Jay Clayton, chairman of the U.S. Securities and Trade Fee (SEC), stated Tuesday that he doesn’t see a pathway to a cryptocurrency ETF approval till considerations over market manipulation are addressed.

“How that [manipulation] situation will get addressed, I don’t have a specific path. But it surely must be addressed” earlier than an ETF will get authorized, Clayton remarked throughout CoinDesk’s Consensus: Make investments convention.

“The costs retail traders are seeing are the costs they need to depend on, and free from manipulation – not free from volatility, however free from manipulation,” Clayton stated throughout his look, which was moderated by investor Glenn Hutchins. Clayton additionally remarked that custody considerations additionally stay a problem forward of any sort of ETF approval.

The SEC chairman – who clarified on the outset that he was talking in a private capability, and never on the a part of his company – additionally honed in on the query of whether or not the sale of tokens throughout preliminary coin choices (ICOs) represent securities choices.

“In case you finance a enterprise with a token providing, you must begin with the idea that it’s a safety,” he remarked.

Nonetheless, Clayton conceded that in some cases, the standing of a specific token isn’t as clear-cut. When the subject of distributed ledger startup Ripple and the digital asset XRP was raised, Clayton stated that “a few of these questions require a number of data” with out going additional into that particular matter.

Alternatively, “many are very apparent,” in accordance with Clayton. “I’m promoting you my token, I’m going to go off and produce a enterprise and, hopefully, you’ll get a return for having bought that token.”

Clayton additionally provided a bit of recommendation for these seeking to pitch tokens to potential traders: “If there’s a spot between what you’re telling [the SEC] and what you’re telling individuals investing in your enterprise, that’s not a great place to start out.”

The SEC chairman was additionally requested in regards to the latest announcement that two different crypto startups, each of which performed ICOs, settled registration violation prices with the company. Whereas noting that these corporations are working with the SEC, Clayton clarified that the settlements have been made within the context of these particular corporations.

“Individuals ought to perceive that this was the treatment on this specific case however treatments in future instances could also be completely different,” stated Clayton, including: “Get your act collectively.”

Clayton’s remarks match into the broader image of the SEC’s actions within the crypto house up to now, starting with its July 2017 launch of the so-called DAO report, which outlined how some token gross sales, within the company’s view, may very well be thought of securities choices.

Whereas some startups sought to bypass securities legal guidelines solely by dubbing their choices utility tokens, Clayton has famous that the token sale’s habits is the way it could also be labeled. He used the idea of a laundry token, noting {that a} token used to scrub garments wouldn’t be a safety.

“But when I’ve a set of 10 laundry tokens and the laundromats are to be developed and people are provided to me as one thing I can use for the long run and I’m shopping for them as a result of I can promote them to subsequent 12 months’s incoming class, that’s a safety,” he said in April.

Picture by Stan Higgins for CoinDesk

Editor’s Notice: This text has been up to date to mirror that Clayton additionally indicated that custody considerations are a part of the SEC’s consideration of any crypto ETF approval. 

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