Former Securities and Exchange Commission Chairman, Jay Clayton, believes that it is only a matter of time before U.S. regulators approve a spot bitcoin ETF. In an interview with CNBC, Clayton expressed his conviction that the current situation, where retail traders have access to a bitcoin futures exchange-traded product but not one based on the bitcoin cash market, cannot persist indefinitely.
The SEC has previously been concerned that the bitcoin cash market was too susceptible to manipulation, leading them to restrict retail access. However, Clayton highlighted that this attitude is shifting as more institutions with surveillance mechanisms challenge the notion of easy manipulation.
This development comes after a federal judge ordered the SEC to reconsider Grayscale Investments' application for a bitcoin spot ETF. The court ruled that the SEC's decision to approve two bitcoin futures funds while denying applications for a bitcoin spot ETF was arbitrary, capricious, and in violation of federal administrative law.
The SEC's denial was based on the belief that bitcoin spot markets lacked sufficient surveillance capabilities to prevent fraud and manipulation, unlike bitcoin futures markets overseen by registered futures exchanges. Grayscale, however, argued that since bitcoin futures prices closely align with bitcoin spot markets, distinguishing between the two was unwarranted. The court agreed with Grayscale, although the SEC still has the option to find other grounds for denial.
In addition to Grayscale's application, the SEC has requested more time to evaluate spot bitcoin ETF applications from other firms like Blackrock and WisdomTree Funds. The regulator now has until mid-October to decide on these applications, aligning with the court's deadline for the SEC to respond to its ruling in the Grayscale case.