While crypto waits with bated breath for the SEC’s approval of a Bitcoin ETF, SEC chairman Jay Clayton told the Consensus Invest conference that while Bitcoin is certainly not a security, the market still has the significant barriers of manipulation and security to tend to before an ETF approval is imminent.
Crypto enthusiasts recently got optimistic about the ETF’s prospects when ‘Crypto Mom’ and chairman of the SEC Hester Pierce said that a Bitcoin ETF was ‘definitely possible,’ and while Clayton doesn’t refute the likelihood of an eventual ETF approval, his comments indicate that its not here quite yet. According to CryptoGlobe Clayton told the conference that, ‘investors expect is that the trading in that commodity that is underlying the ETF is trading that makes sense, is free from the risk or significant risk of manipulation,’ implying that Bitcoin does not fit this criteria. Nonetheless, Clayton indicated with certainty that Bitcoin is not a security, noting that ‘it is designed to be a payment system replacement for sovereign currencies. We've determined that doesn't have the attributes of a security.’
(5) 👮♂️ Outside the community, the recent @SEC_News and @SEC_Enforcement (BTC not a security, ethics officer going on record, ICO guidance) and @CFTC (smart contracts primer) actions indicate pragmatic regulators committed to capital creation, innovation and investor protection.— Thomas Klocanas (@tklocanas) November 27, 2018
This is good news for anyone who was worried about crypto’s position in the SEC’s eyes due to the regulatory body’s recent crack down on ICOs. Clayton gave some insight on this, noting that by default ICO tokens are in fact securities, and that regarding the recent enforcement action against Paragon and Airfax, ‘people should understand that this was the remedy in this particular case, but remedies in future cases may be different.’
Read more: What do non-crypto holders think of Bitcoin?
The interview has led to mixed responses, with many outside the crypto community taking his comments as an indictment on crypto as an asset class, while many inside the crypto sphere seem to take his words to indicate that the SEC is in fact warming up to crypto. Its no secret that crypto is rife with scams, but crypto is looking for solutions. A recent study found a predictive model for pump and dump scams, and suggested the use of machine learning as a tool to eradicate their effects from the market. Mesari Crypto recently launched a self-disclosure registry for crypto projects, which aims to increase transparency and self regulation within the crypto ecosystem.
🥳 ANNOUNCING our first cohort of launch partners who are committed to transparency and self-regulation! Excited to drive common standards for investor protection in crypto and launch industry self-governance that can cross borders.— Messari (@MessariCrypto) November 27, 2018
Our own announcement: https://t.co/8iY5M01e4n https://t.co/ClhKLT19PS
While the SEC is clearly not yet ready to dive headfirst into a crypto ETF, the market is taking steps towards regulating itself and offering investor security, custody, and assurance. The important take away from Clayton’s interview is that the SEC is willing to play ball, but the market needs to figure out its defects, which was already clear to anyone taking crypto seriously.