In an exclusive interview with CNBC, US SEC Commissioner Hester Peirce expressed her dissent from the panel’s recent decision to reject the Winklevoss’ Bitcoin ETF license application. Having returned to the agency as commissioner six months ago, Peirce has been actively debating with other commissioners about the opportunity the SEC possesses in bringing innovation to US capital markets. In fact, after the 3-1 vote in favor of denying the ETF license, Peirce issued a public statement on the SEC’s website elaborating on her dissent.

“I’m delighted to have the opportunities to weigh-in on debates on cryptocurrencies. I think we have an important role to play telling the US and world that our capital markets are open to innovation and that [was what] sort of drove me to come back to the agency as commissioner.”

Peirce’s Dissent from the SEC

Her main arguments as to why the SEC made the wrong decision were:

1. The Proposed Rule Change Satisfies the Requirements of Exchange Act Section 6(b)
   • Peirce mentioned how the Commission disapproved of BZX’s rule change because it was inconsistent with Section 6(b)(5) of the Excahnge Act. She believed that BZX’s argument that the underlying bitcoin market was resistant to manipulation had merit, and that the commission erroneously read the requirements of Section 6(b)(5) of the Act.
2. The Disapproval Order Inhibits Institutionalization of Cryptocurrency
   • Peirce noted that by disapproving the proposed listing, the Commission pointed out issues in the bitcoin market that could have been mitigated by institutionalizing the market. She pointed out the order pointed out price disparities across bitcoin markets. If the SEC were to grant an ETF license, however, it’d leave room for more price arbitrage and thus “better connections among markets.”
3. The Disapproval Order Dampens Innovation
   • In the grand scheme of things, Peirce noted how the disapproval demonstrated the Commission’s overall skeptical view of innovation, which will have long-term adverse effects on investor protection, efficiency, competition, and capital formation. The decision inadvertently sets the SEC up as a “gatekeeper for innovation.”

Conclusion

While the decision to not grant the license to the Winklevoss twins may come across as a huge blow to the expansion and maturation of the bitcoin trading market, it certainly is encouraging to see such a strong advocate for bitcoin ETFs. Hopefully Peirce will be able to continue the conversation with her colleagues to eventually establish some sort of regulatory framework that will instill greater confidence within the cryptocurrency markets.