Recent reports reveal that the former chair of the U.S Securities and Exchange Commission (SEC), Jay Clayton, has stated that a Bitcoin (BTC) spot exchange-traded fund (ETF) could potentially be approved if financial institutions can demonstrate that the product would replicate the conditions of the Bitcoin futures market.
Bitcoin futures market conditions replicated
Despite previous submissions from Grayscale, VanEck, and Cathie Wood’s ARK Invest, no US Bitcoin spot ETF application has been approved yet. However, the SEC recently gave the green light for the launch of the first Bitcoin futures ETFs in October 2021..
Clayton served as SEC chair from 2017-2020. In a new interview with CNBC, he outlined why he believed the SEC first approved those BTC futures ETFs rather than spot products.
“I think that when the SEC approved the futures-based ETF, they said ‘Let’s look at the futures market, we see the surveillance, we see the protections in that market for the end investor that are sufficient. We don’t see them in the spot market, so we’re going to make that distinction.’
I think what the institutions are arguing is that those distinctions have gone away, and now the spot product is actually less drag, more efficient for the investor. So if there’s not that delta in regulation, not that delta in what I can [call] efficacy, the spot should be approved. That’s the argument that’s going on right now.”
According to Clayton, if financial institutions are able to demonstrate these points, they may have a good chance of successfully launching a BTC spot ETF.
“What I would say is, if they’re right, that you can demonstrate that the spot market has similar efficacy to the futures market, it would be hard to resist approving a Bitcoin ETF.”
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