SEC Chair Jay Clayton: No Bitcoin ETFs Until There Is Greater Oversight; "Assume Your ICO is a Security"

Securities Exchange Commission Chair Jay Clayton is reluctant to add digital currency ETFs, including Bitcoin ETFs, over fears of market manipulation, centralization, and custody security.

Speaking at Consensus Invest in New York, Clayton said he will not support ETFs for a financial product until there are measures in place to ensure that it is free of manipulation.

In addition to these concerns, Clayton underlines that existing ETFs are not at risk of "Theft or disappearance," indicating that Bitcoin and other digital currencies are not as secure as other traditional assets.

So far the SEC has rejected several proposals to include Bitcoin and other cryptocurrency ETFs, including a bid from high-profile crypto venture capitalists the Winklevoss twins.

Clayton's skepticism is not surprising and mirrors the overall reluctance of the SEC on the topic.

His statement comes after the SEC ramps enforcement actions against cryptocurrency projects, including its first civil penalties against two successful ICOs: ParagonCoin and AirFox.

In contrast to that, the SEC's William Hinman, commented that Bitcoin and Ether may be treated as commodities based on a "Sufficiently decentralized" test.

Chairman Clayton later emphasized that " staff statements are nonbinding and create no enforceable legal rights".

When pressed on the security status of Ripple Clayton declined to answer.

In the long run, the SEC may consider integrating cryptocurrencies, ETFs, and other securities into the broader market once better oversight is established and regulations are stress-tested.