Bitcoin ETF: SEC is in no hurry for approval due to concerns

Jay Clayton, Chairman of the Securities and Exchange Commission (SEC), stressed at a conference in New York that it is still unlikely that a Bitcoin exchange-traded fund (ETF) will be approved in the near future.

The chairman of the Securities and Exchange Commission, Jay Clayton, is considered the man who can give the “green light” to approve a Bitcoin ETF. However, at a conference in New York, Clayton reiterated the same concerns that led the Securities and Exchange Commission to reject earlier Bitcoin ETF proposals, such as the Winklevoss twins’ Bitcoin ETF: Fear of market manipulation, lack of security measures and insufficient investor protection.

Clayton said as CNBC reports,

What investors expect is that trading the commodity underlying the ETF is a sensible trade, free of the risk or significant risk of manipulation. This kind of protection does not exist in many of the markets where digital currencies are traded.

Clayton also said he wanted to see better market surveillance and custody for digital currencies before he could befriend a crypto ETF. The New York Stock Exchange and the Nasdaq have surveillance systems in place that monitor, prevent and investigate abusive and manipulative activities on the exchanges. Clayton said:

This type of protection is not currently available on all exchanges where digital currencies are traded.

However, there are already “prime examples”. In April, Nasdaq announced a collaboration with Winklevoss’ Gemini exchange, which will gain access to Nasdaq’s monitoring technology through the deal.

The storage must be improved

Further concerns mentioned by Clayton related to the preservation or storage of digital assets. Clayton said to it:

We’ve seen some thefts about digital assets that make you scratch your head.

There are many custody solutions for crypto currencies that have either been announced or are already on the market. Fidelity said in October that it had set up its own company to handle the custody of crypto currencies and the execution of transactions for institutional investors. The companies Coinbase, Gemini, BitGo, Ledger and the Japanese bank Nomura are also working on such solutions, also for institutional investors. But Clayton still said that they “need to be improved and hardened”.

Approving a Bitcoin ETF could create a wave of confidence that will affect market prices and reverse the bearish trend. But until then, there still seems to be a lot of work to be done in the crypto market, if Jay Clayton is to be believed.