SEC crypto commissioner admits the agency's refusal to approve a bitcoin ETF has dug them into a 'little bit of a hole'

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Securities and Exchange Commission cryptocurrency commissioner Hester Pierce said the agency's refusal to approve a bitcoin exchange-traded fund is causing a bit of a challenge amid a boom in cryptocurrency.

"We've dug ourselves into a little bit of a hole," Pierce said in an interview with Blockchain Policy Matters, an online show by the Blockchain Association, on Thursday. "A lot of people are looking for a way to access the asset class." 

The US thus far has not approved of any cryptocurrency ETF. Around 10 firms have attempted to file and have been rejected, including VanEck, and WisdomTree. Canada, meanwhile, saw its first bitcoin ETF, the Purpose Bitcoin ETF, launch last month, along with two others in the country.

Pierce has been trying to put cryptocurrencies and blockchain into the spotlight since her appointment as commissioner in 2018. Among her first steps is to get regulators to look at the assets in a different light.

"What I would urge my fellow regulators and people at the Fed to think is to think not only to have the reaction of looking at where the negatives are but to really look for the positives," she said.

Pierce also encouraged more partnerships between the private and public sectors. Engaging more with the private sector, she said, "can help us, regulators, sharpen our thinking."

"A lot of the real innovation happens in the private sector. Don't try to squelch that out. And don't view this as a competition between the private and the public sector," she said. "There tends to be a conservatism which I think is reflected in a lot of comments from regulators."

The commissioner also said she looks forward to working with SEC chairman nominee Gary Gensler who was once a digital currency professor at MIT as the agency's next chief. She said she is "hopeful" Gensler will help SEC think about these assets "in a more sophisticated way." 

She also explained how distributed ledger technology such as blockchain could potentially eliminate some overlooked gaps in the financial system if centralized. 

The Fed has recently started discussing the possibility of having a central bank digital currency.

In February, Peirce challenged the emerging government narrative that cryptocurrencies are dangerous or as aid terrorist financing and money laundering. US Treasury Secretary in February has expressed concerns that bitcoin and other cryptocurrencies are used for "illicit finance." 

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SEC crypto commissioner admits the agency's refusal to approve a bitcoin ETF has dug them into a 'little bit of a hole'