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US SEC Shoots Down Latest Bitcoin ETF, Commissioner Crypto-Mom Dissents on Ruling

The US Securities and Exchange Commission (SEC) has rejected yet another bid for a bitcoin-based exchange-traded fund (ETF), this time from New York-based financial service providers, Wilshire Phoenix.

A filing posted on Feb. 26 revealed that the SEC had concluded that Wilshire Phoenix had not provided enough evidence that the bitcoin market was resistant to market manipulation.

As stated in the filing,“The Commission concludes that NYSE Arca has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and, in particular, the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices’ and ‘to protect investors and the public interest.

Wilshire Phoenix, an emerging asset management firm and partner to Coinbase Custody,first applied for the ETF last summerwith NYSE Arca.

SEC Commissioner Dissents on Ruling

Peirce highlighted parameters that were set and heavily scrutinized in the SEC’s processing and ultimate rejection of Bitwise’s Bitcoin ETF application,that had not been applied to traditional markets offering.

Peirce wrote, “This line of disapprovals leads me to conclude that this Commission is unwilling to approve the listing of any product that would provide access to the market for bitcoin and that no filing will meet the ever-shifting standards that this Commission insists on applying to bitcoin-related products—and only to bitcoin-related products.”

The SEC has rejected all previous bitcoin ETF proposals filed to date.

Crypto Mom Wants Safe Harbor

Despite well-documented uncertainty between separate regulatory bodies on how to classify digital assets, within the US blockchain and crypto space, the SEC has maintained that digital assets likely fall under US securities laws. The SEC has punctuated this stance through enforcement against high profile projects like Telegram and EOS provider, Block.One who was fined 24 million dollars for its ICO offering.

SEC Commissioner, Hester Peirce has been a breath of fresh air to the sector and has earned the moniker of “Crypto-Mom” for her bold attitude towards digital innovation.

As reported by Blockchain.News, Peirce recently doubled down on her previous suggestion to provide decentralized network developers a safe harbor and has now submitted a formal draft proposal.

The safe harbor proposal recommends that a three-year reprieve from securities law should be granted to developers and projects that can demonstrate they are raising funds and making progress towards an open-source network. These projects will be required to make full disclosures regarding their raised funds to the public.

Image via Shutterstock

Trump Nominates SEC Commissioner Hester Peirce For Second Term

Crypto Mom, Hester Peirce has been nominated for a second term with the US Securities and Exchange Commission (SEC) as one of its five commissioners.

Peirce has proved to be somewhat of an ally of Bitcoin and blockchain projects that come before the US SEC regulatory body. She took office in January 2018 and received a nomination to finish the last two years of her term from US President Donald Trump. Peirce was originally nominated by former President Obama in 2015 to fill a Republican seat, without Trump’s second nomination her term would have ended on June 5.

According to Bloomberg Law, Peirce has now been nominated for a new term that could see her remain as a SEC Commissioner until 2025.

A Harbour in Regulatory Tempest

SEC Commissioner, Hester Peirce has been a breath of fresh air to the sector and has earned the moniker of “Crypto-Mom” for her bold attitude towards digital innovation.

As reported by Blockchain.News, Peirce recently doubled down on her previous suggestion to provide decentralized network developers a safe harbor and even submitted a formal draft proposal.

The safe harbor proposal recommended that a three-year reprieve from securities law should be granted to developers and projects that can demonstrate they are raising funds and making progress towards an open-source network.

Crypto Mom: A Leader Not a Follower

Peirce earned the nickname of ‘Crypto Mom’ when she spoke out and highlighted parameters that were set and heavily scrutinized in the SEC’s processing and ultimate rejection of Bitwise’s Bitcoin ETF application. Peirce argued that the standards that Bitcoin ETF’s are subjected to have never been applied to traditional markets offering.

