SEC Chairman Jay Clayton went on CNBC to discuss many topics. For the crypto space, however, the important part was when he talked about a potential ETF.
Yesterday on CNBC, SEC Chairman Jay Clayton went on to discuss topics ranging from their new broker regulation to cryptocurrencies, to Elon Musk. The conversation started out by the panel talking about the SEC’s new regulation that requires brokers to clearly state how and how much they will be getting paid.
After a few minutes on that, Kevin O’Leary changes the subject and says, “We have to ask you about cryptocurrencies. Where are you at on that? Because so many people want this to be a regulated space so we can issue ETFs…and yet there has been a real resistance.”
Jay Clayton’s response was to say that there is a clear difference between cryptocurrencies and tokens that are securities. He went on to say, “There are a couple of things we need to get comfortable with. The first is custody, it is a long-standing requirement in our market. If you say you have something, you really have it…The other thing that is important is when you look at the trading of these cryptocurrencies, a retail investor looks at them and says ‘that looks like a stock or a bond’. We have sophisticated rules and surveillance to ensure that people aren’t manipulating the stock market. Those cryptocurrency markets don’t have that. We are working hard to see if we can get there but I’m not going to just ‘flip a switch’ and say this is just like stocks and bonds because it is not.”
Clearly, the SEC doesn’t sound like it is ready to approve an ETF anytime soon and that’s ok. The SEC is finally understanding that cryptocurrencies are their own asset and can’t be grouped into stocks or bonds. Hopefully, they will change their minds about the space but in the meantime, don’t hold your breath.