The Biden administration may be preparing for a strategic pivot on crypto regulations, potentially aligning closer 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 stance 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 has sent shockwaves through the financial and crypto markets, with Ethereum and other altcoin prices experiencing double-digit surges. Notably, the approval process requires the SEC to green-light both the 19b-4s, which involves exchange rule changes, and S-1s, the registration statements needed 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 On 180-Degree U-Turn
Following the news, several experts came forward, speculating on a complete turnaround from the Biden administration. Haseeb Qureshi, Managing Partner at Dragonfly, stated via X: “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 over what is ultimately a minor issue to him. ETF is the first sign of this—I think we see other agencies also softening in the next few months.”.
This sentiment suggests a tactical adjustment rather than a full policy overhaul, aimed at mitigating political risks rather than championing digital currencies.
Sam Lyman, Director of Public Policy at Riot Platforms, highlighted a series of crypto-friendly shifts, including Trump’s overt 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 Chair, seen as a result of political pressures from pro-crypto factions.
Can you feel the vibe shift, anon?
In the last two weeks:
>Trump embraces digital assets, putting 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 spot ETH ETF is approved, it will be a true shock to everyone I know in DC who’s close to this process. That doesn’t mean it won’t happen. It means 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 renowned crypto expert, pointed out the political calculations at play, suggesting the Democrats were recalibrating their stance to mitigate electoral losses.
“The abrupt about-face by the SEC on the Ethereum ETF approval is nakedly political. The Democrats have seen that their hostility could potentially cost them the election and Biden likely commandeered the SEC to be more friendly despite the [Senator] Warren wing of the party,” Boyapati remarked.
Cochran, partner at CEHV, expanded on this, indicating a broader realization within the Democratic Party that a pro-crypto stance could appeal to a wider voter base, including moderates and independents focused on financial policies.
He remarked via X:
Warren had a strangle hold over financial policy under the Dems. This is showing the WH and Senate Dems are starting to realize that’s toxic to their election odds. […] This is a big and rapid shift in crypto policy, […] If that’s accurate, it’s more important than the ETF itself. It could mean the winter is over and it’s time for a US renaissance in crypto!
At press time, ETH traded at $3,659, up 18% within the last 24 hours.
Featured image from Medium / Joe Biden, chart from TradingView.com
