Crypto Twitter is rallying behind a sympathetic watchdog at the US Securities and Exchange Commission. Not long after commissioner Hester Peirce dissented from the agency’s rejection of a bitcoin exchange-traded fund, her count of Twitter followers soared:
Peirce’s social media exposure got a boost from a Reddit user who goes by lamb0x, who called for readers on the site to “show her some love from the Crypto Community.” She’s not the first buttoned-down American official to win Twittersphere adoration—the chairman of the Commodity Futures Trading Commission, J. Christopher Giancarlo, had his turn in February after he gave senators an unexpected education on crypto slang during a hearing.
Giancarlo was dubbed “Crypto Dad” by the cryptorati; inevitably, Peirce earned the moniker “Crypto Mom” from some Redditors.
Peirce’s turn came after crypto entrepreneurs Cameron and Tyler Winklevoss’s second attempt to list shares in a bitcoin ETF was shot down. Bobby Cho, global head of crypto trading at Cumberland, pointed out earlier this week that bitcoin prices had surged amid speculation that such a fund might get approved. However, the proposal to list the ETF on Cboe Global Markets was voted down 3-1 by the SEC on Thursday.
The SEC said (pdf) the bitcoin market is susceptible to manipulation and lacks the necessary surveillance to monitor traders. Among other things, regulators pointed to academic research suggesting that bitcoin’s epic bull run last year may may have been driven by market manipulation. The Winklevoss twins had argued in their application that bitcoin’s unique structure made this kind of exploitation less of a concern.
Even so, the SEC said its decision wasn’t based on the merits of bitcoin’s innovation, but rather on the lack of rules to protect regular investors. For now, the majority of trading takes place on unregulated overseas exchanges.
Peirce fired back in a dissent that the commission was undermining investor protection by blocking greater institutional investment in the market. More participation from big investment firms would help even out prices from one exchange to another, while putting pressure on market operators to ramp up their defenses against theft and to improve other safeguards, she said.
The Yale Law School graduate argued that the SEC was incorrect to focus on Cboe’s ability to monitor the broader spot bitcoin market rather than, more narrowly, focusing on the surveillance of its own exchange. Furthermore, Peirce said that the decision “sends a strong signal that innovation is unwelcome in our markets, a signal that may have effects far beyond the fate of bitcoin” exchange-traded products.
Cboe president Chris Concannon also pushed back. The former SEC lawyer said that while investor protection should be at the “core” of any decision, US investors are obviously already accessing unregistered financial products. “Investors are better served by products traded on a regulated securities market and protected by robust securities laws,” he said. Concannon said the exchange was also reviewing Peirce’s dissent “with interest.”
For those on crypto Twitter keeping score, Concannon doesn’t have a Twitter account.