- 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 preseindent 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 any 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?
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
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, by the way, 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 own 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
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. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 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 other incompatible blockchains.
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, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.
Trading volume refers to the total number of tokens for a specific asset that has been 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 are buying and selling the cryptocurrency.
Funding rates are a concept 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 prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark 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.