Jay Clayton: Why a Bitcoin Spot ETF Approval is Now ‘Inevitable’

On 3 October 2023, Jay Clayton, the former chair of the U.S. Securities and Exchange Commission (SEC), appeared on CNBC’s ‘Squawk Box’ to discuss the criminal trial of Sam Bankman-Fried (SBF), the former CEO of the now-defunct crypto exchange FTX. Clayton offered insights into the government’s case, the role of witnesses, and the state of the crypto industry

Clayton emphasized that the government’s case would focus on establishing a narrative that Bankman-Fried took investors’ money for one purpose but used it for something else, primarily for his own benefit. The government will rely on evidence, including witnesses and documents, to support this narrative.

When asked about the defense’s strategy, Clayton mentioned that the defense would likely focus on the concept of “mens rea,” or state of mind. The defense will argue that Bankman-Fried believed he was acting within the law, and it will be up to the prosecution to prove otherwise. Clayton noted that both sides would use witnesses and documents to establish their respective narratives.

Clayton discussed the credibility of witnesses who have taken plea deals with the government. He stated that before these witnesses testify, the prosecution rigorously vets their statements to ensure their accuracy. Clayton acknowledged that while the credibility of such witnesses could be questioned, they are not the only form of evidence; documents and other types of evidence will also play a crucial role.

Although Clayton did not delve into the specifics of the evidence, he mentioned that based on what he had read, the government appeared to have a strong case against Bankman-Fried.

Clayton also touched upon the broader implications of the trial for the crypto industry. He argued that the trial underscores the importance of a robust regulatory environment. He also mentioned that the U.S. needs to take incremental steps in regulating crypto, starting with well-constructed, well-regulated stablecoins.

Clayton also shared his views on the evolving regulatory landscape for Bitcoin. He stated that Bitcoin has been classified as a commodity by both the CFTC and SEC. He also noted that the Bitcoin spot market has improved in terms of efficacy compared to three or four years ago, making the approval of a Bitcoin spot ETF in the U.S. “inevitable.”

He said:

“We’ve decided every legal question around Bitcoin that is relevant. So, as I’ve said before, that would make you think that a Bitcoin spot ETF is inevitable … There are al of people who do surveillance and the like who are confident that the Bitcoin spot market has much greater efficacy than it did three or four years.“

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