Following the U.S. SEC delaying decisions on several spot Bitcoin exchange-traded funds, former commission chair Jay Clayton said he believed approval was still going to happen at some point.
U.S. Securities and Exchange Commission’s former chairman Jay Clayton has explained why he believes the approval of a spot Bitcoin exchange-traded fund (ETF) is inevitable. “It is clear that bitcoin is something that retail investors want access to, institutional investors want access to,” he stressed.
So what is Bitcoin ETF?
Based on the definition of an ETF, which is a type of pooled investment security that tracks a particular index, sector, commodity, or other asset, a Bitcoin ETF tracks the price of Bitcoin. They are pools of bitcoin-related assets offered on traditional exchanges by brokerages to be traded as ETFs. The intent behind these Bitcoin ETFs is to allow retail investors and investors not comfortable investing in cryptocurrencies an option to trade in them.
Challenges and regulatory hurdles faced by Bitcoin ETF proposals
Bitcoin’s price has recently experienced significant fluctuations. These price swings can largely be attributed to developments surrounding spot Bitcoin ETF applications for approval before the U.S. SEC.
In June, when BlackRock and several traditional financial institutions submitted an ETF application, Bitcoin experienced its most significant price surge in over a year, breaching the $30,000 mark. This rally was primarily attributed to the heightened prospects of a spot Bitcoin ETF approval, with several market observers urging the regulator to approve all the applications.
Subsequently, BTC’s price movements have closely mirrored developments related to spot ETFs. Following an 11% dip fueled by rumors of Tesla divesting its Bitcoin holdings, it rebounded when the U.S. Appeal Court sided with Grayscale in its legal battle against the SEC.
However, this upward momentum proved short-lived as it soon retraced to the $25,000 range due to the SEC’s decision to delay its verdict on a litany of pending BTC ETF applications, citing the need to assess the proposed rule changes thoroughly.
The Commission has yet to approve a spot BTC ETF in the U.S. because of concerns over market manipulation, among other factors.
Former SEC Chairman’s Perspective
Former U.S. SEC Chair Jay Clayton offered his perspectives on the likelihood of the securities regulator approving a spot bitcoin ETF in an interview with CNBC on Friday. This followed the SEC delaying its decisions on several bitcoin ETF applications, including one proposed by Blackrock, the world’s largest asset manager.
Without stating whether he would approve a spot Bitcoin ETF if he were still the chairman of the SEC, Clayton said regarding whether the SEC will approve a spot bitcoin ETF, “Approval is inevitable. The dichotomy between a futures product and cash product can’t go on forever.”
So far, the securities regulator has not approved a spot bitcoin ETF even though it has approved some bitcoin futures ETFs.
Clayton explained that when he was the chairman of the SEC, the securities regulator was “uncertain whether cash trading was so easily manipulable that retail folks should not have access to it.” However, he stressed: “There are now large institutions with surveillance mechanisms who are coming in and saying: ‘No, that’s not the case.’ We can rely on the efficacy of the cash market to a sufficient extent where we believe it’s a legitimate product. That’s a shift.”
Bitcoin ETFs positive swing
In an Aug. 31 post on X, Milne stated that a U.S. spot Bitcoin ETF was a distraction. According to him, while an ETF approval would be nice for the industry, the flagship digital asset would still perform great without it.
Alistair Milne, the chief investment officer of Altana digital currency fund, said Bitcoin (BTC) does not need the U.S. to approve a spot exchange-traded fund (ETF) for its value to reach $100,000.
Milne said: “[A BTC ETF is] nice to have, but we didn’t need one to get us to $69,000 and we don’t need one to get to $100,000.”
Earlier this week, the U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of Grayscale Investments against the SEC regarding the crypto asset manager’s proposal to convert its flagship bitcoin trust (GBTC) into a spot bitcoin ETF.
