Ex-SEC staff thinks a Republican president would be good for spot BTC ETF applications, cites partisan issues

Former US Securities and Exchange Commission (SEC) official John Reed Stark has weighed in on the current stall in Bitcoin Spot Exchange Traded Funds (ETF) approvals. He believes the current regulatory team will not approve filings, citing partisanship in the regulators' office. His comments come after the financial regulator delayed Cathie Wood's Ark Invest application, putting off the decision for a later date, potentially in 2024.

Also Read: SEC wants institutions to prove Bitcoin is not a 'manipulated' asset class, as spot BTC ETF decisions delay

Former SEC official bets on a Republican government approving BTC spot ETFs

John Reed Stark, formerly an official with the SEC's internet office, believes the current enforcement team will not approve a Bitcoin spot ETF application. He gives several reasons to back his stance and supports his assumption with arguments made by "independent and objective experts at Better Markets."

According to Stark, the regulatory waves in the crypto shores could shift massively after the US presidential elections, noting that if a Republican president (and therefore government) were to take office, BTC spot ETFs would have a better chance.

Stark also calls out the partisanship issues that now surround (or define) the commission, which in his opinion, is an unfortunate change since his tenure in 2017. Stark states that this political divide has now extended to the crypto space.

Accordingly, Stark believes a Republican president taking office in 2024 would bring several perks. First, it would curb the SEC's crypto-related enforcement efforts, potentially focusing more on fraud cases and less on registration violations "such as the failure of a crypto-trading platform to register as an exchange, broker-dealer and clearing firm."

Secondly, Stark says a Republican administration would be more open to approving a BTC spot ETF, with even greater openness to take other significant regulatory actions in favor of crypto.

Partisan issues at the SEC affect crypto regulation

The ex-SEC official also explains that Democrats currently hold the majority in the SEC's team of commissioners. This is because a new team of commissioners steps in around six months after a new president takes office like it was for President Biden and the current team under SEC chair Gary Gensler.

To eliminate partisan divides at the agency, as it should be, the commissioners' political affiliations must be equal, say two for two. If a Republican is elected, then Gensler would have to give way. In the current case, Hester Pierce, the senior-most commissioner in the current team, would then ascend as interim chair. This would achieve a balance between Democrats and Republicans in the commission. Such a balance would give recommendations about crypto a chance during voting.

It is worth mentioning that Pierce, otherwise called the Crypto Mom, has a history of advocating for the US to use MiCA as a model for its enforcement. MiCA is the regulatory structure in Europe. Further, she has also opposed multiple actions by the commission against the crypto industry.

According to Stark, if the Crypto Mom ascends as interim SEC chair, regulatory attacks against the industry would reduce, if not pause entirely.

Also Read: Bitcoin Weekly Forecast: US SEC likely to reject BTC ETF, experts say