“Let’s encourage investors to do their own work to decide whether an investment is right for them.”
So said Hester Peirce, Trump appointed commissioner at the Securities and Exchanges Commission (SEC).
That was in reply to a recent statement by another SEC commissioner, the Democrat Robert Jackson who stated:
“Getting the stamp of approval from the deepest and most liquid capital markets in the world is hard, and it should be.
Once we put the stamp of the United States Securities and Exchange Commission on an investment, once we make it available to everyday mom and pop investors, we are taking risks that Americans can get hurt.”
Peirce shot back in a statement at the University of Missouri School of Law where she said:
“Our approach with respect to such products borders on merit-based regulation,” Peirce argued, “which means that we are substituting our own judgment for that of potential investors in these products.”
She implicitly blamed SEC of crypto phobia, stating “we seem to be… impulsive in running away from anything labeled crypto.
We owe it to investors to be careful, but we also owe it to them not to define their investment universe with our preferences.”
Jackson for his part said “eventually, do I think someone will satisfy the standards that we’ve laid out there? I hope so, yes, and I think so.”
He does not appear keen on a bitcoin ETF, however, at least for now. Making it two republican commissioners probably in favor, one democrat against, and the deciding vote: chairman Jay Clayton.
Jay Clayton, the Deciding Vote
Jay Clayton initially came to this space like a bull in a China shop. Angrily going around, metaphorically slapping everyone, and implicitly showing a distaste for cryptos.
He now however has effectively admitted he had no clue about any of this stuff. That has changed as he has been studying crypto blockchain since June 2017.
In a recent interview, it appeared there was a new Clayton on stage. He called for a laddered approach towards regulating Initial Coin Offerings (ICOs) and companies in general. He said he did not want to pick winners and losers and generally he came across as friendly.
That might make a potential vote on a Bitcoin ETF less predictable. Trump in addition has refrained from appointing a fifth commissioner which has to be a democrat to keep the balance.
Republican Trump naturally doesn’t want a democrat in any event, but we’d be surprised if the crypto aspects aren’t influencing him slightly as much of his base may well be made of crypto supporters.
Is It Happening?
Millionaire Clayton is an investor and has shares in numerous products. As a former banker you’d naturally think he might be a bit biased against this space, but on the other hand we wouldn’t be too surprised if eventually it is revealed he holds some crypto.
Beyond those practical aspects, technically he has no argument left. They wanted surveillance, now they have surveillance. They wanted traditional exchanges to process significant volumes, CME’s futures now handle twice Coinbase’s spot volumes and sometimes even more than Binance.
Safety naturally is a concern, but a gold vault can be robbed too. There are ways to prevent that and the fact Coinbase has never been hacked in the past seven years running shows there is such a thing as truly securing your crypto.
Preventing price manipulation was the main stated reason for rejecting a bitcoin or crypto ETF. That no longer applies to a reasonable extent due to the regulated volumes and the surveillance agreements.
In a vote thus, and there will be a vote at some point, Clayton will have to explain why he said no if he does say no.
As chairman in addition, if the vote goes 2-1, it might be difficult for him to vote with the democrat. Not least because while a commissioner can not be fired without cause, he or she does serve as chair at the pleasure of the president.
So the chances of it happening do appear to be less unrealistic than last year because there have been material changes both practically and technically following a shift in the commission from democrat dominated to republican dominated after terms expired and new ones were appointed.