SEC Might Approve Spot Bitcoin ETF as a “Political Necessity” – TD Cowen

The Securities and Exchange Commission (SEC) is reportedly on the brink of approving a spot Bitcoin (BTC) exchange-traded fund (ETF), and investment bank TD Cowen Washington Research Group, led by Jaret Seiberg suggests that this decision could be driven by what they perceive as a “political necessity.”

Spot ETF Approval Could Maintain US Position as a Financial Hub 

The debate surrounding the approval of a Bitcoin ETF has been ongoing for years, with concerns ranging from market manipulation to investor protection. However, TD Cowen’s assertion implies a broader context beyond the traditional regulatory considerations. 

The potential political necessity mentioned by TD Cowen could also be linked to global competition in the cryptocurrency space. As other countries and financial markets explore and embrace digital assets, the SEC may perceive the approval of a spot BTC ETF as a means to maintain the United States’ position as a financial innovation hub.

SEC Meets With Spot Bitcoin ETF Applicant

With the potential approval of a spot BTC ETF, the US SEC has been meeting with several filers of the application.

In one of its rare joint conference calls, the SEC urged potential ETF issuers to modify the redemption mechanism for the proposed ETF. The purpose of the calls was to ensure that ETF filers convert their in-kind redemption model so that “everyone is doing cash creates.”

During its discussion with prominent investment asset manager BlackRock, the SEC recommended the adoption of the cash-creating redemption model over the in-kind model. However, similar to numerous other applicants, BlackRock appeared to favor the latter. Fidelity Investments also expressed a preference for the in-kind redemption model.

Spot Bitcoin ETF to Shape Market Outlook

Despite the SEC’s historically cautious approach to crypto-related financial products, signs indicate a shifting tide. Just last month, Michael Saylor, the chairman of MicroStrategy, predicted a bullish 2024 for Bitcoin and the broader ecosystem.

Like many other analysts, Saylor believes that Spot BTC ETF approval will drive demand shocks for BTC. Popular cryptocurrency analyst Nate Geraci also believes that spot BTC ETF denial will impact the broad crypto industry negatively. In a similar vein, senior Bloomberg ETF analysts Eric Balchunas and James Seyffart predicted the odds of having approval at 90%.