Former SEC official: Bitcoin ETF approval won’t happen any time soon

John Reed Stark, who once headed the Office of Internet Enforcement at the U.S. Securities and Exchange Commission (SEC), predicts that a Bitcoin spot ETF won’t see approval until after 2024. In an extensive article on X, previously Twitter, Stark refers to a letter from Better Markets addressed to the SEC. The letter draws attention to issues in the existing arrangements for Bitcoin spot ETFs. The financial regulator noted concerns about “inflated” trade volumes due to rampant wash trading and price manipulation in the Bitcoin ETF sector.

Furthermore, Better Markets underlined that the spot Bitcoin market is dominated by a limited number of players. Stark feels these problems, highlighted by the non-profit, introduce significant vulnerabilities in the proposed ETFs, leaving room for exploitation by ill-intentioned actors.

Despite his expertise in cybersecurity consultancy, Stark thinks it’s improbable the SEC will greenlight spot Bitcoin ETFs. The former SEC official observed a partisan shift in crypto regulation, with the current SEC predominantly leaning Democratic. Yet, post-election dynamics could alter this landscape, as Stark hints that a Republican leadership might be more accommodating towards cryptocurrencies.

Interestingly, under Jay Clayton, a Republican chosen by ex-President Trump, the SEC had a stringent approach toward cryptocurrencies. Clayton, known for initiating 57 actions against the crypto domain, suggested his successor, Gary Gensler, approve Bitcoin spot ETFs.

Stark anticipates two outcomes if Republicans take over in 2024: a decline in crypto enforcement for registration violations, concentrating more on fraud, and a warmer reception to crypto financial products like Bitcoin ETFs.

The prominent writer also envisions commissioner Hester Pierce, often dubbed “Crypto Mom,” succeeding Gensler as the SEC head. If this occurs, Stark presumes a significant reduction in the SEC’s crypto-focused actions, reflecting Pierce’s known dissenting stance.

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