Former SEC Official Says Spot Bitcoin ETF Coming After 2024, Here’s Why

Former SEC official John Reed Stark has recently spoken on the current developments and believes that the SEC won’t approve a spot Bitcoin ETF anytime soon. However, he believes that the tides could change post the US Presidential Election 2024.

John Reed Stark believes that a Republican President in 2024 would improve the odds of a spot Bitcoin ETF approval. The former SEC official also cites an SEC comments letter from Better Markets which highlights the issues with the current state of spot Bitcoin ETFs. The letter explains:

“The spot bitcoin markets (1) have a history of artificially inflated trading volumes due to rampant manipulation and wash trading; (2) are highly concentrated; and (3) rely on a select group of individuals and entities to maintain bitcoin’s network”.

Furthermore, the letter also adds that these attributes create significant vulnerabilities in the context of a proposed spot bitcoin-based ETP, making it susceptible to manipulation by malicious actors. The proposed rule alterations do little to effectively counteract these risks. Relying on market surveillance mechanisms in other arenas to identify and address manipulation is insufficient, it adds.

Republican President and spot Bitcoin ETF

John Reed Stark mentions that the issues concerning crypto regulations have become partisan at the SEC. Interestingly, he also notes that the SEC crackdown began under Republican-appointed SEC Chair Jay Clayton. He was the one who filed the case on Ripple just days before leaving office.

However, Jay Clayton now believes that the SEC should approve spot Bitcoin ETFs and that the current regulation is going overboard with its regulatory stand.

However, if the Republican wins the US Presidency in 2024, John Reed Stark expects two possible outcomes in this case.

1. Drastically reduce crypto-enforcement endeavors, likely focusing on fraud cases and moving away from charging registration breaches (like failure to register as an exchange, broker-dealer, or clearing firm for crypto-trading platforms); and
2. Show greater openness to approving a Bitcoin spot ETF and adopting other crypto-friendly regulatory measures.

Interestingly, he also predicts a scenario where crypto mom Hester Pierce will be the SEC chair. “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,” adds Stark.

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