Former SEC Official Predicts Delayed Approval for Bitcoin ETFs Till After 2024, Cites Regulatory Shifts

John Reed Stark, a former SEC official, believes that the current Securities and Exchange Commission (SEC) is unlikely to approve a Bitcoin spot ETF application until after 2024 due to various compelling reasons noted by BetterMarkets.

“Will the SEC Approve Any Of The Recent Bitcoin Spot ETF Applications?,” he tweeted.

As mentioned in Stark’s tweet, the reasons stated by the Economic Security and Market Expert, BetterMarkets, in their SEC Comment Letters (Letter 1 and Letter 2) on August 8, 2023, responded to the proposed rule changes filed by national securities exchanges regarding spot bitcoin-based exchange-traded products.

One noteworthy aspect of Stark’s opinion is the potential for a shift in crypto-regulatory dynamics after the upcoming 2024 Election.

Stark highlights the increasing partisanship surrounding crypto regulation at the SEC, which contrasts with the relatively non-partisan environment when he first started delving into the world of cryptocurrencies in 2017.

“Issues surrounding crypto regulation have unfortunately become increasingly partisan at the SEC. This is surprising because when I first began writing about crypto in 2017, crypto was not at all a partisan issue.”

In the past, prominent figures from both sides of the political spectrum, such as President Donald Trump, Secretary Hillary Clinton, and Congresswoman Maxine Waters, shared a common view that cryptocurrencies posed significant risks. Surprisingly, crypto regulation has evolved into a partisan issue.

Stark suggests that if a Republican secures the U.S. Presidency in 2024, the landscape of crypto regulation at the SEC could experience a substantial transformation.

He predicts that a Republican-led SEC might reduce its crypto-crackdown efforts and become more open to approving a Bitcoin spot ETF. This change in direction could pave the way for a more crypto-friendly regulatory environment.

The Potential Influence of An Established SEC Commissioner, Hester Pierce- The Crypto Mom

Hester Pierce, often ascribed as “crypto-mom,” also comes into play.

As an established SEC Commissioner with a history of compliance and opposition to various crypto-related actions, Pierce could play a significant role if she were to assume the position of acting Chair, particularly in a scenario where the Commission is equally divided between Republicans and Democrats, Stark suggested. 

Stark’s insights prompt us to consider the broader context of the SEC’s decision-making process.

The SEC is an independent federal agency led by a five-member Commission, with appointments subject to political considerations.

The potential for a change in leadership with the upcoming presidential election might introduce a dynamic shift towards crypto.

His opinion also highlights concerns raised by Better Markets in their Comment Letters.

These concerns revolve around the vulnerability of proposed spot bitcoin-based ETFs to manipulation due to inflated trading volumes and concentration within the spot bitcoin markets.

The potential reliance on other markets for surveillance to detect and address manipulation raises valid concern about the effectiveness of regulation in the ecosystem.

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

At the end, Stark’s perspective provides a thought-provoking opinion of the complex interplay between politics, partisanship, and crypto regulation within the SEC. While the approval of Bitcoin spot ETFs may not occur in the near future, Stark’s insights shows the potential for regulatory shifts that could reshape the crypto landscape after Election Day.

NB: Any Information provided is NOT FINANCIAL ADVICE. Do Your Research before making any Financial Decisions.