As the former Securities and Exchange Commission (SEC) chairman, Jay Clayton oversaw the financial agency for approximately four years. He came down hard on the industry many times, and initiated penalties to companies that claimed their securities were mere “tokens” or “coins” that the SEC held no jurisdiction over.
Jay Clayton On the Future of Crypto
However, despite this hardcore attitude, Clayton is quite positive about the future of crypto. He thinks that blockchain is going to play a huge role in the future of business in both America and abroad, and he even serves as an advisor to Fire Blocks, a crypto custody firm.
In a recent interview, Clayton talked about some of the regulatory tactics he thinks are heading to the U.S. and where he believes crypto will go in the coming years. During the interview, he acknowledged that the SEC’s attitude towards crypto has changed somewhat, and he talked about why he thinks the agency is becoming so involved. He said:
The SEC cares about securities. To the extent that crypto overlaps with the offering or trading of securities, then the SEC cares about it. Now we go back to ICOs (initial coin offerings). Few people doubt that most ICO offerings were securities within the SEC’s remit, so that is a clear historical example of where it was appropriate, necessary and for the benefit of the public for the SEC to be involved.
Regarding one of the consistent issues that he saw with the crypto space, he said the following:
The first major crypto issue that caught my attention was the ICO boom. I remember anecdotes of lots of money being raised in what were clearly public securities’ offerings and being astonished. I was quite surprised that anybody would think that because you called it a coin or a token as opposed to a security, somehow it was outside of the SEC’s remit. I was also quite astonished that the professionals around those offerings—the lawyers and others—had thought that somehow this was different from securities offerings because the substance was the same.
Where Do Stable Currencies Fall?
He also discussed the rise of decentralized finance, and where stable coins fall into the mix. He said:
My view is that if you look at the function that the product is providing and compare that to the incumbent space, you have a very good handle on the regulation that applies or is likely to apply. Stable coins are a good example. A stable coin that promises $1 back to you in exchange for the coin and is backed by cash is one item. Such a coin that is backed by commercial paper—whether it’s 30, 60 or 90 days—sure looks like a money market mutual fund to me, so the second element really looks like a security.