The SEC Chairman, Jay Clayton discussed the possibility of issuing Bitcoin ETF’s in the early future. Various finance organizations are asking for approval to offer ETF based cryptocurrency products. But the SEC has not approved the first one yet. Jay Clayton declared that there still much uncertainty about the underlying markets to approve a bitcoin ETF anytime soon.
SEC Chairman Jay Clayton Denies ETFs
The SEC Chairman Jay Clayton explained why the SEC won’t approve a bitcoin-based ETF anytime soon. According to him, the cryptocurrency market still has a distinctive instability that prevents them from letting investors take unnecessary risks.
Jay Clayton stated that:
“What investors expect is that the trading in that commodity that’s underlying the ETF is trading that makes sense, is free from the risk or significant risk of manipulation,”
meaning that they still don’t trust in an unregulated market as the cryptocurrency market. He continued stating that:
“Those kinds of safeguards don’t exist in many of the markets where digital currencies trade.”
Apart from the possible manipulations of the market, the SEC Chairman declared that cryptocurrencies can be stolen easily while they are in exchanges, and with this lack of really safe custody solutions makes difficult to approve a bitcoin-based ETF.
The Road To Approval
This statement silences the reports from cryptocurrency related websites about an EFT approval before the new year. The SEC has now denied ten ETF proposals. The most recognized one was the one presented by the Winklevoss Twins and their regulated exchange Gemini. From the other nine, the Proshares and the Van Eck were the most important proposals also rejected.
The SEC has been tightening the grip and starting to enforce laws in cryptocurrency related cases. this month they fined their first decentralized exchange with $400K. This because they were selling unregistered securities. The SEC also fined $250K to two ICOs. They also forced these startups to return the money to their investors.
Cryptocurrency investors and experts were counting on the approval of an ETF to get the market out of the bearish phase that it is facing. However, according to this statement, it won’t happen soon. Also, the futures market exchange Bakkt will open its doors next January. So there will be no institutional rescue to the market. At least, not this year. Most investors bet on a quick recovery in the first quarter of the next year with the injection of fresh institutional money to the market.