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 important regulatory considerations, together with the flexibility to forestall fraud and defend traders.
The SEC crypto divide.
Curiously, Stark believes the difficulty of crypto regulation has advanced right into a partisan divide throughout the SEC, a dramatic shift from the bipartisan consensus towards cryptocurrencies when Stark first started writing in regards to the topic in 2017.
This partisanship has manifested in varied 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 towards cryptocurrencies.
The potential influence of the upcoming 2024 U.S. presidential election on the regulatory panorama is one other issue to think about, in accordance with 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 atmosphere, with the SEC doubtlessly turning into extra receptive to approving a Bitcoin spot ETF. Moreover, different important crypto-friendly regulatory actions could also be extra more likely to happen.
Stark additionally highlighted that the SEC, being an impartial 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 document of dissent in the direction of most crypto-related SEC actions, this transformation may considerably influence 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 will permit the itemizing and buying and selling of spot Bitcoin ETFs.
These embody considerations 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 selections on Bitcoin ETFs and associated regulatory points are more likely to be influenced by varied elements, together with inner politics, the broader political panorama, and ongoing considerations about market manipulation and investor safety.
Because the political spectrum stands at this time, Stark doesn’t imagine a spot Bitcoin ETF shall be permitted, and it’ll require adjustments to the regulatory panorama for it to take action.