To say that advocates of crypto are dedicated would be putting it lightly. Since Bitcoin’s earliest blocks, true innovators have discovered value in the crevices of the cryptocurrency world, finding it logical to latch onto this nascent industry in times of despair and euphoria alike. While this zealous faith in this decade-old innovation has taken many forms over the years, in the recent downturn, investors have sought a newfound light at the end of the tunnel — a U.S.-based, fully-regulated Bitcoin (BTC) exchange-traded fund (ETF).
But, as recently divulged by a commissioner from the U.S. Securities and Exchange Commission (SEC), the advent of a crypto-backed ETF might be nothing more than a quixotic dream, or at least for now.
SEC’s Clayton On Bitcoin ETF: Market Surveillance, Custody Still A Concern
Speaking at the Consensus Invest Conference in New York, SEC incumbent Jay Clayton, who assumed office in May 2017, exclaimed that he isn’t ready to greenlight a Bitcoin ETF.
Giving his heated statement some credence, while referencing the SEC’s role of mitigating investor risk in financial markets, Clayton first brought up the lack of market surveillance in crypto markets.
While blockchains are predicated on a semblance of transparency, in juxtaposition to this nature, the SEC decision-maker noted that there’s an evident lack of bonafide surveillance implementations on crypto platforms at large. Talking with CNBC’s Bob Pisani, also commenting in response to a query regarding a Bitcoin ETF’s prospects, Clayton stated:
“Those kinds of [surveillance] safeguards do not exist currently in all of the exchange venues where digital currencies trade… It’s an issue that needs to be addressed before I would be comfortable.”
He then explained that investors expect that a commodity-backed fund is free from manipulation, alluding to his sentiment that Bitcoin is susceptible to questionable price action on a group’s whim, or through orders executed by bad actors.
Along with his fears regarding proper surveillance measures, Clayton also touched on his opinion that while strides have been taken towards impenetrable custody solutions, these crypto-centric services still are lacking.
Related Reading: Regulatory Green Light: Coinbase Custody to Launch in New York State
Discussing the Bitcoin ETF applications on Consensus Invest’s stage, the recently-appointed SEC commissioner brought attention to “some thefts around digital assets that will make you scratch your heads,” likely referencing situations where startups’ cold storage wallets have been accessed without authorization. Keeping this in mind, Clayton closed off his comments on the matter by noting that storage solutions “need to be improved and hardened.”
Interestingly, Clayton’s comments on the cryptocurrency market contradict statements released by VanEck’s in-house Bitcoin ETF consortium, who sat down with SEC representatives in an October closed-door meeting.
As reported by NewsBTC previously, through a slide titled “VanEck SolidX Bitcoin Trust Should Be Approved,” VanEck’s crypto branch divulged that monumental progress has been made towards solving regulatory qualms, seemingly knocking down the SEC’s most-pertinent concerns in one fell swoop. Most notably, the investment firm claimed that there now “exists a significant regulated derivatives market for Bitcoin,” before adding that CBOE’s rules dictate that market surveillance will be of utmost priority in the proposed vehicle.
Still, with Clayton’s most recent bout of criticism fresh in investors’ minds, the fear that an ETF is still months, if not years away has been rekindled. But then again, there’s a silver lining, as the SEC’s 4,600 employees aren’t known to have homogeneous views on specific markets and products, whether nascent or otherwise.
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