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SEC Working On Frameworks To Accommodate Crypto ETFs

The US Securities and Exchange Commission (SEC) has been involved in several cases involving businesses in the crypto industry.

The regulator has charged many companies with violating securities laws during ICOs, and through these cases, a clearer picture of what is required of crypto businesses in the country is starting to be formed.

Bringing regulations for ETFs to modern standards

In a move that is not aligned with the position held by the SEC, the regulator says that it is working on the modernization of regulatory frameworks that govern exchange-traded funds (ETFs).

The SEC is making this move in a bid to bring more innovation to the investment vehicles. The SEC’s creation of this framework comes at a time when crypto related ETFs are struggling.

Most of these ETFs are associated with Bitcoin, the leading cryptocurrency.

According to Jay Clayton, the SEC’s Chairman, there is significant progress being made in terms of bringing crypto ETFs to the mainstream market.

The Chairman said this in an interview with CNBC last month and at the same time, Bloomberg reported that there were over 20 crypto products that were due for approval from the regulator.

Until now, none of these products have received the approval they seek, and many firms have been forced to change their strategies regarding the crypto products.

According to Laura Flores, a partner at Morgan, Lewis & Bockius, the new ETF regulations should allow the SEC to commit more staff and resources to products such as cryptocurrency ETFs.

She added that they think that the SEC’s staff recognizes that there is a growing demand for access to cryptocurrency and the products that are related to these digital assets.

This shift in perspective by the SEC is welcome by players in the crypto industry.

Concerns over SEC regulations still remain

Despite the prospective change in position by the SEC with regards to crypto ETFs, the regulator still maintains a negative stance against the asset class.

Flores said that the chief concern that the SEC has had to do with offering retail investors protection when they engage with cryptocurrencies.

The regulator has also shown concerns about the volatility that comes with crypto prices and possible market manipulation.

This year alone, Bitcoin’s price has risen to almost $15,000 and has now dropped to around $8,000.

The price of the cryptocurrency differs across exchanges due to varying premiums and fees that are charged by different exchanges.

These issues surrounding cryptocurrency are what the SEC seeks to fight against.

Flores said that if crypto related businesses want to enable broader access to the asset class, the regulatory body will need to be convinced and the burden of proof lies on players in the industry.

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      A journalist, with experience in web journalism and marketing. Ali holds a master's degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.