Progress is being made in the cryptocurrency space to allow the launch of a Bitcoin ETF. However, Jay Clayton says that concerns persist inside the U.S. Securities and Exchange Commission (SEC).
Clayton, president of the SEC, stated that there is progress with the Bitcoin exchange-traded fund, and that the market has taken steps to address the concerns of the SEC. With respect to approving an ETF fund in Bitcoin, he said that there is still work to be done.
Some media such as CoinGape have said that this implies that the waiting time could be lengthened even more.
Good and Bad News
When asked yesterday whether there is progress to allow the launch of a Bitcoin ETF, Clayton replied affirmatively, thus reassuring for the future. In this regard, he said that the SEC is involved in this, but they need to feel comfortable about some things. The first is custody, which is a long-standing requirement in the market, and so having something means really having it.
It seems that not everything in the garden is rosy, due to the persistence of Clayton’s concerns about the decision to approve the aforementioned product.
Clayton noted two reasons for being worried: the lack of an adequate cryptocurrency custody provider and the threat of price manipulation in unregulated exchanges.
The President of the SEC said in November of last year that concerns about price manipulation had been a key obstacle to giving the financial product a green light, along with questions about how custody operates.
On September 9th, Clayton reiterated his concerns by saying that an even more difficult question, given that they trade heavily in unregulated exchanges, is how they can ensure that those prices will not be subject to significant manipulation. He explained that people need to answer these difficult questions for them to be sure that they are offering the right kind of product.
Is the Time Drawing Near?
Clayton’s observations arrived only a few weeks before the SEC’s approval or rejection of a couple of Bitcoin ETF proposals.
Bitwise Asset Management, which submitted one of the proposals with NYSE Arca, has published a series of reports throughout the year to convince the SEC that the market is mature enough to support that product.
VanEck/SolidX submitted the other proposal with Cboe BZX. It should be noted that it had been submitted in 2018, when it was seen as a strong competitor to become the first ETF approved by the SEC. Although it was withdrawn during the prolonged closure of the government in early 2019, it was later resubmitted.
The SEC has postponed decisions on both ETF proposals, but faces a deadline of October 13th for Bitwise and October 18th for VanEck/SolidX.
An ETF remains essential as futures trading and trust funds have limited market adaptability. ETF shares can be included in the portfolio of an average investor. It can also be included with mutual funds and other benefits.
According to CoinGape, the SEC deals primarily with the risk and security of retail investors. He thus adds that he is taking a slow and calculated approach. Interestingly, the first Gold ETF was launched in 2004 but, given the long story, an ETF for Bitcoin could take longer.
By Willmen Blanco