SEC Chairman Jay Clayton Backs Innovation In Crypto, But Warns of Any Tricky Play

By Bhushan Akolkar
Published October 3, 2020 Updated October 3, 2020
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SEC Chairman Jay Clayton Backs Innovation In Crypto, But Warns of Any Tricky Play

By Bhushan Akolkar
Published October 3, 2020 Updated October 3, 2020

Speaking at an event by the Digital Chamber of Commerce, SEC Chairman Jay Clayton opened up his views about cryptocurrencies and blockchain. The U.S. Securities and Exchange Commission (SEC) has been going hard after crypto projects in the past.

However, this time the SEC chief was in a bit different mood talking about innovation and decentralized finance. Surprisingly, Mr. Clayton had a positive stand while talking about the tokenized exchange-traded fund (ETF). He said the regulator is open to it. However, he passed the onus on the crypto community to create an efficient way to tokenize the ETF product. He would be open to facilitate it if the crypto community has a strong proposition.

The SEC has turned down all previous proposals for a Bitcoin ETF. Although SEC Commissioner Hester Pierce, also popular as the crypto mom, has been a vocal supporter of a Bitcoin ETF, it has helped little to convince Mr. Clayton. Citing an indirect reason for his previous rejections, the SEC Chief said:

“One of the problems that we had was we got off on the wrong foot in this innovation. There was the theory that, because it was so efficient because it could have so much promise, we could toss aside some of those principles of responsibility and transparency. I think now three years later, four years later, we are in a much better spot.”

SEC Chairman Bats for Tokenization of Stocks

While the SEC chief has remained critical of crypto-related products, he said that the blockchain technology and distributed ledger technology (DLT) bring a new promise in terms of efficiency. He noted that all stock trading has already turned completely electronic in the last two decades.

The stock certificates of the past have been replaced by the digital entries. “It may very well be the case that those all become tokenized,” added Clayton.

However, Mr. Clayton didn’t fail to give a subtle hint that the SEC won’t be taking it easy at all. He added that when you are throwing a financial vehicle in the market, don’t try to trick the regulator saying “the function is payments”. That’s actually “What we don’t like,” he added.

While the crypto community is waiting for a crypto-ETF in the U.S, other companies have turned to more crypto-friendly regulators. Last month, the Brazilian Fund Manager Hashdex announced a new crypto ETF in partnership with Nasdaq.


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About Author
Bhushan Akolkar
893 Articles
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.