Former SEC Chairman Clayton Thinks Ethereum ETF Deal Is ‘Inevitable’, But Questions Still Remain: CNBC
Former U.S. Securities and Exchange Commission Chairman Jay Clayton struck down the SEC’s decision on spot trading. Ethereum 
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What’s next for exchange-traded funds (ETFs)?
Clayton said the approved listing bodes well for the product, adding that he believes their deal will be “inevitable.” However, challenges surrounding the product still remain.
The former SEC Chairman first stated that approval of an Ethereum ETF would occur in two stages.
“There’s the listing approval, which happened yesterday, and there’s the approval of the product itself, which is still pending,” Clayton said in an interview with CNBC on Friday.
The next step before trading begins is whether the fund’s registration statement is approved. The registration statement provides transparency about the fund’s objectives, expenses, risks, fees, management and organizational structure to ensure that potential investors are fully informed.
Nonetheless, Clayton believes such approval will definitely happen.
“I think that means it’s inevitable,” he said. “We went through the same process for the Bitcoin product and almost all the questions were decided. The question that was decided yesterday was, technically speaking, is the market effective enough for this product to be listed on an exchange? “I have other questions, too.”
It was these market efficiency issues that prevented Clayton from approving a cryptocurrency ETF while he was leading the SEC from 2017 to 2020. However, he noted that the spot markets for Bitcoin and Ethereum have “developed significantly over time.” As The Block’s data dashboard shows, spot cryptocurrency trading for exchanges reached an all-time high in mid-2021, with March 2024 coming in third.
Ethereum ETF and Bitcoin ETF
Clayton also noted the difference between approvals for the Ethereum ETF and Bitcoin ETF, the latter of which occurred on January 10th.
The two primary cryptocurrencies have different answers as to whether they are securities or commodities. According to the CFTC and current SEC Chairman Gary Gensler, Bitcoin is a commodity. However, the “The SEC has not and still has not said definitively that Ethereum’s underlying transactions are not securities transactions,” Clayton said.
The difference between commodities and securities is whether investors rely on others to grow the value of their investments. Clayton compares it to a Broadway ticket. If a show is scheduled and the production team still needs to develop scripts, secure locations and otherwise develop the final show, tickets to that show will be security. Years later, when the show hits the stage and the work is done, tickets to that show become a prize.
“So what is used to build a network, using tokens to build a network, to say that once this network is built, you will get a lot of money, that is security,” he explained. Once the network is established, tokens can only be used on the network.”
These and other questions regarding the Ethereum ETF are yet to be decided, but estimates suggest the fund could begin trading in July or August. JPMorgan speculated that trading could begin before November, The Block previously reported.
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