U.S cryptocurrency enthusiasts will have to wait a while longer before cryptocurrency ETFs become a thing following the Securities and Exchange Commission (SEC) chairman Jay Clayton?s remarks.
Clayton stated that the SEC is not ready to approve cryptocurrency exchange-traded funds otherwise known as ETFs. He pointed towards market manipulation and theft as some of the issues holding back the SEC?s approval. Jay made the remarks on Tuesday during a New York Consensus Invest summit.
Evidence suggests that the prices of cryptocurrencies in 2018 have indeed been manipulated by multiple players. pic.twitter.com/MmQqqJT6PM
? ?Crypto Authority? (@cryptoauthorit) November 28, 2018
The SEC has not completely shut the doors on cryptocurrency ETFs
There is however a glimmer of hope despite the SEC chairman?s statement. His remarks suggested that the SEC will only approve cryptocurrency ETFs once the crypto market has addressed various concerns. The regulatory body will be willing to change its mind on ETFs if there is better market surveillance.
“What investors expect is that trading in the commodity that underlies that ETF makes sense and is free from the risk of manipulation,” stated Clayton.
Clayton even gave the Nasdaq and the New York Stock Exchange as examples that have surveillance systems. Those systems monitor the markets for any manipulative or abusive practices on exchanges. He believes that such systems would make the cryptocurrency market safer if digital currency exchanges adopt them. Unfortunately, crypto exchanges do not have such measures, making digital currency investments a risky affair.
Gemini exchange founders Tyler Winklevoss and Cameron Winklevoss previously tried gaining the SEC?s approval to launch Bitcoin ETFs. However, their efforts were turned down and it looks like that decision might not be reversed anytime soon.
Regulatory guidance for cryptocurrency startups looking to launch ICOs
The many cryptocurrency theft reports especially just this year alone have convinced the SEC that the crypto market is still not safe for investors. Clayton also warned Initial Coin Offerings (ICOs) that they should classify their tokens as securities before any approval applications. The warning should act as a guide to crypto startups before they consider any public offerings. Most of the startups that do not adhere to the SEC?s requirement usually get rejected.