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Bitcoin ETF needs major improvements in crypto sector, says Jay Clayton

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The chairman of the US Securities and Exchange Commission (SEC) Jay Clayton needs to see major improvements in the cryptocurrency space in order to greenlight a Bitcoin exchange-traded fund, industry website Coindesk has reported.

Speaking at Coindesk’s Consensus: Invest conference, Clayton highlighted some issues that the sector needs to address before such an ETF becomes a reality. His biggest concerns revolved around market manipulation.

“How that [manipulation] issue gets addressed, I don’t have a particular path. But it needs to be addressed,” the SEC chairman said, as quoted by Coindesk.

“The prices retail investors are seeing are the prices they should rely on, and free from manipulation – not free from volatility, but free from manipulation,” he added.

Clayton talked about the need of “surveillance” systems similar to those used by large stock exchanges such as Nasdaq and the New York Stock Exchange (NYSE). He also said that the sector needed better custody solutions.

Several companies have been working on developing reliable custody solutions, aiming to attract institutional investors to the crypto market. The largest US digital currency exchange Coinbase launch such a service earlier this year, as part of an institutional investor product suite. And last month financial services giant Fidelity Investments announced plans to develop its own crypto custody product.

During his appearance at Consensus: Invest, Clayton also shared his view on whether tokens issued through initial coin offerings could be considered securities.

“If you finance a venture with a token offering, you should start with the assumption that it is a security,” he said. Clayton had clarified earlier the he was speaking in a personal capacity and not as part of the SEC.

Clayton did say that in some instances the status of a particular token is not that easy to determine. He gave an example with Ripple and its token XRP, saying that “some of these questions require a lot of information”. However, he did not go into further details.

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