Bitcoin might have a mole, a sympathetic insider at the highest levels of the US financial regulatory apparatus, if recent ecosystem press accounts are to be believed. According to a US Securities and Exchange Commission (SEC) meeting transcript, SEC Chair Jay Clayton has privately expressed deep knowledge of cryptocurrencies, including during a heated exchange with staff. Looming spectres of exchange traded fund listings, deciding which digital assets constitute securities, and much more, mean crypto needs all the friends it can get.
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Transcript: Jay Clayton Had Heated Exchange with SEC Staff Regarding Crypto
In early June, Eric Werner, Associate Director of Enforcement in the Ft. Worth Regional Office of the SEC, set about welcoming his boss to Houston during a roundtable meeting. Sunshine laws usually demand such events be recorded, and sometimes even transcribed word for word. That appears to be the case here, as Associate Director Werner was tasked with introducing SEC Chair Jay Clayton.
It’s arguably the most interesting part of the 19 page document, if only for the suck-up quality of Mr. Werner’s remarks. He flowers Chair Clayton with effusive praise so saccharine readers’ teeth ache after only a few paragraphs. It was Mr. Werner’s “privilege,” for example, to make the introduction of a man so humble he insists “we call him Jay.” However, “don’t be fooled by his informality,” the Associate Director swoons, “because, underneath that, lies incredible aptitude, intellect and dedication” of his superior. It goes on in this manner.
Arriving to page 12, after a laundry list of the SEC Chair’s credentials and super-human like attributes protecting the country and commerce itself, “the Chairman has found time to delve into some cutting edge issues,” Mr. Werner begins on line 1. Finding time to accomplish all of that having assumed office a tender 14 months ago is nothing short of miraculous.
With Friends Like Chair Clayton, Who Needs Enemies
Chair Clayton, according to the Associate Director turned personal cheerleader, also immerses himself into “things like distributed ledger technology, the dark web and initial coin offerings. 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.” 
The cryptosphere has run a little wild with the insight, and assumed Chair Clayton was taking a positive position, outlook toward things crypto. And that does seem to be a fair reading of the passage’s import, seeing as how the SEC is presupposed to crack down on non-government financial innovation. But nowhere is the Chair quoted as affirming cryptocurrencies. It’s turns of phrase from the Associate Director such as “legitimacy and viability of cryptocurrencies” that might be causing most of the ruckus. Regulators at the highest levels of finance engaging in honest debate, much less about decentralized digital money, is indeed a revelation.
Still, Mr. Clayton is on record in several instances as insisting nearly all initial coin offerings (ICOs) constitute securities according to his understanding of the Howey Test, and are therefore automatically subject to SEC jurisdiction. SEC field offices have been aggressive in helping to prosecute peer-to-peer Bitcoiners across the US as unregistered money exchanges. That combination has all but dried up ICOs in the United States, and heavy market capitalized cryptocurrencies such as Ethereum’s ETH and Ripple’s XRP have recoursed to lawyering up just in case they’re tagged securities. Lastly, the bitcoin ETF drama has unsettled crypto markets to no end, rising and falling on the shabbiest of rumors and hints coming from the SEC. With friends like Mr. Clayton, who needs enemies?, might be the more appropriate stance by enthusiasts at this point.
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Images via Pixabay, SEC.
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