Investment bank TD Cowen has predicted that the U.S. Securities and Exchange Commission (SEC) will approve a spot bitcoin exchange-traded fund (ETF) by the January 10 deadline, describing the move as a 'political necessity.' In a note published Tuesday, the bank's Washington Research Group, led by analyst Jaret Seiberg, argued that the SEC needs to solidify its role as the primary crypto regulator before Congress considers more comprehensive cryptocurrency legislation.
'Political Necessity' and Regulatory Positioning
“To us, this is a political necessity as the agency needs to cement its role as a crypto regulator before Congress consider broader crypto legislation,” Seiberg wrote. The bank also noted that the SEC likely wants to avoid another legal defeat over its refusal to approve bitcoin ETFs. Last August, the SEC lost a court battle against Grayscale Investments, which sought to convert its bitcoin trust (GBTC) into a spot ETF. The court ordered the SEC to reconsider its initial denial, a ruling that has significantly increased pressure on the regulator to approve a spot product.
By approving a spot bitcoin ETF now, TD Cowen believes the SEC can preemptively assert its authority over the crypto market, positioning itself as the lead agency for investor protection in any future legislative framework. This strategy would allow the SEC to maintain regulatory control even as Congress drafts broader crypto laws.
Congressional Legislation and the Path Forward
Congress is currently considering multiple crypto-related bills. In 2023, the House Financial Services Committee advanced four digital asset bills: the Financial Innovation and Technology for the 21st Century Act, the Blockchain Regulatory Certainty Act, the Clarity for Payment Stablecoins Act, and the Keep Your Coins Act. TD Cowen sees a potential window for lawmakers to negotiate a comprehensive crypto market structure bill during the 'lame duck' session after the November elections. A lame-duck session occurs between the election and the inauguration of a new government.
“To get the Senate and White House on board, the SEC will need to be the lead on investor protections,” the bank emphasized. This suggests that the SEC's proactive approval of a spot bitcoin ETF could strengthen its bargaining position in future negotiations with lawmakers, ensuring that its regulatory framework remains central to the U.S. crypto landscape.
The SEC faces a critical deadline on January 10 for the spot bitcoin ETF application filed by Cathie Wood's Ark Invest and 21shares. If approved, it would mark the first U.S.-listed ETF directly holding bitcoin, a milestone long awaited by the crypto industry and seen as a catalyst for mainstream adoption.