The former head of internet enforcement at the U.S. Securities and Exchange Commission (SEC), John Reed Stark, who was known for his skepticism towards cryptocurrencies, has shifted his stance on the likelihood of the agency approving a spot bitcoin exchange-traded fund (ETF). Stark, currently the president of cybersecurity firm John Reed Stark Consulting, suggested that the regulatory landscape under Chairman Gary Gensler might pave the way for the approval of a spot bitcoin ETF, which he views as a significant win for the crypto industry.
Former SEC official reconsiders earlier stance on ETFs
Stark, who served as chief of the SEC Office of Internet Enforcement for 11 years and was an enforcement attorney for 15 years, had previously expressed doubts about the agency’s inclination to approve a spot bitcoin ETF. However, recent developments, including reported calls from the SEC to spot bitcoin ETF filers, have led him to reconsider his position. The SEC’s inquiries focused on ensuring compliance with cash creates, with issuers urged to eliminate references to in-kind redemptions from their filings.
In response to these reports, Stark commented on the likelihood of a spot bitcoin ETF approval, stating that “some iteration of a spot bitcoin ETF seems likely.” While the specific characteristics of an approved Bitcoin spot ETF are yet to be defined, Stark emphasized the potential for this approval to become part of Gary Gensler’s legacy at the SEC. He described it as a “mammoth victory for big crypto” and acknowledged the unusual nature of the regulatory developments, referring to the current environment as “strange days indeed.”
Stark’s shift in perspective is noteworthy given his historical skepticism towards cryptocurrencies. He had previously dismissed the reported 90% likelihood of the SEC approving a bitcoin spot ETF as “absolutely absurd,” referencing Bloomberg’s analysts who predicted a 90% chance of SEC approval by January 10. His skepticism toward crypto has often centered on concerns about market manipulation and the speculative nature of crypto prices, fueled by a lack of regulatory oversight.
Evolution and the legacy of Chairman Gary Gensler
The former SEC official’s longstanding belief that crypto prices rise due to the absence of regulatory checks on market manipulation and the willingness of individuals to sell overhyped and overpriced cryptocurrencies to a “greater fool” has shaped his cautious approach. Despite the evolving regulatory landscape, Stark has consistently warned of a continued “crypto regulatory onslaught,” reinforcing his view that regulatory scrutiny in the crypto space is unlikely to diminish.
Stark’s commentary on the potential approval of a spot bitcoin ETF reflects broader discussions within the crypto community and financial markets. The prospect of an SEC-approved bitcoin ETF is seen by many as a key milestone that could attract institutional investors and further legitimize the cryptocurrency market. The emphasis on cash creation and the removal of in-kind redemption references in filings suggests a concerted effort by the SEC to address concerns related to the structure and operations of potential spot bitcoin ETFs.
As the crypto industry awaits further developments from the SEC, Stark’s evolving perspective highlights the dynamic nature of regulatory considerations surrounding cryptocurrencies. The outcome of this regulatory journey could significantly impact the trajectory of the crypto market, influencing investor confidence and market dynamics. Whether or not a spot bitcoin ETF receives approval, the ongoing dialogue between regulatory authorities and the crypto industry remains a focal point for observers and participants alike.
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