Compliance issues lead SEC to likely deny bitcoin spot ETFs, impacting market and highlighting political dynamics.
A prediction suggesting that the SEC is poised to reject a series of proposals for bitcoin spot ETFs this month comes from Matrixport, a digital asset financial services provider. Matrixport's analyst, Markus Thielen, has indicated that the proposals on the table do not fulfill a key SEC requirement.
One of the primary reasons for his anticipated rejections is the SEC's call for more stringent compliance within the cryptocurrency industry. SEC Chair Gary Gensler has been vocal about the need for enhanced regulatory frameworks, particularly in the realm of crypto assets. The SEC's hesitancy to approve a bitcoin spot ETF is seen as a reflection of the current leadership's cautious approach to embracing cryptocurrencies.
Matrixport's analyst suggests that the denial of the bitcoin spot ETFs could lead to a potential 20% drop in bitcoin's price. Despite this potential short-term volatility, there remains a bullish outlook for bitcoin's value by the end of 2024. It's important for investors to brace for possible market fluctuations while keeping an eye on the long-term prospects of the asset.
Matrixport also points out that political factors may play a role in the SEC's decision-making process. Approving a bitcoin spot ETF would essentially provide Bitcoin with a stamp of legitimacy as an alternative store of value, which could be a contentious move in the current political climate. The SEC's rejection could thus be seen as a way to maintain the status quo and avoid the political ramifications of legitimizing Bitcoin in this manner.
