In a discussion with Dan Morehead, founder of cryptocurrency hedge fund Pantera Capital, Jay Clayton partially agreed with the SEC’s accusations regarding crypto exchanges Binance and Coinbase. The agency alleges that they allowed U.S. customers to buy unregistered securities.
Former top SEC official recalled his tenure at the agency when he was called a “cryptohawk. At the time, the regulator was focused on curbing the infatuation with initial coin offerings (ICOs). That said, Clayton believes that the SEC could take alternative approaches to regulating the industry.
Unlike current SEC Chairman Gary Gensler, who has expressed skepticism about cryptocurrencies, Clayton believes that digital assets and blockchain have legitimate uses. He explained that the latest technology is developing rapidly, so their potential can be used in the financial sector. For example, tokenization can greatly simplify asset management. Clayton cited investment bank Citi’s forecast that the market for tokenized assets will be between $4 trillion and $5 trillion by 2030.
The former SEC chairman also praised the functionality of stabelcoins tied to fiat currencies, particularly the U.S. dollar. Clayton believes they simplify international transfers between individuals. Stablecoins can also be used to more effectively implement Know Your Customer (KYC) procedures and comply with anti-money laundering (AML) regulations, Clayton said. That’s why he recommended that U.S. authorities look more closely into the use of stablcoins.
Jay Clayton recently said that courts are unlikely to be able to determine whether a crypto-asset is a security or not. Clayton explained that over time, any security can cease to be one.