- Ex SEC Chair acknowledges retail crypto access depends on large institutions.
- Jay Clayton said the SEC may have alternative reasons for approving or rejecting Bitcoin ETFs.
- John Deaton criticized the view that retail access to Bitcoin ETFs is contingent on large institutions.
In a recent interview, former SEC chairman Jay Clayton addressed the SEC’s repeated delays in approving the first U.S. exchange-traded fund (ETF) investing in Bitcoin. The interviewer questioned the rationale behind these delays and whether they indicated an underlying intention to seek alternative grounds for rejecting the applications.
Clayton began by acknowledging the historical uncertainty surrounding the manipulability of spot trading in Bitcoin, which had led to reservations about providing retail access. However, he highlighted a significant shift in the industry landscape, where large institutions with robust surveillance mechanisms had entered the picture.
"It is clear that #Bitcoin is not a security. It is something that retail investors want access to and importantly some of our most trusted providers want to provide this product to the retail public," says Fmr. SEC Chair Jay Clayton. "An approval is inevitable." pic.twitter.com/gwHoQkFoxw— Squawk Box (@SquawkCNBC) September 1, 2023
According to Clayton, these institutions have expressed confidence in the integrity and reliability of the Bitcoin spot market. He suggested that retail access to Bitcoin may now be deemed appropriate.
Clayton also noted that the DC circuit had granted the SEC additional time to reevaluate the situation. Notably, this opens the door to alternative reasons for approval or rejection. While he acknowledged the possibility of such reasons, Clayton expressed his uncertainty about their existence.
Meanwhile, prominent crypto lawyer John Deaton weighed in on the conversation. He drew attention to a key statement by Clayton. Deaton highlighted Clayton’s assertion that retail access to Bitcoin ETFs would only be permitted once large institutions, such as BlackRock, stepped into the arena. Deaton pointed out that this admission shed light on how the regulatory framework operates in the United States.
Deaton expressed strong skepticism about Clayton’s justification for this approach, which he characterized as being cloaked in the guise of investor protection. Deaton bluntly rejected this explanation, referring to it as “bullshit.”
Notice that Clayton says until the large institutions (eg BlackRock) offer it, we won’t allow retail access. He literally admits that’s how it works in the United States. Now, of course, he couches it all in the name of investor protection, which I reject as bullshit. We are… https://t.co/Eb04fLuHhG— John E Deaton (@JohnEDeaton1) September 1, 2023
In Deaton’s view, regulators have now come to terms with the fact that they cannot eliminate cryptocurrencies entirely. Instead, they are pursuing strategies to suppress the price of cryptocurrencies.
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