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Commissioner Hester M. Peirce of the U.S. Securities and Exchange Commission (SEC), also known as CryptoMom because of her stand on the exchange-traded product (ETF) which was designed to give investors access to Bitcoin, gave a heartwarming opening remark at the just-concluded Cato Institute’s FinTech Unbound Conference.
She started off by acknowledging the standard SEC disclaimer, saying the views she wishes to express are her personal thoughts and has little to no trace to the views of the Commission or her fellow commissioners, I guess that was obvious enough.
With that said, she began her speech on her views about the commission’s refusal of an exchange-traded product designed to give crypto investors access to Bitcoin.
According to her, DC parents are known for their ‘helicopter parenting’ skills (i.e parents who hover around their children to ensure that they stay away from trouble and achieve their ultimate goals) and she is of the belief that members of the commission must have employed this skill in their decision-making process.
She admitted that while hovering parenting is virtually inherent in every parent, I mean which parent would want their kids to take risks and watch them suffer the consequences, she would rather be a free-range mother (a mother who allows her kids to explore decisions of their own with little to no supervision).
She went further and likened the regulators, of which she is one, to helicopter parents who just can’t stand investors taking investment-risks that ‘might’ lead to a loss.
While that is one of the reason, she also thinks investment-regulators (who we can refer to as parents) are scared of their kids (the investors, say crypto-investors) taking risky decisions because it all falls back to them eventually. When the investment goes bad, everyone would accuse the regulators of not warning or guiding the investors against such an investment-risk.
This coupled with the inherent helicopter parenting skills has made regulators strict with their decisions on investment.
According to our CryptoMom, such decisions are unhealthy for U.S. Investors. Investment is all about taking risks for goodness sake, why stop them? How will they grow? What is financial marketing without the risk factor?
She went on to advise the Commission (SEC) against coddling the American investors and proposed that they should learn to appreciate the connection between investment-risk and returns in the capital market.
She reminded her audience, and colleagues of course, that the commission never asked them to guarantee investors of no loss in their investment nor did it ask them to substitute their risk analysis skills for that of the American investors. Also, it didn’t state that removing the risk factor associated with the capital market is the best way to protect investors.
With that in mind, she went further to tell her listeners that the world is becoming increasingly integrated as such there is the need to create new asset classes that will help diversify portfolios and that cryptocurrencies may be one of such asset classes.
Just before the end of her speech, she reminded her audience that despite her stand on the topic, she is by no means encouraging investors to take uncalculated risks. In fact, she is of the opinion that crypto-investors need to employ the old-fashioned dose of skepticism while choosing whether and how to invest in crypto just like any other product.
In conclusion, she listed several instances where the commission has stopped or suspended exchange-trading of products relating to Bitcoin and considered it uncalled for. She admonished the commission to see beyond the weakness and vulnerabilities of Bitcoin and embrace this technology with open arms just like other innovators.
Lastly, she shared five lessons she thought would help the commission in dealing with FinTech innovations.
Personal thought – hopefully, the U.S. SEC will borrow a leaf from the CryptoMom and explore this new technology like any other innovation.