Industry Updates

SEC considers green light for crypto ETFs

SEC Chairman says 'door is wide open'

George Geddes

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The Securities and Exchange Commission (SEC) is engaging with the market about the possible introduction of cryptocurrency ETFs, according to Chairman Jay Clayton.

Speaking at a on innovation and regulation within digital assets, Clayton discussed the responsibilities of the regulators to drive the implementation of cryptocurrencies and digital assets across various financial markets including ETFs.

“Regarding the tokenisation of ETFs, [the SEC] should be driving that and we are willing to be driving that,” Clayton said.

He added the regulator's “door is wide open” to meet with market participants who can show how the tokenisation of ETFs can add efficiency.

Furthermore, Clayton said the SEC would facilitate this if it is shown to be beneficial to the market.

A number of firms have begun exploring the idea of trading ETFs as a token using blockchain similar to trading cryptocurrencies such as bitcoin.

Why the UK remains years not months off a crypto ETP

In the last 18 months, there have been many discussions on the compatibility of cryptocurrencies and ETFs in the US.

However, the SEC rejected multiple proposals for a bitcoin ETF in 2019 from Bitwise and VanEck because the underlying blockchain technology did not meet the standard for preventing fraudulent activities.

Furthermore, Facebook’s proposition of a stablecoin, Libra, last year saw the market labelling the digital asset as an ETF while the ETF industry argued otherwise.

The SEC remains very hesitant in green lighting any digital assets without a thorough examination so the introduction of a tokenised ETF is not expected in the immediate future.

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