- Jay Clayton shared his opinion during an interview with CNBC on Monday.
- The former SEC chair says if applicants demonstrate efficacy and have surveillance, it would be hard for the SEC to deny a spot Bitcoin ETF.
- BlackRock, Fidelity and others have market surveillance agreements with Coinbase.
The US Securities and Exchange Commission (SEC) has so far denied all the applications for a spot Bitcoin ETF to come before it.
But now might be the time the regulator gives a seal of approval to the product, former SEC Chair Jay Clayton said on Monday.
“If they’re right that the spot market has similar efficacy to the futures market, it would be hard to resist approving a bitcoin ETF,” Clayton told CNBC’s Squawk Box.
"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
SEC’s approval of futures ETFs
This is the argument that applicants have put forth, particularly with BlackRock, Fidelity and others taking steps to comply with requirements previously cited as reasons for SEC’s disapproval.
Notably, proposals by the Cboe and Nasdaq have included market surveillance agreements – the so-called surveillance sharing agreement (SSA) with major cryptocurrency exchange Coinbase.
Noting this, and the fact that the SEC has approved futures-based ETFs on this basis, Clayton added:
“When the SEC approved a 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 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 that the spot product is now less drag, more efficient for the investor.”
With no delta in regulation and efficacy, the SEC will have to approve a first spot Bitcoin ETF for the US market. As highlighted earlier, Clayton believes it would be “hard” for SEC to “resist” a spot ETF any further if applicants prove efficacy.
As CoinJournal reported last week, analysts at $650 billion asset manager Bernstein noted that chances of a spot Bitcoin ETF approval are “fairly high.”
The crypto market has been largely optimistic of an approval ever since BlackRock filed its proposal in mid-June. The optimism was reflected in the price of Bitcoin rallying after the news to reach a new year-to-date high above $31k last month.