SEC Won’t Approve Bitcoin Spot ETF, Says Former SEC Attorney

SEC Won’t Approve Bitcoin Spot ETF, Says Former SEC Attorney

According to former SEC Attorney John Reed Stark, the SEC is unlikely to approve a Bitcoin Spot ETF under the current leadership of Gary Gensler. 

Stark claims that cryptocurrency is a partisan issue in the U.S., and the only thing that will bring about a change of policy in the SEC is a change of political leadership at the very top.

The politicization of bitcoin

John Reed Stark says that nothing less than a complete change of political direction will lead to the approval of a Bitcoin Spot ETF.

According to Stark, crypto was a non-partisan issue as recently as 2017. More recently, the battle lines have been drawn with Democrats becoming increasingly anti-crypto and Republicans becoming pro. So how does this alter the likelihood of a Bitcoin Spot ETF?

It comes down to the 2024 Presidential elections, says Stark.

“When any President is elected, the current SEC Chair typically resigns,” said Stark on Twitter this Sunday

President Biden appointed current SEC Chair Gary Gensler in 2021, placing him on the Democrat side of crypto’s political divide. A change in leadership could reasonably lead to a change in Chair.

Stark added, “Should a Republican get elected President, Chair Gensler would likely resign and the senior Republican appointed SEC Commissioner (in this case famed “crypto-mom” [Hester Peirce]) would possibly become acting Chair.”

Democrat Chair Gensler has made a reputation as staunchly anti-crypto. Republican Commissioner Peirce is considered an ally of cryptocurrency, earning the fond epithet of “crypto-mom” by many in the industry.

Stark says “given [Peirce’s] lengthy track record of dissent and opposition to most crypto-related SEC actions, the world should expect that most U.S. SEC crypto-related enforcement and most crypto-related SEC disruption would grind to a screeching halt.” 

Who is Hester Pierce?

SEC Commissioner Hester Peirce was appointed by President Trump in 2018.

Before her appointment at the SEC, Commissioner Peirce researched the regulation of financial markets. She was a Senior Counsel on the U.S. Senate Committee on Banking, Housing, and Urban Affairs, advising members on securities issues.

Commissioner Peirce has been critical of the SEC under Gensler, who has ramped up enforcement.

In May 2022, she said, “The SEC is a regulatory agency with an enforcement division, not an enforcement agency. Why are we leading with enforcement in crypto?”

These contrarian positions led to the crypto community dubbing her “crypto mom,” although it is not a title she is particularly comfortable with.

Last year in an interview with Protocol, she said, “It’s kind of funny because I don’t have children,” before adding, “I also think it’s important for people not to think about the government in parental terms.”

Hester Peirce, the SEC and crypto

Hester Peirce may be much more friendly to crypto than current Chair Gary Gensler, but she does not advocate for the industry.

Her position roughly aligns with the adage DYOR – do your own research. 

According to Peirce, the SEC should legislate against tricksters and fraudsters and, to borrow a driving analogy, make the rules of the road clear.

“If we see that there are people dropping nails in the road so that people will get flat tires, we can go grab those people and pull them out of the road,” said Pierce. “And we can also set up rules by which people have to drive on the road. And that’s what I think we failed to do.”

Image credits: Shutterstock, CC images, Midjourney, Unsplash.