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
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
×