SEC Commissioner Hester Peirce wrote that “the Commission applies a unique, heightened standard under Exchange Act Section 6(b) to rule filings related to digital assets” in a dissenting statement in response to the Bitcoin ETF rejection.Peirce wrote, “This line of disapprovals leads me to conclude that this Commission is unwilling to approve the listing of any product that would provide access to the market for bitcoin and that no filing will meet the ever-shifting standards that this Commission insists on applying to bitcoin-related products—and only to bitcoin-related products.”

Peirce is yet to make any official comment on her recent nomination.

SEC Commissioner Hester Peirce Confirmed for Second Term By US Senate, Crypto Mom Will Remain Until 2025

The United States Senate has voted in Commissioner Hester Peirce of the Securities and Exchange Commission for a second term that will see her remain with the regulator until 2025.

The US Senate has confirmed Securities and Exchange Commission (SEC) commissioner Hester Peirce, renewing her position for a second term via a voice vote on Aug 5.

Peirce who has earned the name ‘Crypto-Mom’ for her pragmatic and reasoned approach to dealing with digital innovation projects brought before the SEC was voted in alongside Caroline Crenshaw.

Commissioner Peirce first took office in January 2018 and received a nomination to finish the last two years of her term from US President Donald Trump. Peirce was originally nominated by former President Obama in 2015 to fill a Republican seat, without Trump’s second nomination her term would have ended on June 5.

SEC Commissioner Peirce’s second term will expire in 2025.

Crypto Mom: Voice of Reason in the SEC

Peirce earned the nickname of ‘Crypto Mom’ when she first proposed a safe harbor for digital token projects as the SEC regulating authority had become increasingly prejudiced towards cryptocurrency and blockchain-related project.

According to Commissioner Peirce’s safe harbor proposal, a three-year reprieve from securities law should be granted to developers and projects that can demonstrate they are raising funds and making progress towards an open-source network. These projects will be required to make full disclosures regarding their raised funds to the public.

Peirce highlighted that the benefits would allow developers to fundraise, investors to access more detailed project information and innovations in this emerging technology would stay in the US.

SEC Commissioner Peirce made further headlines in the cryptosphere when she spoke out and highlighted parameters that were set and heavily scrutinized in the SEC’s processing and ultimate rejection of Bitwise’s Bitcoin ETF application. Peirce argued that the standards that Bitcoin ETF’s are subjected to have never been applied to traditional markets offering.

SEC Commissioner Hester Peirce wrote that “the Commission applies a unique, heightened standard under Exchange Act Section 6(b) to rule filings related to digital assets” in a dissenting statement in response to the Bitcoin ETF rejection. Peirce wrote, “This line of disapprovals leads me to conclude that this Commission is unwilling to approve the listing of any product that would provide access to the market for bitcoin and that no filing will meet the ever-shifting standards that this Commission insists on applying to bitcoin-related products—and only to bitcoin-related products.”

During a recent appearance, Peirce was also incredibly critical of the SEC’s handling of Telegram’s TON network, which she believed was a waste of resources and ultimately helped no one.

Peirce Will Likely Continue Advocating for Innovation

Securities and Exchange Commissioner Hester Peirce has shown no signs of pulling out of her advocacy role for digital projects.

Last month on July 7, Peirce spoke at the Unitize Virtual Conference and advocated for a clear regulatory framework for crypto projects to foster innovation in the capital markets. Peirce said, “I wanted to make sure that our regulatory structure was flexible enough to accommodate innovation.”

Alluding to her previous safe harbor proposal Peirce highlighted that the benefits of clear regulation would allow developers to fundraise, investors to access more detailed project information, and innovations in these emerging technologies would stay in the US.

The exodus of tech talent from the US to Asia and Europe has been well documented and Peirce believes that’s “all the more reason for a jurisdiction like the United States to try to develop a workable framework that allows people to come and avail themselves of our market.”

While Peirce wants to see the US Government be more proactive in cutting through the regulatory uncertainty for crypto and blockchain, she also highlighted that innovation rarely comes from the public sector.

