(BlockBar) Commissioner at the United States securities regulator Hester Peirce has reportedly urged for a less cautious approach towards innovation in the exchange-traded funds (ETFs) space on the regulator’s part.
According to the reports, the Security and Exchange Commission’s (SEC) Peirce has also called on her co-commissioners and urge to allow for innovation in the ETF space by lessening their caution.
Again according to the reports, she has also commented on the SEC’s approach towards this category of highly regulated financial derivatives. She also said that the SEC is “still smothering ETFs with personalised attention as if they were infants.”
Peirce is also reportedly believes that the regulator was also wrong in its decision to reject the bitcoin (BTC)-based ETF application which was introduced by the Winklevoss twins. It is worth noting that the Winklevoss twins are also founders of the Gemini cryptocurrency exchange.
Cyrus Taraporevala, the CEO of world’s third-largest asset manager, State Street Global Advisors said:
“If something does go awry with them, then the whole industry gets painted with the same brush. […] We do not do inverse ETFs or leveraged ETFs. That will be the case as long as I am in my role.”
In 2010, the SEC reportedly banned leveraged and inverse ETFs because they can produce particularly large losses. But according to Pierce other types of mutual funds also use derivatives to amplify their exposure. So, for her, it was clear that unsophisticated retail investors are not the target for leveraged ETFs. She reportedly commented:
“The unwillingness to allow more competitors to offer geared ETFs seems to be another example of denying or curtailing access to a product that would be useful to some investors.”
The U.S. regulator in question is also expected to introduce new ETF regulation, which is expected to speed up innovation in the space.
To be noted, at the end of May, the Japanese Financial Services Agency has also showed a cautious approach towards cryptocurrency-based ETFs. Even part of the crypto community believes that bitcoin’s volatility could render the odds of an ETF based on the coin being approved significantly lower.
