SEC partisan divide may alter Bitcoin ETF approval odds, former SEC legal professional predicted

In accordance with former SEC legal professional John Reed Stark the present SEC, beneath the chairmanship of Gary Gensler, is unlikely to approve a Bitcoin spot ETF utility centering on vital regulatory issues, together with the flexibility to forestall fraud and shield traders.

The SEC crypto divide.

Apparently, Stark believes the difficulty of crypto regulation has developed right into a partisan divide throughout the SEC, a dramatic shift from the bipartisan consensus in opposition to cryptocurrencies when Stark first started writing in regards to the topic in 2017.

This partisanship has manifested in numerous methods, together with the SEC’s crypto crackdown initiated by former Republican-appointed SEC Chair Jay Clayton, notable for his staunch criticism and sweeping regulatory actions in opposition to cryptocurrencies.

The potential affect of the upcoming 2024 U.S. presidential election on the regulatory panorama is one other issue to think about, based on Stark. If a Republican is elected, he predicts a big lower within the SEC’s crypto-enforcement efforts.

This potential discount may result in a extra crypto-friendly setting, with the SEC probably changing into extra receptive to approving a Bitcoin spot ETF. Moreover, different vital crypto-friendly regulatory actions could also be extra more likely to happen.

Stark additionally highlighted that the SEC, being an unbiased federal company, is topic to management adjustments following presidential elections.

Hester Peirce, coined because the “crypto-mom” by Stark for her assist of cryptocurrencies, may change into the appearing Chair if a Republican is elected, with the present Chair, Gensler, more likely to resign.

Given Peirce’s prolonged file of dissent in direction of most crypto-related SEC actions, this transformation may considerably affect the SEC’s stance on cryptocurrencies.

Higher Markets letter to SEC.

Stark additionally referenced a Higher Markets letter to the SEC which famous a number of points with the proposed rule adjustments that might permit the itemizing and buying and selling of spot Bitcoin ETFs.

These embrace issues about manipulation within the Bitcoin market, with allegations of “wash buying and selling” creating false volumes.

Moreover, Higher Markets argued that the proposed surveillance-sharing agreements with buying and selling platforms like Coinbase are inadequate to detect manipulation, provided that Coinbase represents solely 5% of world Bitcoin buying and selling.

The group additionally factors out that concentrated possession of Bitcoin presents a threat, with 50 miners controlling half of the mining capability and the highest 10,000 Bitcoin wallets proudly owning 27% of Bitcoins.

Finally, Stark asserted that the SEC’s choices on Bitcoin ETFs and associated regulatory points are more likely to be influenced by numerous components, together with inside politics, the broader political panorama, and ongoing issues about market manipulation and investor safety.

Because the political spectrum stands right now, Stark doesn’t imagine a spot Bitcoin ETF will probably be authorized, and it’ll require adjustments to the regulatory panorama for it to take action.