In a recent interview with CNBC, former Securities and Exchange Commission (SEC) Chairman Jay Clayton said that he believes the SEC should approve spot Bitcoin exchange-traded funds (ETFs), which are funds that track the price of Bitcoin directly and allow investors to buy and sell the cryptocurrency without having to deal with intermediaries or custody issues.
Clayton, who led the SEC from 2017 to 2020, said that he thinks the agency has done a good job in regulating the crypto space, but that there is still room for improvement. He said that one of the areas where the SEC could provide more clarity and certainty is in the approval of spot Bitcoin ETFs, which have been repeatedly rejected by the regulator over concerns about market manipulation, fraud, and lack of transparency.
I think we’re at the point where these products can be offered in a way that meets the investor protection standards that we apply to other products,” Clayton said. “I think there’s enough maturity in this market that we can have spot ETFs.
Clayton’s comments come at a time when the SEC is facing increasing pressure from the crypto industry and lawmakers to approve spot Bitcoin ETFs, especially after the agency greenlighted several futures-based Bitcoin ETFs in October. Futures-based ETFs track the price of Bitcoin futures contracts, which are derivatives that expire at a certain date and are traded on regulated exchanges. While futures-based ETFs offer some exposure to Bitcoin, they also introduce additional costs and risks, such as contango, rollover, and leverage.
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Many crypto advocates argue that spot Bitcoin ETFs would be more beneficial for investors, as they would offer lower fees, higher liquidity, and more accurate price discovery. They also claim that spot Bitcoin ETFs would boost the adoption and innovation of the crypto sector, as they would attract more institutional and retail investors to the market.
However, the SEC has not yet shown any signs of changing its stance on spot Bitcoin ETFs. In fact, the agency has recently delayed or rejected several applications for spot Bitcoin ETFs from various firms, such as VanEck, Valkyrie, WisdomTree, and Kryptoin. The SEC has cited various reasons for its decisions, such as insufficient information, inadequate surveillance agreements, and unresolved legal questions.
The SEC’s reluctance to approve spot Bitcoin ETFs has also drawn criticism from some lawmakers, who have urged the agency to act more swiftly and transparently on the matter. For instance, Senator Cynthia Lummis, a Republican from Wyoming and a vocal supporter of crypto, said in a tweet that she was “disappointed” by the SEC’s rejection of VanEck’s spot Bitcoin ETF proposal, and that she hoped the agency would “reconsider its approach.”
Clayton, who is now an advisor for One River Asset Management, a firm that invests in crypto assets, said that he respects the SEC’s current leadership and that he is not trying to influence their decisions. He said that he is simply sharing his personal views based on his experience and knowledge of the market.
“I’m not second-guessing what they’re doing,” Clayton said. “I’m just saying that from my perspective, having lived in this space for quite some time, I think we’re ready for this product.”