Jay Clayton Outlines Obstacles to Crypto ETFs, Market Surveillance and Custody Main Barriers

Jay Clayton Outlines Obstacles to Crypto ETFs, Market Surveillance and Custody Main Barriers

Those watching the cryptocurrency markets will know that the CoinDesk’s ”Consensus: Invest” conference has drawn speakers from many different fields. The chairman of the US Securities and Exchange Commission, Jay Clayton, spoke at the event on the subject of ETFs.

Cryptocurrency ETFs could be a huge step towards institutionalization

Observers generally consider cryptocurrency ETFs, or cryptocurrency exchange-traded funds, to be an important step towards the institutionalization of cryptocurrencies. Moreover, several crypto ETFs have been rejected during 2018, leaving many to wonder when the first one will be approved.

One of the most important agencies for an approved cryptocurrency-based exchange-traded fund is the SEC. It is therefore quite notable that its chairman, Jay Clayton, attended ”Consensus: Invest” to speak on the matter.

Clayton noted that one of the fundamental prerequisites for an approved cryptocurrency ETF would be ”better market surveillance.”

More specifically, Clayton cited concerns over the fact that cryptocurrency exchanges do not use the same monitoring tools as traditional stock exchanges. The chairman went on to suggest that this might prevent them from getting ”a fair assessment” of the price of cryptocurrencies.

For example, the Nasdaq and the New York Stock Exchange all employ different systems that prevent manipulative and abusive activity. Clayton noted the lack of surveillance in cryptocurrencies is ”an issue that needs to be addressed before [he’d] be comfortable.”

Furthermore, he also called for more comprehensive cryptocurrency custody as something supposedly needed to allow a Bitcoin ETF.

An ETF would need to have guaranteed underlying assets

”We’ve seen some thefts around digital assets that would make you scratch your head,” Clayton commented during his talk. ”We care that the assets underlying the ETF have good custody, and that they’re not going to disappear.”

Although a number of cryptocurrency custody solutions have already been launched, it would seem this is not enough in Clayton’s eyes. Moreover, the issue of custody is something which has faced a fair bit of criticism in the past.

Toshi Times recently covered how Caitlin Long, from the Wyoming Blockchain Coalition, argued new custody solutions might not be necessary. ”I think there’s a real question as to whether a custodian is needed if all the assets are actually sitting on a blockchain,” Long noted.

In summary, it would, however, seem that a cryptocurrency ETF is still some time away. Nevertheless, Clayton’s willingness to even discuss the matter should be regarded as a step in the right direction.

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