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Former US Securities and Exchange Commission (SEC) Chairman Jay Clayton evaluated the SEC decision and next steps regarding spot Ethereum exchange-traded funds (ETFs).
Clayton said the approved listings were a positive sign for the product and said he thought trade in these products would be “inevitable.” However, he emphasized that there are still complex questions about the product that need to be resolved.
The former SEC chairman stated that the Ethereum ETF approval process consists of two stages. “There’s the listing approval, which happened yesterday, and then the approval of the product itself, which is still pending,” Clayton said in an interview with CNBC on Friday.
What needs to be done before the start of trading is whether the registration statements of the funds will be approved or not. A registration statement provides transparency about a fund’s objectives, expenses, risks, fees, management and organizational structure so that potential investors are fully informed.
Still, Clayton thinks this approval is likely to happen. “That means it’s inevitable,” he said. “We went through the same process with the Bitcoin product, where almost all the questions were decided. The question that was technically decided yesterday was whether the market was active enough for this product to be listed on the exchange. That’s what was decided, but there are other questions as well.”
This market efficiency question prevented Clayton from approving crypto ETFs when he was SEC chairman between 2017 and 2020. However, he noted that spot markets for both bitcoin and ether have improved remarkably over time. Spot crypto trading for exchanges hit all-time highs in mid-2021, with March 2024 coming in third place, according to The Block’s Data Dashboard.
In Clayton’s view, it is only a matter of time before trading of Ethereum spot ETFs begins, but there are still some technical and regulatory issues that need to be resolved. With the completion of these processes, Ethereum ETFs are expected to take their place in the market.
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