Former SEC Chairman Jay Clayton today said that regulators would find it “hard to resist” approving a spot Bitcoin exchange-traded fund (ETF) if such a product performs the same functions as a futures one.
Speaking in a CNBC interview Monday, Clayton said that the SEC would have to see that a spot product application would provide “similar efficacy to the futures market” in order to approve it.
He argued that although he was very skeptical of Bitcoin trading when he was the SEC boss, he now finds it “pretty remarkable” that major players in traditional finance want to put their name on spot ETF applications.
BlackRock, the world’s largest asset manager, last month applied to the SEC for a spot Bitcoin ETF, leading institutional investors to pour money into the space.
“If they’re [applicants] right—that the spot market has similar efficacy to the futures market—it would be hard to resist approving a Bitcoin ETF,” Clayton said.
"I was very skeptical with trading in the #bitcoin market when I was SEC Chair," says Jay Clayton. "But if you can demonstrate that the spot market has similar efficacy to the futures market, it would be hard to resist approving a #bitcoin ETF." pic.twitter.com/mig05ZUwIL
— Squawk Box (@SquawkCNBC) July 10, 2023
An ETF is a type of investment vehicle that tracks the underlying price of an asset. Investors are able to buy shares of gold, foreign currencies or crypto via ETFs—instead of owning the product themselves.
A spot Bitcoin ETF is a hot topic right now as one does not yet exist in the States;
Wall Street’s biggest regulator claims that the price of Bitcoin can be manipulated so has been reluctant to approve such a product.
The SEC also claims that applicants need to be clearer on how they’d manage a “surveillance-sharing agreement” meant to deter fraud and manipulation by ensuring the fund issuer is monitoring market trading activity, clearing activity and customer identity.
BlackRock last week applied again to the SEC with a new proposal finalizing a surveillance agreement with Coinbase, America’s largest cryptocurrency exchange.
Investors want access to such a spot Bitcoin ETF because it would allow them to get involved with Bitcoin without having to deal with the custody of the asset, according to experts.
The SEC last month approved America’s first first leveraged Bitcoin futures ETF—the Volatility Shares 2x Bitcoin Strategy ETF (BITX).
It allows investors to buy shares that bet on the future price of Bitcoin.