Peirce said, “Remember that innovation typically comes from outside the government sector. We need to set up a framework that allows people who spend a lot of time thinking about new ideas to continue to spend time thinking about those ideas and not a lot of time worrying about complying with regulations.”

Crypto Mom Hester Peirce Officially Sworn in as SEC Commissioner

Commissioner Hester Peirce has been officially sworn in for a second term as one of the United States Securities and Exchange Commission’s five commissioners alongside Caroline Crenshaw.

The Securities and Exchange Commission (SEC) has sworn in Hester Peirce and Caroline Crenshaw after the pair were confirmed by vote in the United States Senate on August 6. Peirce, who has been an ally to digital innovation within the SEC, received a nomination for a second term from President Donald Trump in June.

Peirce earned the nickname ‘Crypto Mom’ when she spoke out and highlighted parameters that were set and heavily scrutinized in the SEC’s processing and ultimate rejection of Bitwise’s Bitcoin ETF application. Peirce argued that the standards that Bitcoin ETF’s are subjected to have never been applied to traditional markets offering. She also called for a safe harbour period of three years for digital asset and crypto projects as the regulation was not clear.

In the official release on August 18, Chairman Jay Clayton said:

“As a Commissioner, Hester has been a tremendous advocate for our markets and investors, and I know she will continue to be a strong voice for them in the years to come.”

After being sworn in for a second term, Commissioner Pierce said:

“I am honored to be able to continue to serve our investors and protect the integrity and efficacy of our markets together with the SEC staff and my fellow commissioners, including my newest colleague, Commissioner Crenshaw.”

Innovation and Government

Commissioner Peirce was first sworn in as a Commissioner in 2018. She has focused particularly on matters of innovation in financial services and has often been critical of the SEC’s rigid and unyielding approach to an industry still finding its way.

At the Unitize virtual conference on July 7 , Peirce said:

“I wanted to make sure that our regulatory structure was flexible enough to accommodate innovation.”

Peirce has often highlighted that the benefits of clear regulation would allow developers to fundraise, investors to access more detailed project information, and innovations in these emerging technologies would stay in the US.

Peirce said,

“Remember that innovation typically comes from outside the government sector. We need to set up a framework that allows people who spend a lot of time thinking about new ideas to continue to spend time thinking about those ideas and not a lot of time worrying about complying with regulations.”

Commissioner Peirce fills a term that expires on June 5, 2025.

Commissioner Crenshaw fills a term that expires on June 5, 2024.

SEC Makes ICO Token Sales More Inclusive, Not Enough For SEC Commissioner Hester Peirce

The United States Securities and Exchange Commission (SEC) has modernized its definition of an accredited investor to now consider not just an individual’s wealth, but their education to qualify for investing in cryptocurrency ICOs, as well as mainstream capital market offerings.

The US SEC has broadened its definition of “accredited investors” that qualify to take part in token sales of Initial Coin Offerings(ICOs) to include the consideration of a person’s education not just their net worth. Pro-crypto and blockchain SEC Commissioner Hester Peirce believes that the definition needs to be made even more inclusive and extended to “mom and pop” retail investors.

According official release on Aug. 26, the SEC’s new amendments to the definition are part of the Commission’s ongoing effort to “simplify, harmonize, and improve the exempt” offering framework creating more inclusion and opportunity while “maintaining appropriate investor protections and promoting capital formation.”

Under the old “accredited investor” definition, individual investors who did not meet specific standard of wealth “regardless of their financial sophistication”, have been denied the opportunity to invest in the United States’ multifaceted and vast private markets. The new definition applies to all capital market offering not just cryptocurrency token sale ICOs, and will also include native American and Tribal government entities.

SEC Chairman Jay Clayton said:

“For the first time, individuals will be permitted to participate in our private capital markets not only based on their income or net worth, but also based on established, clear measures of financial sophistication.”

