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FameEX Hot Topics | Analyst Suggests SEC's Approval of Spot Bitcoin ETF to Maintain Regulatory Grip on Crypto Sector

2024-01-04 16:50:46

TD Cowen, an investment bank, anticipates the U.S. Securities and Exchange Commission (SEC) will approve a spot Bitcoin exchange-traded fund (ETF) by the January 10 deadline, considering it a "political necessity." The bank's analysts suggest that the SEC must solidify its role as a crypto regulator before broader cryptocurrency legislation is considered by Congress. They also emphasize the SEC's desire to avoid legal challenges to its refusal to approve Bitcoin ETFs, following a prior setback in a case involving Grayscale Investments.

The SEC's legal battle with Grayscale Investments regarding the conversion of its Bitcoin trust (GBTC) into a spot Bitcoin ETF ended unfavorably for the SEC in August last year. Initially, the regulator had rejected the application, but it was compelled to revisit its decision following a court ruling.

In the current legislative landscape, Congress is actively deliberating several cryptocurrency-related bills. In the previous year, the U.S. House Financial Services Committee passed four digital asset bills: the Financial Innovation and Technology (FIT) for the 21st Century Act, the Blockchain Regulatory Certainty Act, the Clarity for Payment Stablecoins Act, and the Keep Your Coins Act.

TD Cowen underscores the potential for lawmakers to engage in negotiations for a comprehensive crypto market structure bill during the period following an election. This period, known as a session of Congress, occurs between the election and the inauguration of a new government. The investment bank asserts that for the Senate and White House to support such legislation, the SEC will need to take the lead in establishing investor protections.

In conclusion, TD Cowen believes that the SEC's approval of a spot Bitcoin ETF by the January 10 deadline is not just a regulatory decision but a political imperative to assert its position in the cryptocurrency regulatory landscape. It aims to preempt further legal challenges and solidify its role ahead of potential broader cryptocurrency legislation in Congress. This move could facilitate the negotiation of comprehensive crypto market structure bills, which the investment bank sees as a possibility during the post-election session of Congress. The SEC's role in protecting investors is seen as pivotal to gaining support from the Senate and the White House for any cryptocurrency-related legislation.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.

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