Very interesting post from SEC Commissioner Crenshaw, lots of interesting info about how the SEC see the world, what kind of visibility they have into markets and how they regulate (or not, in this case), a bit of sass in there too, clearly the SEC feel as though their hand was forced on this issue. But with regards to Bitcoin as a financial investment I feel most of the concerns detailed here deserve some consideration. On the whole I feel most of their concerns relate to trading bitcoin, which as we all know is a degen thing to do. The stats show a growing majority of bitcoin is held for the long term and as such I think a lot of the SEC's concerns are not something that would be relevant to the long term investor.
That said I feel the SEC are right to be cautious, Bitcoin is something new under the sun and not quite like anything they've dealt with before. I don't know how long they have been working on how they would regulate a Bitcoin ETF/ETP but however long it has been, based on the contents of Crenshaw's post it's clearly not been long enough. I share the concern that 'who knows what this will open the door to', hopefully the ETFs are straight forward funds and they work as intended but if I know traditional finance, if there is any potential for financial fuckery etc. it will be uncovered and attempted. As far as Bitcoin as a technology however (another topic I guess), I expect that it won't care at all.
Quote from the final paragraphs:
Wasn’t Bitcoin Supposed to Solve This? I am aware of the grand claims made by proponents of these and similar products. They are disintermediating the financial system. Banking the unbanked. Enhancing freedom. Changing the world. And when I read the whitepapers, it can be hard not to buy in. Many of the goals of the crypto ecosystem are goals I support. How can you be against freedom and prosperity? But when I look at products like the ones at issue in today’s approval, I have a simple question: wasn’t bitcoin supposed to solve this? If the technology is so revolutionary, why do so many of its uses seem to revolve around recreating the existing financial system, except with less regulation, more opacity, fewer investor protections, and more risk? Bitcoin is a peer-to-peer system. Individual investors in the U.S. who want to invest in the product may already do so, either by mining it themselves or by setting up a wallet and buying it from someone else, each of which they are able to do from the comfort of their living room. That is the whole point of creating a new, censorship-resistant digital currency. So why is so much energy being expended on linking it to the existing financial system? I fear that our actions today are not providing investors access to new investments, but instead providing the investments themselves access to new investors in order to prop up their price. While this is in the interests of the sponsors of the ETPs, as well as the law firms and service providers who will get paid by them, my duty is to consider investors, markets, and the public, whose overall interests I do not believe are in fact well-served today. I am deeply concerned about today’s actions. I am concerned that these products will flood the markets and land squarely in the retirement accounts of U.S. households who can least afford to lose their savings to the fraud and manipulation that appears prevalent in the spot bitcoin markets and will impact the ETPs. I am concerned that today’s actions will create the imprimatur of Commission approval and oversight of the underlying spot markets when really no such oversight exists. I am concerned that there will be confusion about what exactly these products are – (they are not ETFs registered under the Investment Company Act of 1940, the ubiquitous products that today are used by millions saving for retirement) – and that investors may infer protections that do not in fact exist. I am concerned about what comes next – when new, potentially more speculative products bearing greater risks of investor harm seek to list, we will hear a chorus of well-heeled voices saying that the SEC’s hands are tied by the new standards that we have set. I fear that today we are setting ourselves up for tomorrow’s failure, and it will be the investors that we have a duty to protect who will ultimately pay the price.