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SEC Chair Jay Clayton to Leave the Commission by Year End—Implications for the Future of Crypto

The current Chairman of the United States Securities and Exchange Commission (SEC) Jay Clayton is set to leave the commission after a three and a half year tenure.

As contained in the official release by the commission, Clayton ranks as one of the longest-serving Chairmen of the SEC and his departure comes following his promotion of “market integrity and investor protection.” The SEC announcement read:

“The U.S. capital markets ecosystem is the strongest and most nimble in the world, and thanks to the hard work of the diverse and inclusive SEC team, we have improved investor protections, promoted capital formation for small and larger businesses, and enabled our markets to function more transparently and efficiently.”

While the SEC gave no direct reason why Clayton decided to end his tenure, the departure appears seems imperative with the possibility of the US President-elect nominating a candidate to take charge of the key agencies including the SEC.

What Clayton’s departure could mean for crypto

A review of the key events during Clayton’s reign as the SEC boss can give an idea of what the agency will either improve on or relax when it comes to the crypto sphere. The tenure of Jay Clayton was filled with the regulatory overturn of two key crypto projects including Facebook’s Libra and Telegram’s Gram token Initial Public Offering (ICO).

The project from the two social media giants has not just met with a negative reception from the SEC, that of Facebook has not still been made to see the light of day while Telegram was forced to abandon its Telegram Open Network (TON) while refunding investors in the Gram ICO sales.

While the SEC under Clayton regulated the crypto space with more focus on protecting investors, the agency recently increased its fundraising limits for the US capital markets, a move that has the potential to benefit blockchain and crypto businesses. This move shows the balanced position of Clayton’s SEC to ensure a well-regulated market.

What could happen to the SEC after Clayton’s departure

The fate of the SEC post-Clayton is largely uncertain. The regulatory stance of the SEC will largely be dependent on who President Joe Biden appoints to key positions according to Jake Chervinsk, the General Counsel at Compound Finance.

While it is largely uncertain who will take up key positions in regulatory bodies including the SEC under President Biden, Blockchain.News reported that Bitcoin will likely be the ultimate winner as noted by crypto enthusiast and entrepreneur Qiao Wang.

Former SEC Chair Jay Clayton Joins Crypto Advisory Board

The former Chairman of the United States Securities and Exchange Commission (SEC), Jay Clayton has taken up an advisory role with digital asset investment firm One River Digital Asset Management, keeping him in the cryptocurrency space for the foreseeable future.

As detailed in the official press release, Clayton’s appointment comes alongside that of Kevin Hassett, and Jon Orszag. Together, they will help stir policy recommendations for One River Digital Asset Management’s newly formed Academic and Regulatory Advisory Council.

Jay Clayton resigned from the SEC back in December, following a 3-year stint navigating affairs with the market regulator. Under his leadership at the time, Clayton fought for investor’s protection as well as market integrity, remarkably clamping down on scams in the crypto ecosystem.

Notable projects such as the Facebook-Libra project now rebranded as Diem as well as Telegram’s TON Network were prevented from seeing the light of day under Clayton and he notably spearheaded the ongoing court duel between Ripple and the SEC, over alleged unregistered XRP securities.

The understanding of Clayton within the United States regulatory landscape has been highlighted as a boost for One River Digital Asset Management, according to the company’s CEO, Eric Peters.

“It is crucial to understand how digital assets will interact with existing laws and regulatory bodies while engaging with governments in an open and transparent manner,” explained Mr. Peters. “The One River Academic and Regulatory Advisory Council will help us consider how these new digital systems and the investment opportunities they present will best fit within existing policy, while also helping us think through how to advance these frameworks in ways that ensure the US continues to lead the world in financial innovation and asset management.”

While Clayton and his fellow appointees will be active in One River’s regulatory adherence affairs, the former SEC Chairman appears to have returned to his former law firm, Sullivan & Cromwell L.L.P. as a Senior Policy Advisor.

One River Asset Management Closes $41M Funding Round Led by Goldman Sachs

One River Asset Management, one of the leading institutional asset managers in the cryptocurrency ecosystem, has completed a $41 million Series A funding round led by Coinbase Ventures and Goldman Sachs Group Inc, amongst others.

As noted by the firm, the funds will help deepen its ties with financial and digital industry leaders and provide capital to accelerate One River Digital’s ongoing development further.

The One River Asset Management’s funding and its high-profile participants, including the two Wall Street giants named above, showcases the growing influx of mainstream players into the digital currency industry. With many ways to embrace crypto-related investments, active backing players in the space through venture capital funding has proven to be a very safe bet for many, including Goldman Sachs.

“We are thrilled to have the support of these five new strategic investors. Each institution is a leader of their specific category of finance, bringing with them unique experiences, connectivity, and capabilities,” said Sebastian Pedro Bea, President of One River Digital. “We are already collaborating to develop and distribute an expanding range of institutional digital asset strategies that best meet the needs of our global clients.”

One River Asset Management made headlines back in March when it employed former US Securities and Exchange Commission (SEC) boss Jay Clayton as one of its advisors. The aim was to get a headstart in navigating the regulatory landscape as the company seeks to roll out a number of products to increase its market share.

A number of digital currency firms and projects have raised funds successfully this year. Amongst the most notable ones include the $100 million Series C round announced by Singapore-based Digital financial service platform Matrixport and Avalanche’s recent $230 million raised from a group of investors led by Polychain and Three Arrows Capital, amongst others.

