Introduction

John Red Stark, Founder and President of the desk of The Internet enforcement body of the US Securities and Exchange Commission (SEC) claims that the agency will only approve spot bitcoin ETFs after 2024.

Stark’s Opinion on Regulatory Environment

Stark weighed in on the current regulatory environment in a lengthy post on X, formerly known as Twitter:

Tweet by John ReedStark

Issues with Spot BTC ETFs

In the post, Stark cited a letter to the Securities and Exchange Commission from Better Markets highlighting its problems with the current process for Spot BTC ETFs. According to the financial sergeant, the Bitcoin ETF sector has a history of “artificially inflated” trading sizes caused by unbridled accidents of wash trading and price manipulation.

Better Markets also points out that the spot bitcoin market is very focused and dependent on a small group to maintain the network.

In Stark’s view, the issues highlighted in the non-profit organization’s letter to the Securities and Exchange Commission create significant vulnerabilities in proposed Bitcoin-based ETFs that bad actors can manipulate.

Therefore, Stark, who runs a cybersecurity advisory firm, thinks it’s far-fetched to imagine a regulator would approve bitcoin ETFs.

Crypto Regulation and SEC Office

Ex-SEC official also claims that crypto regulation has become more partisan with the current SEC office leaning heavily towards the Democrats. However, the agency’s position could change dramatically after Election Day, which means a Republican president might create more favorable conditions for cryptocurrency, he suggests.

Hester Pierce for SEC Chair?

Interestingly enough, the SEC is starting to come down severely on the crypto industry during the tenure of Jay Clayton, a Republican appointee of former President Donald Trump. Clayton, who issued 57 executive procedures against the crypto industry during his time on record, advised his successor, Gary Gensler, to approve Bitcoin ETFs.

If the Republicans win the Presidency in 2024, Stark predicts two scenarios playing out: the new management will drastically reduce crypto enforcement procedures for registration violations and instead focus on fraud, and they will also be more open to cryptocurrency investment instruments like Bitcoin ETFs.

The author also expects Commissioner Hester Pearce, better known as “Krypto Mom,” to take over from Gensler as the new SEC chair. Stark believes that if this were to happen, enforcement actions related to the agency’s cryptocurrency will cease, given Pearce’s record of opposition.