Jay Clayton, the former chair of the U.S Securities and Exchange Commission (SEC), thinks a Bitcoin (BTC) spot exchange-traded fund (ETF) could get approved if financial institutions can prove such a product would mimic the conditions of the Bitcoin futures market.

No US Bitcoin spot ETF application has ever been approved thus far, despite submissions from Grayscale, VanEck, and Cathie Wood’s ARK Invest, though the SEC did greenlight the launch of the first Bitcoin futures ETFs in October 2021.

Clayton served as SEC chair from 2017-2020. In a new interview with CNBC, he outlined why he believed the SEC first approved those BTC futures ETFs rather than spot products.

“I think that when the SEC approved the futures-based ETF, they said ‘Let’s look at the futures market, we see the surveillance, we see the protections in that market for the end investor that are sufficient. We don’t see them in the spot market, so we’re going to make that distinction.’ 

I think what the institutions are arguing is that those distinctions have gone away and now the spot product is actually less drag, more efficient for the investor. So if there’s not that delta in regulation, not that delta in what I can [call] efficacy, the spot should be approved. That’s the argument that’s going on right now.”

Clayton says if financial institutions can prove those points, they’ll likely be successful in launching a BTC spot ETF.

“What I would say is, if they’re right, that you can demonstrate that the spot market has similar efficacy to the futures market, it would be hard to resist approving a Bitcoin ETF.”

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