Hester Peirce Is a Boss
And the Spot Bitcoin ETFs Have Been Approved
Well, after 11 years since the first application for a spot bitcoin ETF was filed, 11 spot bitcoin ETFs have been approved. You’ll be able to purchase them through traditional financial brokerages tomorrow (on Jan. 11, oddly enough).
I offered my more biased and unbridled thoughts on these financial products here:
“The Spot Bitcoin ETFs Will Be Trash” (Substack)
As you can probably tell, I’m a proponent of people owning real bitcoin, not a financialized version of the asset (which is what the ETFs are).
That being said, I’m not here to tell you what to do with your money. So, if you’d prefer to own shares of a spot bitcoin ETF, go right ahead and buy as many as you’d like.
I wrote a more professional take on the spot ETFs at the following link:
“Here’s what you need to know about the spot bitcoin ETFs” (Finder)
Please just do me a favor and don’t buy the BlackRock product — BlackRock iShares Bitcoin Trust (IBIT). Pretty please. I don’t like BlackRock. (j/k - Do whatever you want.)
If anything, buy the Fidelity product — Fidelity Wise Origin Bitcoin Trust (FBTC). Fidelity has been banging the Bitcoin drum for years now, and the institution’s CEO — Abigail Johnson — is a total boss. I sang her praises in this piece in which I was quoted:
“Fidelity CEO Brings Crypto Some Solace” (The Street)
Speaking of head honcho ladies that are TOTAL BOSSES, it’s time to shout out SEC Commissioner Hester Peirce.
In the wake of the approval of the ETFs today, she didn’t hold back in letting us know just how much the SEC has failed US citizens for the last 11 years.
Here’s a link to her statement:
The following are some of my favorite segments from it:
“Today marks the end of an unnecessary, but consequential, saga. More than ten years after the filing of the first spot bitcoin exchange-traded product (“ETP”) application, the Commission finally has approved multiple applications by exchanges to allow the listing and trading of spot bitcoin ETPs. This saga likely would have spanned well beyond a decade were it not for the DC Circuit-ex-machina. You need not be a seasoned securities lawyer to spot the difference in treatment of bitcoin-related ETP applications compared to the many other ETP applications that have been routinely filed and approved over the past decade.”
“Since I became a Commissioner six years ago, one of the questions I have been asked most frequently is “When will the Commission approve a spot bitcoin ETP?” For reasons I have explained many times before, the logic of the long string of denials is perplexing… The goalposts kept moving as the Commission slapped “DENIED” on application after application.”
“In the meantime, the Commission has driven retail investors to less efficient means of attaining bitcoin exposure in the securities markets.”
“until a court reminded us that our ‘unexplained discounting of the obvious financial and mathematical relationship between the spot and futures markets falls short of the standard for reasoned decisionmaking,’ we persisted in denying a spot bitcoin ETP.”
“The Commission, rather than admitting error, offers a weak explanation for its change of heart. In the past, the Commission, allowing our prejudice against the underlying asset to get in the way, has rejected applications on the basis that the bitcoin market was still immature and that there were outstanding manipulation concerns.”
“We have denied multiple applications over that period, depriving investors of the opportunity to gain exposure to bitcoin in a more convenient and investor-friendly way.”
“We squandered a decade of opportunities to do our job. If we had applied the standard we use for other commodity-based ETPs, we could have approved these products years ago, but we refused to do so until a court called our bluff. And even now our approval comes only begrudgingly, as demonstrated by our continued insistence that these products satisfy a correlation test we have not demanded of prior commodity-based ETPs.”
“Today’s order does not undo the many harms created by the disparate treatment of spot bitcoin products.”
“First, our arbitrary and capricious treatment of applications in this area will continue to harm our reputation far beyond crypto. Diminished trust from the public will inhibit our ability to regulate the markets effectively. This saga will taint future interactions between the industry and our staff and will dampen the rich, informative dialogue that best protects investors.
Second, our disproportionate attention on these filings has diverted limited staff resources away from other mission critical work. Over ten years, likely millions of dollars of staff time has gone toward blocking these applications.
Third, our actions here have muddied people’s understanding of what the SEC’s role is. Congress did not authorize us to tell people whether a particular investment is right for them, but we have abused administrative procedures to withhold investments that we do not like from the public.
Fourth, by failing to follow our normal standards and processes in considering spot bitcoin ETPs, we have created an artificial frenzy around them. Had these products come to market in the way other comparable products typically have, we would have avoided the circus atmosphere in which we now find ourselves.
Fifth, we have alienated a generation of product innovators within our space. Our unreasonable approach to these applications has signaled that regulatory prejudice against new products and services can lead us to sidestep the law and unreasonably delay product launches. The industry has logged hundreds of meetings, has filed submissions, withdrawals and amendments, and ultimately had to resort to a costly legal battle to get us to today.
Although this is a time for reflection, it is also a time for celebration. I am not celebrating bitcoin or bitcoin-related products; what one regulator thinks about bitcoin is irrelevant. I am celebrating the right of American investors to express their thoughts on bitcoin by buying and selling spot bitcoin ETPs. And I am celebrating the perseverance of market participants in trying to bring to market a product they think investors want. I commend applicants’ decade-long persistence in the face of the Commission’s obstruction.”
God bless this woman.
If you’ve ever thought I was being hyperbolic in my critique of the SEC, you can now see that I was simply echoing the sentiment of one of its higher ups.
Oh, yeah, I got the opportunity to echo that sentiment in the press last week.
Here’s a quote from a piece in which I was cited at ETF.com:
“The SEC has been incredibly inconsistent in its messaging around regulation for bitcoin and the broader digital asset ecosystem,” Corva said. "This has made it difficult for those in the bitcoin industry or those who work with bitcoin-related products to remain compliant.”
Full piece: “Advisors Expect Fresh Worries From Spot Bitcoin ETFs” (ETF.com)
Though it wasn’t like we needed a reminder of how corrupt the SEC is, a commissioner from the organization sure did a hell of a job in letting us know just how much damage the institution has done to investors and, in turn, to itself.
The SEC operates within the regulatory capture of Wall Street.
Wall Street doesn’t like Bitcoin because Bitcoin is a challenge to it — the old financial guard — in some ways. (This is part of the reason I’d prefer people not buy the spot bitcoin ETFs. Doing so benefits Wall Street on a number of levels.) So, it did what it could to stop money from flowing into bitcoin by not approving applications for a spot bitcoin ETF for over a decade.
That’s over now, though. Thanks to the courts and the efforts of many who pressured the SEC, unelected bureaucrats have lost the fight.
We’re moving into a new era for Bitcoin now. Whether these ETFs will be a net positive or a net negative remains to be seen. Regardless, they’re a testament to the US judicial system as well as the many people who’ve refused to relent in calling out Gensler and the SEC for acting in a way that hurt the investing public.
Let’s hope that this is a sign we’re moving out of the age of the compromised bureaucrat and into the age of the Bitcoiner — the unrelenting doer.
And before I sign off, let’s take a moment to remember Hal Finney, early cypherpunk and one of the first people to correspond and work with Satoshi on Bitcoin.
He started “Bitcoin Twitter” 15 years years ago today.
Thank you for handing us the baton, Hal.
We’re going to do all we can to keep running with it.
Best,
Frank
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