The Biden administration may be preparing for a strategic pivot on crypto regulations, potentially aligning more closely with the digital asset community ahead of the upcoming November election. This speculation follows recent developments indicating a possible approval of a spot Ether ETF, a significant change in attitude by the Securities and Exchange Commission (SEC).
On Thursday, Bloomberg ETF analysts James Seyffart and Eric Balchunas dramatically increased their forecast for the approval of a spot Ether ETF from 25% to 75%, citing sources close to the SEC. The analysts reported a sudden change in sentiment within the SEC, possibly reflecting a broader political recalibration by the Biden administration in response to former President Donald Trump’s endorsement of Bitcoin and cryptocurrencies.
This news sent shockwaves through the financial and crypto markets, with Ethereum and other altcoin prices experiencing double-digit increases. In particular, the approval process requires the SEC to green light both the 19b-4s, which involve changes in exchange rules, and S-1s, the registration statements required for ETFs to launch. This move is seen as the first concrete sign of the Biden administration’s reorientation towards a more crypto-friendly policy framework.
Crypto community speculates about 180-degree U-turn
Following the news, several experts came forward and speculated about a complete turnaround of the Biden administration. Haseeb Qureshi, managing partner at Dragonfly, said via X: “I’ve been saying for weeks that Biden is going to soften on crypto going into the election. He doesn’t want to lose votes in a tight race on what is ultimately a minor issue to him. ETF is the first sign of this—I think we’re seeing other agencies soften in the next few months as well.”
This sentiment suggests a tactical adjustment rather than a full policy reform, aimed at mitigating political risks rather than combating digital currencies.
Sam Lyman, Director of Public Policy at Riot Platforms, highlighted a series of crypto-friendly shifts, including Trump’s open support for digital assets, the SEC’s policy reversal on the Ether ETF, and significant legislative developments.
Lyman provided a list of recent victories for the crypto sector, such as the repeal of SAB 121 and the resignation of the FDIC chairman, seen as a result of political pressure from pro-crypto factions.
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Can you feel the atmosphere changing, anon?
In the last two weeks:
>Trump embraces digital assets, puts Biden on the defensive>SEC reverses course on ETH ETF as approval looks imminent>SAB 121 repeal passes Congress with dozens of Dems defecting from Warren’s anti-crypto army…
— Sam Lyman (@SamLyman33) May 20, 2024
Jake Chervinsky, chief legal officer at Variant Fund, commented on the potential implications of the ETF approval beyond its market impact. “If the mock ETH ETF is approved, it will be a real shock to everyone I know in DC who is close to this process. That doesn’t mean it won’t happen. This means that approval could signal a major shift in US crypto policy after the SAB 121 vote, perhaps more important than the ETF itself,” Chervinsky explained.
Vijay Boyapati and Adam Cochran both agreed with Chervinsky. Boyapati, a well-known crypto expert, pointed out the political calculations involved, suggesting that Democrats are recalibrating their stance to mitigate election losses.
“The sudden concern by the SEC about the Ethereum ETF approval is nakedly political. The Democrats saw that their hostility could potentially cost them the election and Biden probably ordered the SEC to be friendlier despite the [Senator] Warren wing of the party,” Boyapati noted.
Cochran, partner at CEHV, elaborated on this, indicating a broader realization within the Democratic Party that a pro-crypto stance could appeal to a broader voter base, including moderates and independents focused on financial policy.
He noted via X:
Warren had a stranglehold on financial policy among the Dems. This shows that the WH and Senate Dems are starting to realize that this is toxic to their election chances. […] This is a big and fast shift in crypto policy, […] If it’s accurate, it’s more important than the ETF itself. This could mean winter is over and it’s time for an American renaissance in crypto!
At press time, ETH was trading at $3,659, up 18% in the last 24 hours.
Featured image from Medium / Joe Biden, chart from TradingView.com
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