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SEC Chairman Steps Out

The Chairman of the US Securities and Exchange Commission, Jay Clayton submitted his letter of resignation to Donald Trump today. Today is his final day at the office after almost four years in the role.

He didn’t step out discreetly.

Under his rule, the SEC chased many high profile crypto projects which it supposed over and over again, held unregistered securities offerings.

The SEC reinforced its biggest offense ever when it filed a lawsuit against Ripple Labs, the company behind XRP, which it alleged has raised $1.3B in unregistered securities sales ever since 2013. The price of XRP is currently collapsing because of this.

Included in other large crypto projects that experienced the wrath of SEC are Block One and Telegram. Block One settled with the SEC over its $4B ICO for the EOS blockchain in late 2019. Telegram on the other hand had to return $1.7B of investors’ money after a protracted case with the SEC caused the collapse of its project.

Clayton’s Crypto Regulation

Clayton took over as SEC chairman amid the infamous crypto bubble in 2017. He quickly became the center of attention after calling out entrepreneurs that “initial coin offerings – whether they represent offerings of securities or not – can be effective ways for entrepreneurs and others to raise funding.”

In a similar statement, he reminded the crypto community that:

“A change in the structure of a securities offering does not change the fundamental point that when a security is being offered, our securities laws must be followed.”

He established his point by leading investigations into ICOs, searching for probable violations of the mentioned securities laws. During Clayton’s tenure, the SEC launched the Strategic Hub for Innovation and Financial Technology (FinHub) to help market stakeholders understand how the laws functioned in the context of an ICO.

Although Clayton was one of the first major regulators to talk about crypto, the community criticized the chairman for his lack of rigor.

Failed to make a clear crypto taxonomy law emerged several debates on whether cryptocurrencies like XRP are securities. Notwithstanding the requests from investors to announce a ruling on XRP, Clayton refused to do a formal statement.

Another conflict in Clayton’s leadership was about the Bitcoin ETF. Under his ruling, the Commission has rejected all proposals made.

Experts say that Clayton’s exit is good news for those who look forward to a Bitcoin ETF.

In total, the SEC chairman is one of the most critical US positions when regarded with crypto regulation. Clayton’s replacement will have a huge impact on the industry regarding ETF approval and more transparency on a broad range of matters in the next few years.

Securities, the asset class that the SEC handles, mean investment contracts. The Clayton-era SEC had spent much in the last four years working out if cryptocurrency tokens develop investment contracts.

If the coin’s creator named the coin as an investment and hadn’t registered sales of the coin with the SEC, then the agency will chase after the projects and prosecute.

Clayton decided in June 2018 that BTC didn’t constitute a security under the US law. He maintained this position during his employment at the SEC.

Clayton recapitulated his position last month, “We determined that bitcoin was not a security, it was much more a payment mechanism and stored value,” he said.

In his resignation letter, Clayton acknowledged the 4,500 SEC staffers that he led since 2017 for “their services to the investor, our markets, and our country.”

Clayton formerly planned to step down in June 2021, but he announced last November that he will leave by the end of this year.

To Clayton, have a pleasant journey.

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