Jay Clayton, the former chair of the US Securities and Exchange Commission (SEC), has commented on the regulatory agency’s current treatment of cryptocurrencies. Speaking at Bloomberg Invest on June 8, Clayton was asked whether he would have taken the same actions as current SEC chair Gary Gensler, who recently filed charges against Binance and Coinbase. Clayton responded by stating that he would not second-guess Gensler’s leadership, and that he supports the SEC.
During his tenure as SEC chair, Clayton was known for being a “crypto hawk” who shut down the “ICO craze” in 2018, declaring that initial coin offerings should be regulated as securities. Despite his past attempts to regulate the industry, Clayton said regulators are now having “very blunt conversations” around blockchain and cryptocurrency, noting that it is something that “requires nuance.”
The Role of Blockchain in Reforming Old Regulations
Clayton noted that blockchain technology was expected to reform old regulations, but in practice, early blockchain technology broke down investor protections. He stated that applications of blockchain in the financial system “should not be controversial” and that regulators are having to consider the nuances of the technology.
Clayton expressed support for tokenization of assets and noted that other countries are engaged in blockchain-based issuance of sovereign debt. He suggested that the use of blockchain technology could improve the efficiency of capital markets and that regulators need to find a way to balance innovation with investor protection.
True Stablecoins for International Retail Transfers
Clayton expressed support for what he called “true” stablecoins that are backed by the same thing as bank accounts. He described stablecoins as a “remarkable technology” for international retail transfers of value, and suggested that they provide a far greater capacity for compliance with KYC/AML regulations than paper currency.
Clayton did not indicate which stablecoins might qualify as “true” stablecoins, but his co-panelist, Dan Morehead of Pantera Capital, suggested that USDC proved its backing by recovering from a depeg after Silicon Valley Bank’s collapse in March. Clayton did not dispute that point.
In summary, Jay Clayton, the former chair of the SEC, has expressed support for true stablecoins and tokenization of assets. He believes that regulators need to find a way to balance innovation with investor protection when it comes to blockchain technology and that the use of stablecoins could improve the efficiency of capital markets.