Why US SEC Is Delaying Bitcoin ETF Approval?

Pro-XRP lawyer John E Deaton has responded to the recent U.S. Securities and Exchange Commission (SEC) decision to delay the approval of a Bitcoin exchange-traded fund (ETF) by global asset manager BlackRock. Deaton, referencing recent statements by former SEC Chairman Jay Clayton, highlighted concerns that regulators may prioritize institutional interests over retail access.

Notice that Clayton says until the large institutions (eg BlackRock) offer it, we won’t allow retail access. He literally admits that’s how it works in the United States. Now, of course, he couches it all in the name of investor protection, which I reject as bullshit. We are… https://t.co/Eb04fLuHhG

— John E Deaton (@JohnEDeaton1) September 1, 2023

US SEC’s History with Crypto ETF Approvals

The SEC’s hesitance isn’t new when it comes to the cryptocurrency realm. In a squawk box interview, former SEC Chairman Jay Clayton acknowledged the apparent demand from retail and institutional investors for access to Bitcoin. While Clayton agreed that Bitcoin isn’t classified as a security, the debate centers on whether the cash trading market could be easily manipulated to a degree that might preclude retail access. 

However, the tides might be turning with large financial institutions introducing surveillance mechanisms. These institutions are vouching for the legitimacy of the cash market, suggesting that it’s now an appropriate product.

Deaton’s Stance on Regulator Bias

Citing Clayton’s words, Deaton expressed frustration, insinuating that regulators in the U.S., under the guise of “investor protection,” may be biased in favor of large financial entities like BlackRock. He contends that by delaying decisions like these, regulators might attempt to manipulate crypto prices to benefit these “incumbent friends.”

In his interview, Clayton emphasized the difference between a Bitcoin futures product and a cash product, hinting that this distinction might not be sustainable in the long run. Despite the SEC’s delay, he remains optimistic about the future, pointing out that the 45-day window for reconsideration isn’t a significant delay in the broader context.

The tension between the need for regulatory prudence and market demand for Bitcoin ETFs continues to shape the landscape. While the SEC’s decision to delay might be seen as a precautionary move, voices like Deaton’s are allegedly essential in ensuring that the interests of all market participants, especially retail investors, remain in the spotlight.