Banning Bitcoin Is Like Shutting Down Internet — Government Would Be ‘Foolish’ to Try

by Gordon James

Hester Pierce, commissioner of the Securities and Exchange Commission, compares banning bitcoin to shutting down the internet and says it would be foolish for governments to try. It also gives an indication of whether the SEC will approve an exchange-traded fund (ETF) for bitcoin this year.

Governments would be stupid to try to ban bitcoin.

U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce shared her views on government regulation of bitcoin and cryptocurrencies in an interview with Marketwatch at the Investing in Crypto event last week. He was also asked whether the securities regulator is likely to approve bitcoin exchange-traded funds (ETFs) this year.

Ms. Pierce, sometimes nicknamed Crypto Mom, has been urging the SEC to approve a bitcoin ETF for years. During the interview, he was asked about the possibility of banning cryptocurrencies, as some people still believe governments can ban bitcoin at any time, including Ray Dalio, founder of Bridgewater Associates, Michael Berry of The Big Short and Ron Paul. The commissioner replied:

I think we passed that point early on, because the internet should have been shut down. As I’ve said in the past, I don’t see how it can be banned….. I think it would be foolish of the government to try that.

However, she noted that governments may make attempts to ban bitcoin or other cryptocurrencies. She stated that although the government can say it is not allowed here, people can still do it and it would be very difficult to stop people from doing it.

However, the commissioner pointed out that a big problem with banning cryptocurrencies is that we would miss out on the innovation around bitcoin and other digital assets if we tried to stop them.

Will the Securities and Exchange Commission approve bitcoin this year?

Commissioner Pierce was also asked if the SEC will approve a bitcoin exchange-traded fund (ETF) later this year, as many investors expect. That’s the big question on everyone’s mind, she said, adding that her answer is the same as it has been for the past three years: I mean, I don’t know.

She noted that the SEC is in a period of transition, with a new chairman, Gary Gensler, expected to be confirmed in the coming weeks and take office soon. This will have a major impact on the final approval of an exchange product, the Commissioner said.

Regarding the bitcoin market, Pierce stated:

In the three years I have been working on contracts, the market has become much more mature. We see a lot of institutional interest in the market. We think of it as a kind of stock product.

Pierce then pointed out that Canada has already approved some bitcoin ETFs. We’re seeing a lot more institutional involvement in the underlying market, she said, adding that this is the kind of thing that can reassure us that the underlying market is working.

The Commissioner noted: The bitcoin market will never be like, say, the stock market, so I think it’s inappropriate to try to impose such a structure on the underlying market. This was the expectation of some of the previous disappointments.

When asked how other countries can get ahead of the United States in innovation, Pierce said:

I think we’re definitely behind schedule. We’ve seen other countries take a much more productive approach to crypto-regulation, in the sense that they’re not saying there should be no regulation at all, but they’re just saying, let’s create a regulatory framework that works for crypto.

Our approach was to say no and tell people to wait, she says. So I think we really need to turn things around, to be ready to work, to create a framework that works for this industry. I am optimistic that with the arrival of a new president who knows these markets, the cryptocurrency markets, well, we can work together to create a good regulatory framework.

Do you agree with Securities and Exchange Commission Commissioner Pierce that it would be foolish for governments to try to ban bitcoin? Let us know your comments in the section below.

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