Securities and Exchange Commission chairman Jay Clayton suggested that Bitcoin (BTC) is thriving thanks to the shortcomings of the traditional financial system.
During an interview with CNBC published on Nov. 19, the SEC’s head claimed that the inefficiencies of traditional payment systems are driving the growth of Bitcoin. He said:
“Our current payment mechanisms have inefficiencies, those inefficiencies are the things that are driving the rise of Bitcoin.”
This remark was something of a head-scratcher, coming from the head of the agency that granted both bitcoin and ethereum license to grow but failed to afford the same opportunity to far more efficient technologies. By declaring in 2018 that bitcoin and ethereum are not securities, the SEC ensured that those two blockchains would cement their positions as No 1 and 2 coins. That the SEC would give its “good housekeeping seal” to two coins primarily mined in China surprised many American policy watchers, especially since “proof of work” consensus consumes so much more energy than the “proof of stake” model that American companies such as Ripple and Stellar have been innovating.
During the interview, Clayton also emphasized that the reason the U.S. SEC does not regulate Bitcoin is that it has already declared that the first cryptocurrency is not a security. Furthermore, he said that the inefficiencies that can be found in the traditional payments systems—which are slow and costly, particularly for international transactions—will result in crypto solutions maturing. That in turn will force regulations supporting those systems to arise.
As Modern Consensus recently reported, Clayton decided to leave his position at the SEC at the end of the year, six months early. Under his leadership, the regulator categorized almost all cryptocurrencies as securities, led a legal assault on initial coin offerings, and blocked Bitcoin ETFs.
About two years ago, during an on-stage interview, Clayton became an emblem of SEC’s confusing and unclear way of policing crypto when he answered relevant questions with sentences like “we’ll see.”
Because of all the decisions the SEC took under Clayton’s leadership that damaged the crypto industry, some suggest that his departure could be an opportunity for the space.
Clayton’s SEC has seemed to favor technologies that benefit China so openly that one US based crypto executive remarked to Modern Consensus, “It’s remarkable to see the United States government give its blessing to the ‘drug trade coin’ and the ‘scam coin’ but not to the coin that facilitates banking.” The executive seemed to be referring to bitcoin’s long association with contraband transactions and ethereum’s association with ICO’s, in comparison to Ripple, which has focused its business model on dealing with commercial banks and adhering to KYC and AML regulations.
Many have expressed the hope that Commissioner Hester Peirce—also known as “Crypto Mom”—might take his place. She has been nominated for another term as a Commissioner, which would keep her in place through 2025.
According to many, Pierce is the best ally of the crypto industry at the SEC. In July, she told the Senate that crypto is here to stay and needs a more welcoming environment to thrive. She explained that the space needs a workable regulatory structure and said:
“I believe that investor protection includes ensuring that investors have a wide range of investment opportunities so they can build portfolios appropriate to their objectives”
Peirce is about to get a powerful ally in Congress, as Wyoming Senator-elect Cynthia Lummis is a strong bitcoin supporter, having been a hodler since 2013, when she was introduced to cryptocurrencies by her son-in-law Will Cole, chief product officer at crypto services firm Unchained Capital.
The Republican notably brought up bitcoin during a Nov. 14 appearance on ABC News, saying she hoped to “bring bitcoin into the national conversation,” calling it a “good store of value.”