While the rules for investment in capital markets and tokens sales of ICOs have become more inclusive, a document from the SEC states that they do not expect the number of eligible investors to increase significantly.

Crypto Mom Peirce Wants More Inclusion

Newly re-confirmed SEC Commissioner Hester Peirce, who is known for her forward thinking when it comes to regulation on innovation—thinks the new definition is not inclusive enough.

In a Tweet following the announcement, Peirce wrote:

“Americans shouldn’t have to ask the SEC for permission to invest, but today’s accredited investor rule at least offers people a path to ask permission based on their education rather than simply telling them ‘no, unless you’re rich.’“

SEC Commissioner Hester Peirce Proposes Revised Crypto Safe Harbor Policies

Hester Peirce, the acting commissioner for the US Securities and Exchange Commission (SEC), has long been known to be cryptocurrency-friendly. Peirce now released an amended proposal floating the idea of a safe harbor rule for cryptocurrency projects.

Peirce, also known as the ‘Crypto Mom’ for her active role in seeking to further blockchain and crypto innovation, first released the proposal in February 2020.

A huge dilemma that blockchain entrepreneurs need to consider is whether their token offering will be in violation of US securities laws. Commissioner Peirce has therefore proposed a solution that is designed to provide a clearer guideline for blockchain developers in a way that will not hinder technological innovation. For starters, she proposes a three-year “grace period” where blockchain developers will need to prove how decentralized their network is and whether the token they’re offering is a security.

In her safe harbor plan, Peirce proposes three amended changes.

First of all, in order to ensure that investors are fully protected, Peirce has suggested that token issuers provide a semi-annual update to the SEC regarding their projects to ensure full transparency about the development process. A block explorer is also required so that the public can view transactions on the blockchain.

Second of all, an exit report has been added to her safe harbor proposal to counter any regulatory uncertainty that may still be present at the end of the three-year window. Through the exit report, an outside counsel will therefore re-evaluate whether the project in question is decentralized enough. If it is not, the issued token needs to conform to securities laws and be registered under the Securities Exchange Act of 1934.

Finally, the exit report requirement provides guidance on what outside counsel’s analysis should address when explaining why the network is decentralized, Peirce wrote. This means that the council must determine whether the token issuer has an influence on the token’s price and whether inside information could affect investors’ views on the token.

Peirce put an emphasis on the need for regulatory clarity in the cryptocurrency and blockchain industry. She advocated that this was the perfect time to re-evaluate how policies can be amended “to accommodate this new technology in a responsible manner,” especially as the confirmation of the new chairman of the SEC is nearing. Currently, Gary Gensler is awaiting confirmation to chair the Securities and Exchange Commission. Gensler was tapped by President Joe Biden to chair the SEC, and his confirmation to the role of Chairman will be significant for the cryptocurrency industry, as he is known for his previous background in blockchain.

Crypto Mom Flags New Proposal From SEC as Harmful for the DeFi Ecosystem

United States Securities and Exchange Commissioner, Hester Peirce, popularly known in the digital currency ecosystem as “Crypto Mom” has issued a note of warning that a new proposal from the commission can significantly hurt the Decentralized Finance (DeFi) ecosystem.

As reported by Bloomberg, a proposal from the SEC seeks to modify the definition of “exchange” as laid down by the Securities Exchange Act of 1934. While the supposed change is not directly tagged to feature crypto or DeFi, the Crypto Mom said the expansive nature of the proposal will undoubtedly be a problem for players in the DeFi ecosystem.

“The proposal includes very expansive language, which, together with the chair’s apparent interest in regulating all things crypto, suggests that it could be used to regulate crypto platforms,” said Peirce. “The proposal could reach more types of trading mechanisms, including potentially DeFi protocols.”

Hester Peirce is a renowned advocate of innovative crypto protocols and has consistently backed the emancipation of the industry despite staunch opposition from regulators.

