Former SEC Chair Highlights Conditions For Bitcoin ETF Approval

Former SEC Chair Highlights Conditions For Bitcoin ETF Approval

Jay Clayton, the former chairman of the US Securities and Exchange Commission (SEC), said that it would be difficult for regulators to turn down the approval of a Bitcoin ETF if it functions the same way as a futures ETF.

On Monday, Clayton spoke in an interview on CNBC and said that the SEC would give its approval for a spot Bitcoin exchange-traded fund (ETF) if it shows efficacy similar to the futures market.

Former chair

The former SEC boss said that when he had been leading the regulatory body, he had been skeptical of where Bitcoin trading was concerned.

But, he said that he found it truly remarkable that even prominent players in the traditional finance world were interested in introducing their own spot ETF product applications.

Last month, the largest asset manager in the world, BlackRock, had also submitted its own application for a spot Bitcoin ETF to the SEC.

This had driven large institutional investors to also begin investing in the crypto space. Clayton said that resisting the approval of a Bitcoin ETF would be difficult if the futures market and the spot market have a similar efficacy.

Bitcoin ETF

An investment vehicle, the purpose of an ETF is to keep track of the price of the underlying asset. Thanks to ETFs, investors are able to purchase shares of foreign currencies, gold, and crypto without actually having to own them.

Since there is no spot Bitcoin ETF available in the United States as yet, it has become quite a hot topic these days.

The biggest regulator on Wall Street claims that it is possible to manipulate the price of Bitcoin. Therefore, they have not been in favor of approving such a product.

According to the SEC, the applicants need to provide clear details about how a surveillance-sharing agreement will be managed.

The purpose of the agreement is to deter manipulation and fraud by ensuring that the market trading activity, customer identity, and clearing activity is being monitored by the fund issuer.

The demand

Last week, BlackRock submitted yet another proposal to the SEC for its Bitcoin ETF in which it disclosed that it had finalized a surveillance agreement with the largest crypto exchange in the US i.e. Coinbase.

Investors are interested in putting their money in such as Bitcoin ETF because it would provide them the opportunity of investing in the pioneer crypto without having to actually maintain custody of the asset.

Last month, the securities regulator granted approval for the first leveraged Bitcoin Futures ETF called BITX, the Volatility Shares 2x Bitcoin Strategy ETF.

Thanks to this product, investors would be able to purchase shares betting on the price of Bitcoin in the future.

Previously, the SEC has turned down applications by numerous companies for a spot Bitcoin ETF, citing the risks of manipulation and fraud that would put investors at risk.

In comparison, other countries like Canada have given an approval for such an investment product.