Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Former SEC chair Jay Clayton says he's optimistic about crypto in the wake of FTX's collapse — and breaks down 3 ways regulation can deter bad behavior

Former SEC chair Jay Clayton says he's optimistic about crypto in the wake of FTX's collapse — and breaks down 3 ways regulation can deter bad behavior

Former US Securities and Exchange Commission chairman Jay Clayton is optimistic about blockchain technology's potential to improve traditional financial systems, even as turmoil continues to weigh on cryptocurrency markets.
Despite FTX's sudden downfall last month, Clayton says "the promise of distributed ledger technology is remarkable given how many transactions are already taking place around the globe 24/7 with very few frictions." (Clayton is referring to the blockchain's ability to conduct borderless transactions, along with faster trading settlements than traditional equities.) 

"That undeniably demonstrates that the opportunity to improve the efficiency of traditional financial markets is vast," Clayton said in an interview with Goldman Sachs.

Clayton added: "But, again, we cannot and will not give up a proven and widely accepted regulatory framework in order to achieve those efficiencies more quickly."

FTX, the once $32 billion crypto empire started by Sam Bankman-Fried, filed for bankruptcy protection last month. Around $8 billion of customer funds went missing and FTX backers, including some of the largest venture capital firms, wrote their investments down to zero. 

Bankman-Fried was arrested this week in the Bahamas on charges including conspiracy to commit money laundering, violating campaign finance laws, and wire fraud. US prosecutors are accusing the disgraced founder of orchestrating a years-long scheme to defraud investors. 

"We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto," SEC Chair Gary Gensler said in a statement on Tuesday.

Regulatory oversight of digital assets are at the top of mind in the wake of FTX's fallout.

In the report from Goldman Sachs, former Commodity Futures Trading Commission (CFTC) chairman Timothy Massad argues that a lack of regulatory clarity has been detrimental to the industry while Clayton calls this viewpoint "garbage."

There are three things regulators can do to crack down on bad behavior in the space, according to Clayton:

1. The SEC and CFTC should require all crypto intermediaries to adhere to basic set of customer protections, while the "classification issues that many entities have been exploiting are resolved," Clayton says.

"[This] could easily be drawn from existing requirements for US securities and derivatives exchanges, and mandate that all crypto trading venues abide by them if they're not already registered entities with the SEC or CFTC," he added.

2. Regulators need to "vigorously" crack down on existing digital asset regulations such as enforcing platforms that are trading securities to comply with SEC rules. 

"The SEC's crackdown on unregistered initial coin offerings (ICOs) that I oversaw was necessary because these offerings flouted the rules for public offerings, often failing to provide even basic financial information or risk disclosures," Clayton said.

He added: "Both the SEC and the CFTC have also brought a variety of actions against unregistered or illegal products, Ponzi schemes, and other scams, and they should continue doing so."

3. Stablecoins need to be brought into compliance. 

Algorithmic stablecoin TerraUSD, which was billed as a safe way to park assets while earning yields, collapsed earlier this year as well. This caused many retail investors, those who used the crypto as a high yield-bearing savings accounts, to lose a lot of their money.

"Many stablecoins have unstable features often associated with counterparty and credit risk that should be regulated as cash equivalents would be for traditional financial intermediaries," Clayton said, adding that banking regulators can "take the lead on this."
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
×