Securities and Exchange Commission (SEC) Chairman Jay Clayton revealed today that the commission is not yet comfortable with the idea of a Bitcoin (BTC) or other cryptocurrency ETF due to the current lack of market surveillance.
“What investors expect is that trading in the commodity that underlies that ETF makes sense and is free from the risk of manipulation,” Clayton said while speaking at the Consensus: Invest conference in Manhattan. “It’s an issue that needs to be addressed before I would be comfortable.”
While major stock exchanges like the New York Stock Exchange and the Nasdaq have the infrastructure in place to monitor, prevent and investigate improper trading activity, Clayton states this is currently missing from the cryptocurrency market.
In addition to improving market surveillance, Clayton believes that custody also needs to be properly addressed before moving forward with an ETF approval.
“We’ve seen some thefts around digital assets that make you scratch your head,” Clayton stated. “We care that the assets underlying that ETF have good custody and that they’re not going to disappear.”
In addition to touching on the current state of ETFs, Clayton provided additional insights into the ongoing crackdown against initial coin offerings (ICOs), which recently saw the SEC take action against Airfox and Paragon.
“You should start with the assumption that you’re starting with a securities offering,” Clayton put simply.