, or where it would be worth the time of someone to do something like that, if we hadn't built up so much attention on these approvals," she added about the unauthorized tweet.

Peirce also doubled down on her remarks following the approval of the Bitcoin ETFs, in which she criticized the regulator for having "abused administrative procedures to withhold investments that we do not like from the public."

"Too often, in our hyper-regulated world, we forget about what the other side of regulation is, which is, when you come in to regulate to protect someone, you're taking away people's choices," she said, adding that it is "a good thing to let the American people decide whether they want to hold these products in their portfolios or not."

Edited by Stacy Elliott.

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