WASHINGTON—Sometimes the best scheduling comes down to luck. Day Three of the four-day conference known as Fintech Week was clearly scheduled to keep attendees in the vicinity through at least Wednesday. Securities and Exchange Commission Chairman Jay Clayton, Ripple CEO Brad Garlinghouse, and Ethereum co-founder Joe Lubin were all on the scene at the Showroom on 14th St NW. All the better that, by coincidence, the conference locale was just blocks from the high stakes testimony Mark Zuckerberg was delivering at the same time at the Capitol.
Clayton delivered the first keynote and said … not too much. He mentioned that the commission is doing its best to regulate the space but added that those trying to circumvent or leap ahead of those regulations will find themselves in thick soup. The moderator tried to make some news with two pointed questions and Chairman Clayton said he couldn’t discuss.
However, as careful as the chairman was to avoid breaking any bulletins among 200 or so fintech professionals who are growing impatient with waiting for clear regulatory guidance, one thoughtful question from moderator Chris Brummer, a Georgetown Law professor, did pry some news out of Clayton. And it will surely be music to the ears of companies like Ripple that focus on international payments.
Here’s the exchange:
Brummer: How would you rate the agency’s performance in resolving uncertainty? What do you think of toolbox at your disposal?
Clayton: The most powerful tool in the toolbox is dialogue. We want dialogue to facilitate private sector innovation. We expect the private sector not to be evading principles in a system that has worked extremely well for 85 years.
Brummer: Do you feel satisfied when you look at private participants that there is an understanding of how rules apply? See exchanges that are trying to create ratings—is there more they can and should be doing to engage you in the process of creating more clarity in the rules?
Clayton: DLT [distributed ledger technology] in private placement setting, that’s okay. If you want to make a public offering, wonderful, we’ll work with you. But you can’t have wide distribution to the retail public with trading and not have the protections of the Securities Act. If you want a free for all, you have to go to Congress. We don’t tell Congress what to do. In the securities space—where you’re raising money in a disaggregated space where there’s anonymity as to who your investors are—is a settled question. In terms of international payments, there may be more room to take a fresh look at this space.
With Ripple’s CEO scheduled to speak next, the many XRP Army soldiers in the room were delighted to hear the Chairman’s positive language regarding taking a “fresh look” at companies that focus on International payments. That happens to be Ripple’s chief business.
Brummer, the Georgetown professor who founded Fintech Week, next welcomed Garlinghouse to the stage. He mentioned “the Libra project” and Garlinghouse interrupted with a diss: “not project—it’s a white paper.”
Garlinghouse pointed out that, whatever you think about these individuals, the CEO of one of the most valuable companies in the world is on Capitol Hill testifying about digital currency and the president of the United States is tweeting about it. That was unthinkable five years ago.