As the crypto market heats up in anticipation of a bitcoin spot ETF approval in the U.S., Katherine Dowling, general counsel and chief compliance officer at Bitwise Asset Management, is expecting good luck in the new year.
“I have great hopes for 2024,” Dowling said on TechCrunch’s Chain Reaction podcast. “My spidey sense is that they’re looking at January.”
The SEC missed its Friday deadline to appeal the August court decision regarding converting Grayscale’s Bitcoin Trust (GBTC) into a bitcoin spot ETF.
There have been a lot of obstacles in the way, including the lawsuit, that probably inhibited dialogue with regulators. “So the fact that we have resolution for that and that most recently they’re not taking an appeal stance is actually a great step forward.”
Dowling also noted there has been some engagement from the SEC with crypto S-1 filings, and amendments have been made there, too. “That all suggests some forward motion, and we had some hints that there wasn’t going to be an appeal” due to prior talks of a potential government shutdown.
Bitwise is a crypto asset manager that is known for creating the world’s largest crypto index fund. The firm also filed for a bitcoin spot ETF in the U.S., making it one of a number of firms, like BlackRock, whose applications are pending after the SEC delayed its decisions.
https://techcrunch.com/2023/08/17/bitcoin-spot-etf-crypto-demand/
“Frankly, having more filers at once is what’s best if you’re going to approve a product; that’s what’s best for investors because then they have a wide array of choices,” Dowling said. “If you’re going to approve it, line us up all at once, so that the investor has the best opportunity to survey the offerings and go with what they think best fits their profile.”
SEC oversteps
In past career roles, Dowling worked very closely with the SEC as a federal prosecutor for 11 years and as assistant U.S. attorney, with her last government gig in the economic crimes unit of the U.S. attorney’s office for the Northern District of California.
But there’s a question of what the current mission for the agency is in regards to the sector, as it differs from one administration to another. “There’s a divergence between what the staff is trying to do and get right versus what they’re being guided to work on and how to do that,” Dowling said. “The SEC has been very active in a number of areas, not just within crypto . . . [but] I do think there’s been some big oversteps with the current SEC.”
Dowling said the SEC can’t overstep its jurisdiction and try to “grab areas that maybe shouldn’t be within their purview.”
She thinks that the collapse of FTX has had an impact on regulators’ view on the crypto industry. “We were on a good pace to get toward some more regulatory clarity,” but the downfall of the crypto exchange took the industry “many steps back,” Dowling said.
Without the FTX collapse, she believes that there would have already been legislation around the industry in regards to subsectors like bitcoin spot ETFs and stablecoins. Even though FTX co-founder Sam Bankman-Fried’s trial is ongoing, Dowling thinks the FTX debacle won’t affect future regulators’ or legislators’ decisions as much given that “the big bombs have already exploded and that’s already baked in.”
Even though the industry has been slowly moving toward regulation, the future looks bright. Dowling still holds hope that the crypto industry — and those advocating for it — are “pushing in the right direction.”
This story was inspired by an episode of TechCrunch’s podcast Chain Reaction. Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to hear more stories and tips from the entrepreneurs building today’s most innovative companies.
Connect with us:
- On X, formerly known as Twitter, here.
- Via email: chainreaction@prod22.techcrunch.com
