In response to former SEC lawyer John Reed Stark the present SEC, underneath the chairmanship of Gary Gensler, is unlikely to approve a Bitcoin spot ETF utility centering on important regulatory issues, together with the power to stop fraud and shield traders.
The SEC crypto divide.
Apparently, Stark believes the problem of crypto regulation has advanced right into a partisan divide throughout the SEC, a dramatic shift from the bipartisan consensus in opposition to cryptocurrencies when Stark first started writing concerning 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 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 major lower within the SEC’s crypto-enforcement efforts.
This potential discount may result in a extra crypto-friendly setting, with the SEC doubtlessly changing into extra receptive to approving a Bitcoin spot ETF. Moreover, different important crypto-friendly regulatory actions could also be extra prone to happen.
Stark additionally highlighted that the SEC, being an impartial federal company, is topic to management modifications following presidential elections.
Hester Peirce, coined because the “crypto-mom” by Stark for her help of cryptocurrencies, may turn into the performing Chair if a Republican is elected, with the present Chair, Gensler, prone to resign.
Given Peirce’s prolonged report 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 modifications that may enable the itemizing and buying and selling of spot Bitcoin ETFs.
These embody 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, on condition 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.
In the end, Stark asserted that the SEC’s selections on Bitcoin ETFs and associated regulatory points are prone 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 can be accepted, and it’ll require modifications to the regulatory panorama for it to take action.