SEC ill-prepared to regulate bitcoin, says former chief
29 Sep 2017
Arthur Levitt, a former chairman of the US Securities and Exchange Commission, said on Thursday he believed the regulator was ill equipped to deal with bitcoin, the digital currency that has seen a meteoric price rise and raised fears of a bubble.
Shares of the Bitcoin Investment Trust have surged over 500 per cent this year.
"I think the tendency of the Commission has been to stay away from bitcoin," Levitt said at The Economist's Finance Disrupted conference in New York on Thursday.
"They have too many other issues that they are dealing with now that they don't want to take on something as complex from a regulatory point of view as bitcoin is," said the SEC's longest-serving chairman, who held the post from 1993 to 2001.
Levitt's comments came a day after Grayscale Investments' Bitcoin Investment Trust, which trades over-the-counter and is the lone vehicle available to institutional investors, said it is unlikely to list on the NYSE Arca market after the exchange withdrew an application to the SEC for approval amid regulatory uncertainty.
"Grayscale has been closely monitoring regulatory developments in these markets, and although digital currency market regulation continues to rapidly evolve, at this time Grayscale does not believe there have been enough regulatory developments to prompt the SEC to approve the Rule 19b-4 application for the Bitcoin Investment Trust," the trust's sponsor said in a statement.
Greyscale noted that the SEC turned down two applications for similar virtual currency products earlier this year, and said it plans to keep in touch with the regulator so it can move forward with an exchange listing "when conditions permit."
Digital currencies can be used to move money around the world quickly and with relative anonymity, without the need for a central authority, such as a bank or government.
Grayscale, the fund's issuer, noted that earlier this year, the SEC rejected two similar applications for exchange listings of digital currency products.
The Bitcoin Investment Trust is currently traded "over the counter," in less formal, more lightly regulated exchanges than those used for typical stock transactions.
The price of bitcoin itself has more than quadrupled in value since December to more than $4,100, prompting Jamie Dimon, the head of JPMorgan Chase & Co, to compare it to the famous tulip market bubble in the Netherlands in the early 1600s.
"It could be at $20,000 before this happens, but it will eventually blow up," he said earlier this month.
There have also been a number of massive cybersecurity breaches affecting digital currency holders.
Levitt said the SEC, which says its mission "is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation", clearly should be prepared to regulate bitcoin.
Another factor is that the SEC does not want to get into a battle with state regulators, which have taken the lead on regulating bitcoin, said Levitt.
