In a recent interview with CNBC, former U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton provided an in-depth analysis of the SEC's recent decision concerning spot Ethereum (ETH +1.75%) exchange-traded funds (ETFs) and the subsequent steps required before these products can begin trading.

Clayton highlighted the significance of the SEC's initial approval of listings for Ethereum ETFs, suggesting that this milestone indicates a positive trajectory for the product. He expressed his belief that the trading of these ETFs is "inevitable," though he acknowledged that several complex issues still need to be addressed.

According to Clayton, the approval process for Ethereum ETFs consists of two distinct phases. "There's the listing approval, which is what happened yesterday, and then there's the approval of the product itself, which is still pending," he explained.

Before trading can commence, the funds' registration statements must be approved. These statements are crucial as they provide potential investors with comprehensive information about the fund's objectives, expenses, risks, fees, and management structure. This transparency is vital for informed investment decisions.

Despite the pending steps, Clayton remains optimistic about the eventual approval. "I think it means it’s inevitable," he stated. He drew parallels to the approval process of Bitcoin ETFs, noting that most, if not all, of the relevant questions had been resolved. The recent decision affirmed that the market is sufficiently robust for Ethereum ETFs to be listed on exchanges, yet other considerations still need to be addressed.

Clayton reflected on his tenure at the SEC from 2017 to 2020, during which market efficacy concerns prevented the approval of crypto ETFs. However, he acknowledged the significant advancements in spot markets for both Bitcoin and Ethereum since then. Data from The Block's Data Dashboard corroborates this, showing record-high spot crypto trading volumes in mid-2021 and a notable peak in March 2024.

As the SEC continues to navigate the complexities of crypto ETF approvals, Clayton's insights underscore the ongoing evolution and maturation of the cryptocurrency market. The path to trading Ethereum ETFs may still be fraught with regulatory hurdles, but the trajectory appears increasingly promising.