Spot Bitcoin ETF Approvals: TD Cowen Cites Political Necessity for SEC Action

The post Spot Bitcoin ETF Approvals: TD Cowen Cites Political Necessity for SEC Action appeared first on Coinpedia Fintech News

TD Cowen predicts that the SEC is poised to greenlight a spot Bitcoin ETF by the January 10 deadline, deeming it a “political necessity.” Recent reports suggest that the window for approval is opening, with projections indicating a crucial period of January 4, potentially aligning with a hard deadline from January 5 to 10.

Political Necessity, TD Cowen

TD Cowen, the American multinational investment bank, presents a unique perspective on the approval timeline, asserting that the US Securities and Exchange Commission (SEC) is likely to greenlight spot Bitcoin ETFs by January 10 as a “political necessity.” 

According to the investment bank, the SEC has a vested interest in establishing itself as an adept crypto regulator before Congress commences broader legislative discussions. Moreover, TD Cowen speculates that the SEC would aim to avoid a negative mark on its record regarding spot Bitcoin ETF-related decisions.

In response to FOMO (fear of missing out) and the ‘buy the rumor, sell the news’ situation, the Securities and Exchange Commission (SEC) will approve Bitcoin ETFs in the short term.

Cathie Woods’ Ark Invest

With a deadline looming on January 10, Cathie Woods’ Ark Invest/21Shares Spot Bitcoin ETF is being positioned as a harbinger of the SEC’s decision. Analysts suggest that beyond the technicalities of approval, there’s a political chess game at play. 

TD Cowen hints at a potential joint approval to avoid any perception of the SEC favoring a particular entity, showcasing a delicate balance to maintain regulatory impartiality.

Contrary to the bullish sentiment surrounding ETF approvals, a report by K33 Research’s Vetle Lunde introduces a layer of uncertainty. Lunde’s analysis indicates a 75% probability of a sell-the-news scenario, with a cautious 20% chance of approval sparking a market surge. 

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

Beyond ETFs Approval

In addition to the ETF focus, attention is drawn to two Republican-led bills addressing crypto policy. One bill seeks to regulate stablecoins on a federal level, while the other takes a comprehensive approach to the crypto market structure. 

Despite passing the House Financial Services Committee, the bills face challenges reaching the Senate Banking Committee.

TD Cowen, however, introduces an intriguing prospect—an opportunity for negotiations during the ‘lame duck’ period after an election. This window, characterized by political transitions, could be pivotal for brokering deals on comprehensive crypto market structure legislation. 

Regarding the stablecoin bill, TD Cowen views it as a fallback option if broader legislation faces difficulties, emphasizing that success will depend on political compromises.