SEC Commissioner: Although spot BTC ETFs have been approved, it has "wasted ten years"
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SEC Commissioner: Although spot BTC ETFs have been approved, it has "wasted ten years"
"The logic behind the denial of spot BTC ETFs for over a decade prior is baffling."
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The U.S. Securities and Exchange Commission (SEC) finally got its wish on Wednesday as it approved the trading of spot BTC ETFs, but several SEC commissioners openly described the damage this prolonged approval process has inflicted on the agency, investors, and the crypto industry.
Hester Pierce, an SEC commissioner and long-time crypto advocate affectionately known by supporters as the "Crypto Mom," issued a statement regarding the SEC’s approval action on Wednesday.
Prior to that, SEC Chair Gary Gensler also released a statement on the long-awaited approval of the BTC ETF, though his tone was notably reluctant.
Pierce said: "Today marks the end of a saga that was not necessary but important. The first application for a spot BTC ETF was filed in the United States over a decade ago, and during my six years at the SEC, the question of why we need a spot BTC ETF came up frequently."
Pierce added: "For reasons I have explained many times before, the logic behind the SEC's denial of spot BTC ETFs over the past decade-plus is baffling. Predicting the timeline for approving a spot BTC ETP was impossible because the review process for these filings differed significantly from the relatively straightforward process for approving similar ETPs. As the Commission rejected application after application, the bar for approval kept shifting."
Peirce pointed out: "The SEC's prior inaction forced retail investors to access BTC in less efficient ways within the securities market, and instead of acknowledging its mistake, the SEC offered weak justifications for reversing course."
"This wasted a decade of opportunity. We could have approved these products years ago if we had applied the same standards used for other commodity-based ETPs, but we refused to do so until a court warned us."
Before the SEC ultimately decided to approve spot BTC ETFs, the U.S. Court of Appeals for the District of Columbia Circuit ruled in August that the agency must review Grayscale’s application to convert its BTC trust into a true ETF.
The judge wrote that without a 'coherent explanation' for rejecting spot BTC ETFs, such denials appeared 'arbitrary and capricious'.
Gensler referenced the court ruling in his own statement, writing that while the latest BTC ETF applications were similar to previous attempts, "circumstances have changed."
Gensler continued: "Based on these circumstances and the more fully discussed content in the approval order, I believe the most sustainable path forward is to approve the listing and trading of these spot BTC ETPs."
Peirce speculated that despite Wednesday’s approval, “this order does not undo the significant harm caused by the disparate treatment of spot BTC products”. She then delved into a series of specific issues she believes stem from the SEC’s staunch opposition to crypto assets over the past decade.
She explained: "First, our arbitrary and capricious handling of applications in this space will continue to damage our reputation far beyond the impact on crypto assets. Diminished public trust will undermine our ability to effectively regulate markets. This episode will taint future interactions between the industry and our staff, weakening what should be rich, substantive dialogue—the best way to protect investors."
Peirce further noted that she viewed this as a waste of resources, as over the years "staff may have spent millions of dollars in time trying to block these applications." She also stated that during this period, "public understanding of the SEC’s role became muddled."
She said: "Congress did not authorize us to tell people whether an investment is suitable for them, yet we abused administrative processes to withhold investments we dislike."
Additionally, Peirce argued that the SEC’s actions around the BTC ETF "created an artificial frenzy," and that "we could have avoided the circus-like atmosphere we’re now in if the regulator had simply followed its own rules."
She also believed that the SEC “alienated a generation of product innovators in our space” and expressed regret over the “costly legal battle” that ultimately led to the approval of spot BTC ETFs.
"While this is a moment for reflection, it is also one for celebration. I am not celebrating BTC or BTC-related products; a regulator’s view of BTC is irrelevant," she added. "I am celebrating American investors’ right to express their views on BTC through buying and selling spot BTC ETPs."
She went on: "I celebrate market participants who persisted in bringing to market products they believed investors wanted, and I commend the applicants for persevering for a decade in the face of the Commission’s obstruction."
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