SEC Approval for Spot Bitcoin ETFs Will Be a Political Necessity: TD Cowen

Published by

Elena R

January 3, 2024

TD Cowen, a leading American investment bank, suggests that the US Securities and Exchange Commission (SEC) will likely approve spot Bitcoin ETFs by January 10. TD Cowen calls this a “political necessity,” highlighting the intertwined relationship between policy and finance and indicating a crucial period of January 4.

Read on to know exactly what this means.

Is the SEC About to Act Now?

TD Cowen explains the SEC’s possible motivations. With Congress gearing up to discuss cryptocurrencies, the SEC wants to establish itself as a capable regulator in the crypto space. Avoiding any missteps with Bitcoin ETFs is crucial for maintaining its reputation.

Market Expectations and Trends

Given the buzz around Bitcoin and the trend of acting on rumors, the SEC’s approval of Bitcoin ETFs in the near term seems probable. The Ark Invest/21Shares Spot Bitcoin ETF, led by Cathie Woods, is seen as an indicator of the SEC’s leanings.

To ensure fairness, TD Cowen suggests the SEC might consider a joint approval method. This approach would help the SEC avoid any appearance of favoritism.

Also Read: Are People Against Bitcoin Spot ETFs? Public Feedback Rolls In as SEC Approval Looms

Understanding the Odds of Approval

Contrary to the bullish sentiment surrounding ETF approvals, Vetle Lunde from K33 Research offers a different perspective. Lunde believes there’s a 75% chance traders might “sell-the-news” once the ETF is approved. However, there’s also a cautious 20% chance the market could see a positive rally post-approval.

This underscores the psychological dynamics at play, highlighting a notable exposure of traders and an increased demand for derivatives as the SEC’s decision looms.

GOP’s Crypto Policy Bills

The crypto community is also keeping an eye on two bills proposed by Republicans. One bill focuses on regulating stablecoins at the federal level, while the other addresses the broader crypto market. Despite passing one committee, their fate in the Senate Banking Committee remains uncertain.

TD Cowen suggests that after elections, there’s a “lame duck” period that might be a good time for discussions and compromises on comprehensive crypto legislation.

Stablecoins: A Backup Plan?

TD Cowen views the bill about stablecoins as a possible alternative. If the broader regulations face challenges, this bill could become more prominent. Its success, however, depends on political negotiations and consensus.

Elena R

Elena is an expert in technical analysis and risk management in cryptocurrency market. She has 10+year experience in writing - accordingly she is avid journalists with a passion towards researching new insights coming into crypto erena.