The US Securities and Exchange Commission (SEC) remains steadfast in its opposition to exchange-traded funds (ETFs) in bitcoin spot markets, despite mounting pressure from influential Wall Street entities.
That is according to former SEC attorney John Reed Stark, who weighed in on the matter over the weekend.
"My take is that the current SEC will not approve a bitcoin spot ETF application for a range of compelling reasons,” Stark tweeted out to his followers on Sunday.
Citing a Better Markets thinkpiece, Stark considered bitcoin’s “history of artificially inflated trading volumes due to rampant manipulation and wash trading”, the high degree of concentration in the market, and bitcoin’s reliance “on a select group of individuals and entities to maintain bitcoin’s network”.
“These are features of the bitcoin network that make a proposed spot bitcoin-based ETP extremely vulnerable to manipulation by bad actors, posing unnecessary risks to investors and the public interest,” read the Better Markets piece.
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
Stark’s scepticism is in stark contrast to BlackRock (NYSE:BLK), the world's largest asset manager, which remains optimistic about the future of Bitcoin spot ETFs.
Quoting BlackRock insiders, Mike Novogratz of Galaxy Digital (TSX-V:GLXY) recently said that approval is a matter of "when, not if", speculating a timeline of "four to six months" for the SEC's nod.
This sentiment is shared by other financial giants, including Ark Invest and Grayscale, which have been advocating for SEC approval for years.
Spot Bitcoin ETFs, if approved, would allow traders to buy or sell bitcoin on traditional stock exchanges during regular trading hours, bypassing the complexities of self-custody and the uncertainties of cryptocurrency exchanges.
Republican win could be bullish for bitcoin
Though the SEC remains hostile to spot bitcoin products, Stark reckoned that an administration change in the 2024 presidential elections could change the tide.
A Republican-appointed SEC chair would “become far more receptive to approving a bitcoin spot ETF and far more likely to take other significant crypto-friendly regulatory actions”, he said.
Republican SEC commissioner Hester Peirce is considered a likely contender for the top position should the Republicans take the White House.
“Given her lengthy track record of dissent and opposition to most crypto-related SEC actions, the world should expect that most US SEC crypto-related enforcement and most crypto-related SEC disruption would grind to a screeching halt,” said Stark.