SEC Chair Got into ‘Heated Debate’ on Cryptocurrency

Details of a recent roundtable hosted by the SEC has raised eyebrows after a description of a “heated debate” between SEC chair Jay Clayton and an unknown lawyer was released.

This was seen in a transcript from the roundtable in June and was indicative of the sometimes passionate discussion around cryptocurrencies within the agency.

Specifically, at the start of the June 4 roundtable on conduct standards for investment professionals, SEC official Eric Werner introduced Jay Clayton, who was present at the event.

Werner meanwhile, is the associate director of enforcement for the SEC’s Fort Worth regional office.

In discussing Clayton’s work at the agency, Werner brought up an instance in which he walked into a “heated” discussion between the SEC chairman and an unnamed attorney about cryptocurrency, but he took great pains to clarify and debatably laud Clayton’s commitment to the issue in question.

Werner was quoted as saying:

“In fact, the first time that I met the Chairman, I walked into a heated discussion he was having with an attorney in my office about the legitimacy and viability of cryptocurrencies. I was taken aback, honestly, about how much thought he had given to this space and the issues surrounding that. And what I have learned in the time working with him is that he has given every single issue that he has confronted that same dedication and thought process.”

Clayton’s SEC is one agency among several other U.S. regulatory bodies that are taking a leading role in crafting new regulations for the industry.
The SEC is particularly focused on initial coin offerings (ICOs), as Clayton has remarked publicly on the technology in the past.

This can be traced back to a hearing in February where Clayton stressed the difference between cryptocurrencies and ICO-derived tokens that he viewed as securities.

“I want to go back to separating ICOs and cryptocurrencies. ICOs that are securities offerings, we should regulate them like we regulate securities offerings. End of story,” he said at the time.

Unfortunately, the SEC has as of yet not made clear distinctions between what ICO tokens qualify as a security, and which are not. In fact, the “utility token” moniker itself is under significant scrutiny.

This has made it very difficult for ICO’s to operate without fear in the US. After all, the entire purpose of ICO’s was to set capital free, unencumbered by the requirements of obtaining “accredited investor” status.

“Accredited investor” status, refers to an individual whose net income is $200k/year or more, or $1,000,000 in net assets.

It stems from the condescending notion that only rich people should be allowed to invest in certain investment opportunities because those with less capital don’t have the “education” to make sound investment decisions and thus must be protected from their own supposed ignorance.

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