Ex-SEC Chairman Jay Clayton Says Agency Has ‘Bulky Conversations’ About Crypto; supports “real stablecoins”
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Jay Clayton, former chairman of the US SEC, commented on the agency’s current handling of crypto in a call with Bloomberg Invest on June 8.
As of June 5, the US Security and Exchange Commission filed charges against Binance and Coinbase. Bloomberg’s Carol Massar asked Clayton if he would have taken the same actions as current SEC Chairman Gary Gensler.
Clayton responded by saying:
“See, that’s it [Gensler’s] management now. He has been in this position for over two years. … I’m not going to be the person who throws bombs or second guesses from the sidelines.”
Clayton said he supports the SEC and noted that during his tenure he was known for being a “crypto hawk” who cracked down on the “ICO craze.” This trend took place in the first half of 2018, when initial coin offerings (ICOs) raised a record $7 billion. Around that time, Clayton declared that ICOs should be regulated as securities.
SEC’s “blunt calls”
Clayton told Bloomberg that blockchain, as a new technology, was expected to reform old regulations. But in practice, early blockchain technology broke down investor protections — something that shouldn’t have happened, he said.
Despite his previous attempts to regulate the industry, Clayton said regulators are now having “very tough conversations” around blockchain and cryptocurrency, noting that it’s something that “requires nuance” and the use of blockchain in the financial system “not should be controversial.”
“Real stablecoins”
Clayton then expressed support for what he called true stablecoins, saying:
“I am remarkably impressed with the functionality of real …stablecoins. Not the algorithmic stablecoin, not the liquidity transformation stablecoin, but a true [stablecoin] backed by the same thing we back up bank accounts with.”
He said stablecoins are a “remarkable technology” for international retail transfers of value. He suggested that, compared to fiat currency, stablecoins provide a far greater capacity for compliance with KYC/AML regulation.
Clayton did not indicate which stablecoins could qualify. His fellow panelist, Dan Morehead of Pantera Capital, suggested that the USDC prove its support by recovering from a slump following the collapse of Silicon Valley Bank in March. Clayton did not dispute this point.
Clayton otherwise expressed support for asset tokenization and noted that other countries are engaged in blockchain-based sovereign debt issuance.
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