That she flagged the 654-page proposal from the SEC is a cause for concern, particularly going by the way SEC Chair Gary Gensler is interested in regulating everything crypto.

While there is a fairly long route for the new proposal which Gensler says will focus on “systems that offer the use of non-firm trading interest and communication protocols to bring together buyers and sellers of securities,” to make it into the Federal Register and thus binding on its targeted entities, it has to survive approval approvals from other commissioners.

While the crypto industry may count on Hester Peirce to help stump the survival of the proposal, the fact that other aspects of the financial market will be impacted makes this a dicey situation that may see other commissioners back the new rule.

In all, the DeFi ecosystem and the broader crypto industry are poised to witness more customized regulations under Gary Gensler and the warnings from Crypto Mom should be seen as a clarion call to embrace the in-bound regulation.

Legislation Introduced to Remove SEC Chair Gensler from His Role

The Securities and Exchange Commission (SEC) is facing new controversy, as United States Representative Warren Davidson has announced plans to introduce legislation that would remove SEC Chair Gary Gensler from his role. The move follows the SEC’s proposed rule amendments, which could bring certain brokers under additional regulatory scrutiny and redefine an “exchange.” While Gensler has said the proposed changes could benefit investors and markets, SEC Commissioner Hester Peirce has criticized the move, accusing the regulator of stifling new technology and entrepreneurship.

Peirce, who is known as “Crypto Mom” for her pro-crypto positions, has criticized the SEC’s approach to crypto regulations. She believes that the SEC has been expanding its reach to solve problems “that do not exist” and has refused to alter current regulations to allow room for new technologies and new ways of doing business. Peirce has also accused the SEC of using the “notice-and-comment rulemaking process” as a threat. In her opinion, a concept release should have been issued instead of the proposed rule amendments, given the concerns over their ambiguity and scope, and the SEC’s “limited understanding” of the space.

The SEC has faced criticism for using enforcement actions to develop the law on a case-by-case basis, rather than creating clear regulations. The regulator has launched more than a few high-profile actions against crypto companies such as Ripple, LBRY, and Coinbase over alleged violations. It has also taken aim at staking and stablecoins, prompting some critics to argue that the SEC has been stifling innovation in the crypto space.

Meanwhile, Davidson’s proposed legislation to remove Gensler from his role as SEC Chair has raised eyebrows. Gensler is widely regarded as a tough regulator who is committed to protecting investors and ensuring market stability. He has previously served as chairman of the Commodity Futures Trading Commission (CFTC) and is known for his work in implementing the Dodd-Frank Act, which was designed to reform the U.S. financial system after the 2008 financial crisis.

In conclusion, the proposed legislation to remove SEC Chair Gary Gensler from his role is the latest development in a long-running debate over crypto regulations. While Gensler has said that the proposed rule amendments could benefit investors and markets, Commissioner Hester Peirce has accused the SEC of stifling innovation and entrepreneurship. The SEC has faced criticism for using enforcement actions to develop the law on a case-by-case basis, rather than creating clear regulations. It remains to be seen whether Davidson’s proposed legislation will gain traction, but it is clear that the debate over crypto regulations is far from over.

SEC Commissioner Hester Peirce Speaks Up on Controversial Penny Stock Bars

SEC Commissioner Hester Peirce has expressed her dissenting stance on the Commission’s latest decision to impose permanent penny stock bars on four respondents involved in adjudication matters. This sentiment was publicized in her tweet on June 28, along with a link to an official statement explaining her position.

Peirce expressed concern in her tweet, stating, “Protecting investors is important, but the government needs to have a good reason to prevent people from investing their own money as they choose.” Penny stocks, often known as micro-cap stocks, are publicly-traded shares of small companies that typically trade for less than $5 per share. Due to their low price and high volatility, they are often considered a high-risk investment. The statement attached to the tweet highlighted the complexity of the issue at hand.

