Pro-crypto SEC Chairman Jay Clayton recently did an interview with CNBC where he laid out what needs to be done in the crypto space before a crypto exchange-traded fund (ETF) is approved.
According to Clayton, US regulators need to feel comfortable with cryptocurrency custody solutions and ensure no market manipulation is occurring before they even consider approving a crypto ETF.
Per the interview, Clayton stressed that sound custody solutions are very important to the SEC and always have been:
“We’re engaging on this [a crypto ETF], but there are a couple of things about it that we need to feel comfortable with. The first is custody: custody is a long-standing requirement in our markets, and if you say you have something you really have it.”
The second-most important thing for an ETF approval is to ensure robust preventative measures for market manipulation are put in place:
“We have sophisticated rules and surveillance to ensure that people are not manipulating the stock market, those cryptocurrency markets by large do not have that; And we’re working hard to see if we can get there, but I’m not just going to flip a switch and say this is just like stocks and bonds, because it’s not.”
The crypto industry has come a long way in regards to crypto custody solutions, with the likes of Coinbase Custody, Gemini’s custody services, Fidelity Digital Assets, Bakkt, and more.
As for sophisticated rules and surveillance of the crypto markets, these measures are easier to implement on licensed and regulated crypto exchanges, but not so much on the unregulated exchanges like Binance. Therefore, it might take longer than some people think for a crypto ETF to be approved.
Do you think a crypto ETF will be approved in 2019? Let us know what you think in the comment section below.