- Former SEC official John Reed Stark says the current SEC team will not approve a Bitcoin Spot ETF application.
- He believes the crypto-regulatory tides could shift exponentially after Election Day, with better tidings for crypto if a Republican president is elected.
- In his opinion, crypto regulation issues have become increasingly partisan at the SEC.
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.
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."
Will the SEC Approve Any Of The Recent Bitcoin Spot ETF Applications?— John Reed Stark (@JohnReedStark) August 13, 2023
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
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.
Cryptocurrency metrics FAQs
What is circulating supply?
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. The algorithm of the underlying blockchain technology defines this. Since its inception, 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens or mistakenly sending assets to addresses of incompatible blockchains.
What is market capitalization?
Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, resulting from the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.
What is trading volume?
Trading volume refers to the total number of tokens for a specific asset transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment; this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people buy and sell cryptocurrency.
What is funding rate?
Funding rates are designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future and index prices' periodic payments converge regularly. When the funding rate is positive, the price of the perpetual contract is higher than the marked price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.