Appearing in a conference in New York on Nov. 27, Jay Clayton, the chairman of the Securities and Exchange Commission claimed that it’s highly unlikely his agency will be allowing a Bitcoin ETF anytime soon. He cites the lack of investor protection within the crypto market as the biggest concern among the regulators.
Crypto Can Be Easily Stolen Or Manipulated In Exchanges
Clayton emphasized that his agency was worried that crypto coins could be easily stolen or manipulated on exchanges. So he believes that these two issues have to be addressed before the agency approves a Bitcoin ETF.
In an interview with Glenn Hutchins, the co-founder of Silver Lake, he makes it clear why the agency has been so reluctant to approve the ETF’s despite many applications being sent its way.
“What investors expect is that the trading in that commodity that’s underlying the ETF is trading that makes sense, is free from the risk or significant risk of manipulation. Those kinds of safeguards don’t exist in many of the markets where digital currencies trade.”
The agency has turned down a series of bids to list Bitcoin ETF’s. In August the SEC rejected nine applications from three different applicants in the process dashing the hopes of the backers who view the products as a critical step to public investment.
Two of the rejected ETF proposals at the time belonged to ProShares. At the time, the agency stated:
“Among other things, the Exchange has offered no record evidence to demonstrate that bitcoin futures markets are ‘markets of significant size.’ That failure is critical because, as explained below, the Exchange has failed to establish that other means to prevent fraudulent and manipulative acts and practices will be sufficient, and therefore surveillance-sharing with a regulated market of significant size related to bitcoin is necessary.”
Also, recently the SEC has brought several enforcement cases to crack down on ICOs. According to Clayton, these platforms are rife with fraud.