In an August 15 statement on X (formerly Twitter), former SEC official John Reed Stark shed light on the likelihood of the SEC approving a Bitcoin (BTC) exchange-traded funds (ETFs) soon. Stark’s insights provide a valuable perspective on this ongoing debate related to Bitcoin ETF within the crypto community.
Will the SEC Approve Any Of The Recent Bitcoin Spot ETF Applications?
People often ask for my opinion on whether the SEC will approve any of the recent spate of bitcoin spot ETF applications, which is an interesting and important question.
My take is that the current SEC will… pic.twitter.com/lPXebl03Y4
— John Reed Stark (@JohnReedStark) August 13, 2023
Challenges in Approving Bitcoin ETF
Stark believes that the current SEC’s stance on approving spot Bitcoin ETF applications remains skeptical. This position is backed by compelling reasons, some of which have been elaborated upon by the independent experts at Better Markets in their SEC Comment Letters.
These letters, released on August 8, 2023, respond to proposed rule changes aimed at listing and trading shares in spot bitcoin-based exchange-traded products.
One of the central concerns highlighted by Better Markets is the vulnerability of proposed spot bitcoin-based ETFs to manipulation due to factors such as artificially inflated trading volumes, market concentration, and reliance on a limited group to maintain Bitcoin’s network.
According to Stark, these issues present significant obstacles to the approval of Bitcoin spot ETFs.
Potential Impact of a Republican President
John Reed Stark also delves into the evolving landscape of crypto regulation and its increasing partisanship within the Securities and Exchange Commission (SEC). He notes that crypto regulation was initially non-partisan, but it has become increasingly divided along party lines.
This divide emerged despite various political figures, including President Donald Trump, Secretary Hillary Clinton, and Congresswoman Maxine Waters, previously sharing concerns about crypto’s risks.
Stark points out that this partisan divide intensified during the tenure of Republican-appointed SEC Chair Jay Clayton, who pursued stringent crypto regulation. This leads him to consider the possibility of regulatory shifts depending on the outcome of the 2024 presidential election.
The former SEC official further suggests that if a Republican candidate were to win the presidency in 2024, the SEC’s approach to crypto regulation could undergo significant changes. A Republican-led administration might reduce enforcement efforts related to registration breaches and pivot towards focusing on fraud cases, he said.
How, however, anticipates that a Republican-majority SEC might become more open to approving Bitcoin spot ETFs and other crypto-friendly regulatory actions.
The Potential Influence of “Crypto Mom”
Surprisingly, the X post also highlights the potential role of Hester Pierce, a notable SEC commissioner commonly referred to as “Crypto Mom.” If Pierce were to become acting SEC Chair, Stark believes that the agency’s crypto-related enforcement actions could slow down, given her history of dissenting against certain crypto-related SEC actions.
“If @HesterPeirce becomes acting Chair of the SEC, given her lengthy track record of dissent and opposition to most crypto-related SEC actions, the world should expect that most U.S. SEC crypto-related enforcement and most crypto-related SEC disruption would grind to a screeching halt,” he maintained.
While the SEC’s current stance on a Bitcoin ETF appears cautious due to concerns about manipulation and market vulnerabilities, Stark raises the possibility of regulatory changes depending on future political outcomes.
