U.S. Securities and Exchange (SEC) Commissioner Hester M. Peirce has published a statement of official dissent from the agency’s second disapproval of the Winklevoss brothers’ application for a Bitcoin (BTC) exchange-traded fund (ETF) yesterday, July 26.

The Winklevoss’ Bats BZX Exchange, Inc. (BZX) had filed a proposed rule change with the SEC in June 2016 to allow it to list and trade shares of a Bitcoin ETF called the Winklevoss Bitcoin Trust, which was rejected by the agency in March 2017. Following the disapproval of the initial proposition, the group filed a petition seeking “review of the disapproval by delegated authority, which the SEC formally rejected Thursday, July 26.

Referring to the most recent rejection, SEC Commissioner Peirce argued that the SEC has fundamentally erred with its latest decision on three grounds. Firstly, Peirce contends that the agency overstepped “its limited role” when it focused on the characteristics of the underlying Bitcoin market, rather than the derivative the applicant sought to list:

“The Commission erroneously reads...the [Securities Exchange] Act, which requires…that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices…’ [It] focuses its decision not on the ETP shares to be listed ...but on the underlying bitcoin spot market….[instead of] the ability of BZX...to surveil trading of and to deter manipulation in the ETP shares listed and traded on BZX.”

She reinforces her point by adding that the “concerns underlying the [SEC] disapproval order go to the merits of bitcoin [itself] as an investment,” and that “if the disapproval order’s rigorous standard were applied consistently, many [other] commodity-based ETPs would be in peril, as rumors of manipulation plague many commodity markets.”

Moreover, Peirce argues, yesterday’s decision courts the risky precedent that:

“When we do finally approve an ETP on bitcoin...investors may reasonably — but incorrectly — conclude that the investment carries with it the SEC’s imprimatur because the Commission has performed due diligence on the underlying market and, through its approval, is certifying the quality of that market.”

Peirce’s two further points argue that the SEC’s disapproval order will likely “inhibit” the institutionalization of the Bitcoin market, something she deems necessary in order to best address the agency’s concerns:

“[The disapproval] precludes investors from accessing Bitcoin through an exchange-listed avenue that offers predictability, transparency, and ease of entry and exit….[they] will be relegated to the spot market, which will not benefit from the increased institutional discipline that approval of this product would bring.”

Lastly, she argues that the rejection “demonstrates a skeptical view of innovation,” which she argues could lead to adverse effects “well beyond this particular product,” stating boldly:

“I reject the role of gatekeeper of innovation — a role very different from (and, indeed, inconsistent with) our mission of protecting investors, fostering capital formation, and facilitating fair, orderly, and efficient markets.”

Cryptocurrency markets took a sharp tumble today in response to news of the SEC’s disapproval, seeing a dizzying $12 billion wiped from total market capitalization.

Meanwhile, on July 24 the SEC delayed its decision on a separate Bitcoin ETF application from investment firm Direxion, the same day as digital asset manager Bitwise filed its own application with the regulator for an ETF that would track an index of ten cryptocurrencies.