John Reed Stark, Founder and Head of the Office of Internet Enforcement at the US Securities and Exchange Commission (SEC), claims that the agency will only approve Bitcoin spot ETFs after 2024.

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

In the post, Stark cited a letter to the SEC from Better Markets highlighting problems with the current setup of spot BTC ETFs. According to the financial watchdog, the Bitcoin ETF sector has a history of “artificially inflated” trading volumes resulting from wild incidents of wash trading and price manipulation.

Better Markets also noted that the Bitcoin spot market was highly concentrated and relied on a small group maintaining the network.

In Stark’s view, the issues highlighted in the nonprofit’s letter to the Securities and Exchange Commission created significant vulnerabilities in the proposed Bitcoin-based ETFs that could be manipulated by bad actors.

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

The former SEC official also claims that crypto regulation has become more partisan, with the current SEC office leaning heavily toward the Democrats. However, the agency’s position could change dramatically after Election Day, which means that the Republican president may provide more favorable conditions for cryptocurrency, he suggests.

Hester Pierce for the SEC chair?

Interestingly, the SEC began to crack hard on the crypto industry during the tenure of Jay Clayton, former President Donald Trump’s Republican appointee. Clayton, who has issued 57 executive actions against the crypto industry in his time, advised his successor Gary Gensler to approve Bitcoin ETFs.

Assuming the Republicans win the presidency in 2024, Stark foresees two scenarios: The new administration will drastically reduce crypto enforcement action for registry breaches and focus instead on fraud, and it will also be more open to crypto investment vehicles like bitcoin ETFs.

The prolific author also expects Commissioner Hester Pierce, aka “Crypto Mom,” to take over from Gensler as the new head of the SEC. If that happens, Stark believes most of the agency’s cryptocurrency-related enforcement actions will be halted, given Pierce’s track record in opposition.