ETF Store President Nate Geraci suggested that the outcome of the U.S. election could significantly affect the ETF industry, particularly for crypto-related products.
What Happened: Geraci opined in a blog post for etf.com on Tuesday that, the new administration and Congress will influence key regulatory roles, including the appointment of the SEC chair, which could steer ETF developments.
He identifies three focal areas: crypto ETFs, share class structure and ETF taxation. While the SEC has recently approved spot Bitcoin and Ether ETFs, further crypto innovation under a Kamala Harris-led administration could face regulatory obstacles due to the Biden administration's tough stance on the crypto industry.
ETF taxation is another hot topic, with speculation that the election could revive discussions on removing the tax-deferral advantage for in-kind ETF redemptions, which currently enhances tax efficiency for ETF investors.
Also Read: Bitcoin, Ethereum ETFs Record Over $600 Million Net Outflows Ahead Of Election Day
Why It Matters: Over 30 fund companies, including BlackRock, have requested exemptive relief from the SEC to offer an ETF share class of existing mutual funds. The approval of this structure could be influenced by the election outcome, with industry insiders suggesting a Republican-controlled SEC would be more likely to approve.
The ETF industry plays a pivotal role in providing diverse investment products. Potential regulatory changes could reshape how ETFs are structured and taxed, impacting tax efficiency and innovation within the industry.
What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.
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