Titled “Perpetual Personal Penny Stock Prohibitions: Statement on the Recent Orders Imposing Bars in the Public Interest,” the statement gave insights into the reasons behind Peirce’s objections.

According to the Commissioner, the records for the cases in question failed to demonstrate that the decision to impose an absolute and perpetual penny stock bar on each respondent was in the public interest. She emphasized that administrative proceedings, such as the ones at issue, should be remedial and not punitive in nature.

The Commission’s orders, as Peirce highlights, prohibit the respondents from participating in any offering of a penny stock, including acting as a promoter, consultant, or agent, or even from inducing or attempting to induce the purchase or sale of any penny stock. This prohibition also extends to the respondents trading in penny stocks in their own accounts with their own money.

Peirce emphasized her disagreement with the broad penny stock bars, citing that they are missing an adequately explained link between the need for the bars and the facts of the cases. Moreover, she clarified that none of the respondents’ unlawful conduct involved penny stocks. Therefore, it is not clear how such prohibitions will protect the public interest.

Finally, Peirce suggested the implementation of narrower penny stock bars, which could serve the public interest by preventing respondents from using other people’s money and accounts to trade in penny stocks, while preserving their right to engage in lawful economic activity with their own money.

This recent discussion spearheaded by Commissioner Peirce sheds light on the grey areas of penny stock regulation and the need for careful scrutiny of each case. It further underscores the ongoing debate surrounding the government’s role in guiding investment choices.

SEC's Gag Rule Faces Criticism: Commissioner Hester Peirce Calls for Reform

On January 30, 2024, Securities and Exchange Commission (SEC) Commissioner Hester Peirce voiced her disagreement with the SEC’s decision to deny a petition from the New Civil Liberties Alliance (NCLA) seeking to amend the 1972 gag rule. This rule forbids defendants from publicly denying or criticizing the SEC’s allegations following a settlement, a policy Peirce argues undermines regulatory integrity and raises First Amendment concerns.

The gag rule, formally known as Rule 202.5(e), has been a long-standing subject of contention. The NCLA’s petition, aiming to defend Americans’ rights to free speech, was initially ignored by the SEC for over five years, leading to a renewed push in December 2023. Peirce’s dissent highlights a fundamental disagreement within the SEC about the necessity and fairness of this rule.

The rule’s impact is far-reaching, affecting not only the defendants but also the perception of the SEC’s enforcement actions. Peirce noted that the SEC’s no-deny policy is a mandatory, non-negotiable term in its settlements, which are the most common resolution of SEC enforcement actions. This policy means the SEC effectively gets a benefit it could never obtain through litigation — the permanent silence of the defendant.

In her critique, Peirce emphasized the importance of allowing defendants the right to criticize a settlement after it is signed, arguing that such an ability is rooted in the fundamental principles of free speech. She pointed out that the SEC’s policy effectively shields the Commission’s allegations from criticism, a stance that is not aligned with the principles of a transparent and accountable regulatory body.

Furthermore, Peirce contrasted the SEC’s approach with that of other federal agencies, such as the Federal Trade Commission, which allow settling defendants to deny allegations of wrongdoing. She expressed concern over the ambiguity of the rule and its potential implications for defendants who might inadvertently breach it.

The SEC’s gag rule has faced criticism not only for its impact on individual freedom of speech but also for its effect on the broader discourse around SEC enforcement actions, particularly in the crypto sector. The Commission’s approach to crypto regulation and enforcement has been a topic of debate, with some high-profile cases against crypto companies drawing attention to the SEC’s strategies and policies.

Peirce’s dissent is a significant development in the ongoing discussion about the balance between regulatory enforcement and individual rights. It underscores the tension between the need for effective regulation and the protection of constitutional freedoms. The debate over the SEC’s gag rule is set to continue, with potential legal challenges and further scrutiny of the Commission’s enforcement practices.