Delivering Alpha

SEC chairman says he doesn't see bitcoin trading on a major exchange until it is 'better regulated'

Key Points
  • Bitcoin will need to become better regulated before it trade on a major exchange, SEC Chairman Jay Clayton says at the Delivering Alpha conference presented by CNBC and Institutional Investor.
  • Clayton also cautions about the difficulty of "price discovery" for investors trying to cash in on crypto.
Clayton: Individuals, institutions play by the same rules in public markets
Clayton: Individuals, institutions play by the same rules in public markets

NEW YORK — Bitcoin will need stronger regulation before it's traded on a major exchange, and investors should be wary until that happens, Securities and Exchange Commission Chairman Jay Clayton said Thursday.

The cryptocurrency, with a market cap of $177 billion, has seen a number of attempts to go mainstream, including efforts to launch exchange-traded funds that would give retail investors an easier path into the space.

However, regulators have been reluctant amid violent price swings, a string of negative headlines involving fraud and a general level of skepticism about the stability of the crypto industry. Bitcoin was trading around $9,875 Thursday, up about 54% over the past year but off 51% from its all-time high just above $20,000, according to Coinbase quotes.

"If [investors] think there's the same rigor around that price discovery as there is on the Nasdaq or New York Stock Exchange ... they are sorely mistaken," said Clayton, the opening speaker at the Delivering Alpha conference, presented by CNBC and Institutional Investor. "We have to get to a place where we can be confident that trading is better regulated."

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The closest bitcoin has come to being listed on a public exchange was when the CME added futures trading. However, the actual coins do not trade on a major listing.

The crypto topic came amid a wider-ranging discussion at the ninth Delivering Alpha gathering in New York.

Clayton has been campaigning lately on getting retail investors greater access to public markets, and he reiterated his position Thursday that he'd like to see private companies launching IPOs sooner and with more access.

"If the growth opportunities have shifted not all the way but to a substantial extent into our private markets and ordinary investors don't have access to them, that's not good," he said. "The question is, what do we do about it?"

He suggested "some kind of funds structure" but did not elaborate on any specific plan.