The outgoing SEC Chairman Jay Clayton, who oversaw the rejection of nine Bitcoin (BTC) exchange-traded funds during his tenure, has told CNBC that “inefficiencies” in the current payments systems are continuing to drive the popularity of Bitcoin.
Appearing on CNBC’s Squawk Box yesterday, Clayton, who is due to step down by the end of the year, confirmed his agency’s general assessment that Bitcoin was not a security but a payment mechanism and store of value.
"We determined that bitcoin was not a security, it was much more a payment mechanism and stored value," says SEC Chairman Jay Clayton on #btc. "Our current payment mechanisms--have inefficiencies those inefficiencies are the things that are driving the rise of bitcoin." pic.twitter.com/3r1mxzfgpi— Squawk Box (@SquawkCNBC) November 19, 2020
The chairman has been widely criticized by the Bitcoin community for keeping a tight rein on Bitcoin and cryptocurrency. However, during his years as SEC chair, Clayton was never a staunch opponent of Bitcoin in principle, but regularly expressed his fears that average investors could be subjected to unnecessary risk when investing in a Bitcoin ETF.
This risk is due to the SEC’s perception that the largely unregulated nature of some Bitcoin exchanges makes it too easy for the price of BTC to be manipulated. With Clayton out as SEC chair, some Bitcoin proponents believe the chance of a Bitcoin ETF being approved is now greater than ever.
Just in: SEC Chairman Jay Clayton will be stepping down in December.— Yano (@JasonYanowitz) November 16, 2020
This is a huge deal for crypto regulation.
Clayton’s successor will ultimately approve or deny a Bitcoin ETF.
Let’s hope the new chair understands innovation
Clayton believes Bitcoin will continue to grow, while regulations evolve.
What we are seeing is that our current payment mechanisms, domestically and internationally, have inefficiencies. Those inefficiencies are the things that are driving the rise of Bitcoin... And we’re gonna see more of that. We’re gonna see this mature and we’re gonna see more regulation around the digital payment space.
Clayton was the first member of the SEC to issue a warning about the potential pitfalls of investing in initial coin offerings during the 2017 ICO craze, reminding the public that such products were usually regarded as securities offerings and subject to the regulations accompanying them.
“We did not regulate Bitcoin as a security,” said Clayton, explaining that BTC was “much more a payment mechanism and stored value” than a security.
When people use crypto assets as securities to raise capital for a venture, the SEC regulates that. And what was happening in the ICO craze was people were using ICOs and essentially making offerings of public securities without registering them with the SEC.
Clayton was nominated for SEC Chair by President Donald Trump in January 2017 and is leaving the position as one of the agency’s longest-serving chairs. In June 2020, Clayton was nominated by Trump to replace the outgoing United States Attorney for the Southern District of New York, a position which he says he sought out of a strong desire to continue his career in public service.