SEC chair: Crypto ETF approval is dependent on exchanges being ‘free from manipulation’

Jay Clayton said Tuesday the approval of cryptocurrency exchange-traded funds (ETFs) will continue to hang in the balance until manipulation and custody issues are addressed.

The chair of the U.S. Securities and Exchange Commission highlighted that the current state of regulatory safeguarding falls short and remedies remain unclear. Clayton said: “I don’t have a particular path. But it needs to be addressed,” CoinDesk reported.

Clayton clarified that he was speaking at the Consensus: Invest conference in a personal capacity and not as part of the SEC, but his comments may cast doubt on potential bitcoin ETF applications.

Themis Trading broker Joe Saluzzi shares Clayton’s concerns. “You need to put in some oversight. The SEC can’t give approval until they monitor the underlying [market] and feel comfortable that the price is not being manipulated,” Saluzzi told The Block. “They don’t have the policy in place. When you try and cross into the traditional [finance] world, you’ve got to play the traditional game.”

Saluzzi did however concede that a crypto ETF “will eventually happen,” pointing to the Winklevoss twins’ Gemini launch as a leading example. “These guys are smart, they understand about regulation.” Meanwhile, the institutional incentive is there too, adding “Wall Street wants to make money.”

Clayton was also asked whether Ripple’s digital asset XRP was a security rather than a utility token. However his answer on the topic was vague, responding simply that “some of these questions require a lot of information.” Clayton did not elaborate further.


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