By Michael Scott
The former chairperson of the US Securities and Exchange Commission (SEC) admitted that Bitcoin exchange-traded fund (ETF) approval is likely if the applicant proves it provides an efficient channel for investors to acquire Bitcoin.
Former SEC Chair Jay Clayton revealed in the Monday, July 10 interview at CNBC that it could become challenging for the regulators to resist the approval of spot Bitcoin ETF. Such instances could arise where the applicant demonstrates the product has similar functions as those executed by futures.
Bitcoin ETF Approval Likely if it Matches Market’s Efficacy
Clayton indicated that the it would involve convincing SEC through evidence that the spot product application matches the future market’s efficacy to secure approval.
The former head of the securities watchdog agency confessed his extreme skepticism of Bitcoin trading when serving as the SEC boss. He admitted that the stance is gradually changing now that major players within the traditional finance ecosystem desire to include their names in the recent wave of spot ETF applications.
Although noncommittal on the applicant, he indirectly revisited the BlackRock desire for the Bitcoin ETF application as a remarkable fete. BlackRock commands the largest asset management that, in April 2023, was estimated at $9 trillion. The asset manager reapplied for the spot Bitcoin ETF after the June application was dismissed by SEC as inadequate.
The applications seek to provide institutional investors a channel to commit investment without direct exposure to Bitcoin. The approval of the Bitcoin ETF would help unlock $30 Trillion investment potential in BTC.
Bitcoin ETF Applications Must Resolve Surveillance and Price Manipulation for Approval
Clayton identified the ETF as an investment vehicle allowing investors to track a defined asset’s underlying price. It will enable the investors to acquire foreign currency, crypto, or gold shares through the ETFs without owning the product.
Clayton considered spot Bitcoin ETF fueling excitement in the US as none exists. Wall Street’s regulator is cognisant of the desire for ETF applications. It dismissed previous ETF applications indicating that Bitcoin pricing is vulnerable to manipulation hence the reluctance to approve the product.
SEC tasked the applicants to clarify how they would oversee the surveillance-sharing agreement to avert fraud and price manipulation. The Garry Gensler-led agency imposed this requirement as fundamental to ensuring the fund issuers continually monitor the trading activities, clear activity, and customer identity.
Clayton’s optimistic remarks coincide with the BlackRock announcement of reapplying the spot Bitcoin ETF. It submitted the revised proposal that finalizes the surveillance agreement involving the leading US crypto exchange Coinbase.
SEC Tasked with Approving the Bitcoin ETF as Institutions File More Applications
Clayton considers the desire to have spot Bitcoin ETF approval as the awareness that it will facilitate investors to track Bitcoin pricing without directly assuming the crypto’s custody.
The optimism portrayed by the former SEC chair of Bitcoin ETF approval leans towards experts’ sentiments confident of likely approval for the pending applications. Fidelity Investments reapplied for the ETF joining Ark Invest, Bitwides, Invesco, and 21Shares in seeking the elusive approval. Also, Valkyrie, Wisdom Tree, and VanEck confirmed submitting their applications with the SEC.
Recently, SEC has come under attack from Gemini’s Winklevoss brothers for appearing to apply double standards. The criticism arises from approving the initial leveraged Bitcoin futures ETF applied by the Volatility Shares. It will allow investors to acquire shares betting on Bitcoin’s future price.