Securities and Exchange Commission Chairman Jay Clayton is stepping down as the enforcement agency’s head at the end of the year, six months ahead of schedule.
Under Clayton, the agency took a hard line on cryptocurrencies, defining almost all as securities. That stance led to a harsh crackdown on initial coin offerings, virtually all of which were classified as illegal securities offerings. The lawsuits filed by the agency scuppered more than a few cryptocurrencies, culminating in June with instant messaging service Telegram’s agreement to buy back $1.2 billion worth of pre-sold tokens for its TON blockchain.
In all, it notes that Clayton’s SEC brought 56 cases since its July 25, 2017 DAO report first declared virtually all ICO tokens were securities. It added that the SEC stopped 18 suspected frauds involving blockchain, digital assets, or distributed ledger technology.
Clayton also led the agency as it defined first bitcoin and then ether as non-securities. Despite that he was widely unpopular in the cryptocurrency industry, where many boosters objected to the ICO crackdown.
That was in contrast to fellow SEC Commissioner Hester Peirce, who aggressively championed cryptocurrencies, often objecting to the agency’s hard line and challenging Clayton and the rest of the Commission. Along the way she earned herself the nickname Crypto Mom.
“It will be difficult to bid farewell to Chairman Clayton,” Peirce said in a tweet on Nov. 16. “He has been an excellent chairman, who has led the agency during a very challenging, but nevertheless very productive, period.”
Unappreciated accomplishments
Despite serving less than four years, the SEC said Clayton was one of its longest serving chairs in the Nov. 16 announcement of his departure. While the main press release did not touch on the agency’s position on digital assets and enforcement actions against ICOs and scams alike, a list of Clayton’s “Select SEC Accomplishments” delved deeply into cryptocurrency actions.
Most notable was the agency’s establishment of a Division of Enforcement Cyber Unit in September 2017, which focused on digital assets and cryptocurrencies, as well as broader hacking of securities-related information from public companies. A year later, Clayton oversaw the creation of the Strategic Hub for Innovation and Financial Technology—FinHub—with the goal of reaching out to companies in the financial technology (FinTech) industry, including digital assets and distributed ledger technologies.
The accomplishments release included a 13-point list of FinTech achievements, beginning with the DAO report and ending with the October joint statement with Commodity Futures Trading Commission (CFTC) and Financial Crimes Enforcement Network (FinCEN) warning any company or person involved with digital assets must comply with the anti-money-laundering (AML) and countering the financing of terrorism (CFT) regulations, as well as have a suspicious transactions flagging system in place.
Within the cryptocurrency industry Clayton was also well known for flat out refusing to consider approving bitcoin exchange traded funds (ETF), saying anyone who thought it was possible to get an honest report on the price of bitcoin was “sorely mistaken”—just 10 days after saying bitcoin ETFs were making progress.
Which could be why the industry cheered so loud when the June announcement of his eventually unsuccessful appointment as U.S. Attorney for the critical Southern District of New York was first made public.
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