SEC Chairman Jay Clayton SEC Chairman Jay Clayton (Photo: Andrew Harrer/Bloomberg)

Don’t hold your breath for the Securities and Exchange Commission to approve a Bitcoin ETF, or any other cryptocurrency ETF, anytime soon. SEC Chairman Jay Clayton said as much at an appearance Monday before the Economic Club of New York.

In the brief Q&A session that followed a speech, Clayton said, “When you put it [Bitcoin] into a product and make it a security, then we have to worry about whether it trades appropriately or not and whether it can be held appropriately or not. … It troubles me that people look at the trading on these venues and think it has the same level of protection that you have in the equity market in the U.S., on Nasdaq and NYSE. Nothing could be further than the truth.”

“We have lengthy rulebooks, all sorts of protection to make sure prices are not manipulated in the equity markets. I don’t see those in the crypto asset markets.”

To date, the SEC has either rejected or delayed rulings on several Bitcoin ETFs that it has received in recent years. It rejected an application from Cameron and Tyler Winklevoss, and it has delayed multiple times applications from Bitwise Asset Management, Wilshire Phoenix and the partnership of VanEck Securities and SolidX Management. The agency is expected to issue final decisions on all three in the coming weeks: on or around Sept. 29 for Wilshire Phoenix United States Bitcoin and Treasury Investment Trust, Oct. 13 for the Bitwise Bitcoin ETF Trust and Oct. 18 for the VanEck/SolidX Bitcoin Trust proposal.

In his prepared speech before the Economic Club, Clayton spoke about the need to increase the attractiveness of public capital markets for companies, who are increasingly turning to private markets, and the need for private markets to be more accessible to Main Street investors.

He also talked about the need to monitor the growth of corporate debt, which has swelled to $10 trillion, a level equal to almost half of U.S. GDP but dwarfed by $22 trillion in federal debt.

“We should monitor the size of corporate debt in aggregate and by industry, the location and type of holders and credit quality. And we should consider the likely actions of market participants if market sentiment or other circumstances change,” Clayton said.

On a related issue, the SEC chairman repeated what a recent staff statement stressed: that market participants assess their exposure to Libor and how they plan to manage the risk when the benchmark rate end in 2021. Market participants “should ensure that any contracts that extend beyond 2021 either reference Libor and have effective fallback language or do not reference Libor.”

(Related on ThinkAdvisor: Start Preparing Now for the End of Libor-Linked Loans, Securities)

Well before Libor is scheduled to disappear at the end of 2021, the U.K. will decide about whether and how it will leave the European Union. Clayton said the SEC is closely monitoring the potential impact of Brexit on financial markets and market participants, and he encouraged financial firms, issuers and other participants to fight “fatigue that is endemic to situations of this type… Continue to prepare for — and reasonably inform your investors of — the potential impact of Brexit.” He said the SEC is working with domestic and non-U.S. counterparts to identify and plan for those potential effects.

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