Ex-SEC Chair Jay Clayton Says He's a "Huge Believer" in Crypto

Former Chairman of the United States Securities and Exchange Commission (SEC) Jay Clayton expressed his trust in the nascent digital currency world saying he is a “huge believer” in the technology underpinning the industry.

“I am a huge believer in this technology,” says Jay Clayton on crypto. “The efficiency benefits in the financial system and otherwise from tokenization are immense.”

This comment was made while speaking in an interview with CNBC’s Squawk Box and it came as a shock to many seeing how Clayton treated the digital currency ecosystem under his tenure. The SEC, at the very tail end of his tenure as SEC Chairman last December, filed a damning $1.3 billion lawsuit against Ripple for selling XRP coins as securities. The case is still ongoing.

When asked about his take on the matter, Clayton refused to comment, saying the facts are before law enforcement.

Clayton was appointed by former US President Donald Trump in 2017 and he served until 2020, a time in which the SEC rejected many applications for a Bitcoin or crypto-focused Exchange Traded Fund (ETF) product. Clayton’s successor, Gary Gensler has finally approved a Bitcoin Futures linked ETF, further highlighting the likely bias Clayton has against such products.

However, Clayton’s perspective towards crypto seems to have broadened since joining One River Digital Asset Management as an Advisor earlier this year. On the Squawk Box show, Clayton shared his thoughts on how crypto should be regulated.

“Crypto is a wide variety of products, with a wide variety of functions, and the rules of our financial system are clear and long-standing. If you are raising capital for a project, you have to register your capital raising with SEC. If you are trading securities it has to be on a registered venue, but there are many crypto sectors like stablecoins that are not securities and outside of SEC purview.”

In all, Clayton believes digital currencies should be implemented but in a systematic approach.

Voyager Digital Taps Former OCC Boss Brian Brooks as Director

Voyager Digital, one of the publicly traded cryptocurrency platforms in the United States, has tapped the services of Brian Brooks, the current Chief Executive Officer of Bitfury, as one of its non-Executive Directors.

The appointment was announced on Monday, and per the company, Brooks’ works start immediately.

“On behalf of the Board, I welcome Brian to the Board as an independent, non-executive Director.” said Philip Eytan, Chairman of Voyager Digital, “Brian’s extensive background as an executive at major crypto companies and as the leader of important government regulatory initiatives in the crypto space will help propel the growth of digital assets and Voyager’s business.”

Brooks’ appointment was informed by the wealth of experience he has gathered in his professional career while serving as the Comptroller of the Currency under former President Donald Trump’s administration. Following his departure from the OCC, Brooks has taken on roles in the digital currency ecosystem, and this, to an extent, has broadened his perspective the more in the space.

Brooks is known for his proactiveness in helping to advance the growth of the nascent digital currency ecosystem. Under his reign at the OCC, the regulator permitted Federally Chartered Banks to keep custody of stablecoins, one of the first and crucial gestures of openness to the crypto ecosystem from a Federal Agency.

The recognition of Brooks as a crypto advocate is duly recognized across the entire digital currency ecosystem as he represented Bitfury in the U.S. House Committee on Financial Services to discuss cryptocurrencies. The ascension of Brian Brooks mimics that of Jay Clayton, the former Chairman of Security and Exchange Commission. He was appointed earlier in the year as an Advisor with One River Digital Asset Management company.

With the appointment of Brooks and Clayton making headlines, it is becoming evident that digital currency platforms are prioritizing the integration of former regulators in preparation for the future of the ecosystem.

Ripple CEO Brad Garlinghouse Criticizes Former SEC Chair Jay Clayton's Regulatory Approach

The Chief Executive Officer of Ripple, Brad Garlinghouse, has voiced his disagreement with the regulatory posture taken by Jay Clayton, who formerly served as Chair of the US Securities and Exchange Commission (SEC). This criticism surfaced in response to statements made by Clayton during an interview with CNBC on June 29, 2023. Clayton was discussing the SEC’s more aggressive legal stance against corporations, especially those operating in the cryptocurrency industry.

The Securities and Exchange Commission (SEC) started taking a number of regulatory measures against cryptocurrency organizations and exchanges at the beginning of 2023 in an effort to safeguard investors. The regulatory environment has been significantly disrupted as a result of these moves, which has increased the level of legal uncertainty for a variety of crypto organizations. In an interview with CNBC, Clayton said that legal action should only be conducted against corporations that have good legal grounds, and he emphasized that regulatory agencies should provide claims and policies that are capable of withstanding the examination of a court.

In his response to Clayton’s interview, Garlinghouse pointed out the irony of the situation, particularly in light of the fact that the SEC had previously initiated a case against Ripple when Clayton was in charge of the agency. Ripple, Garlinghouse, and Christian Larsen, the co-founder of Ripple, were accused in a lawsuit that was filed in December 2020 of arranging a “unregistered, ongoing digital asset securities offering,” and it was claimed that they made more than $1.3 billion from the sale of XRP. Garlinghouse brought out the inconsistency between Clayton’s words and his actions and emphasized the flimsy legal foundation of the SEC’s case against Ripple, which intended to categorize XRP as a security. He did this by pointing out the discrepancy between Clayton’s words and his actions.

The disclosure of Clayton’s remarks from June 2023 has emerged as a topic of conversation among the parties engaged in the current court procedures, which are still ongoing. The Securities and Exchange Commission (SEC) submitted a petition in October asking the court to dismiss the allegations against Garlinghouse and Larsen without prejudice, which further stirred the current discussion about the regulatory environment for cryptocurrencies.