Jay Clayton testifies before the Senate Banking Committee
Jay Clayton testifies before the Senate Banking Committee during his confirmation hearing on March 23. Chip Somodevilla/Getty Images

On Tuesday, Jay Clayton, the Securities and Exchange Commission chairman testified in front the U.S. Senate Committee on Banking, Housing, and Urban Affairs.

The SEC’s opinion on blockchain

Throughout the hearing about the agency’s regulation of cryptocurrencies and blockchain technology as a whole, as expected, congress members shared their concerns and raised a lot of questions.

SEC Chairman Jay Clayton testifies at House hearing on SEC oversight – 09/24/2019

Jay Clayton published a written testimony, sharing an optimistic view towards the contribution of blockchain, prior to the hearing:

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“I am optimistic that developments in distributed ledger technology can help facilitate capital formation, providing promising investment opportunities for both institutional and Main Street investors.”

During the hearing, Clayton showed that he is well aware of the global trends:

“Digitization of the plumbing and other aspects of our financial system including payment transfers — it’s coming… It’s just the natural economic forces… taking fat out of the system.”

He believes that the United States should not be against the digitization as “If we fight it, it will go around us.”

A careful approach

Despite the optimism, the agency is conducting a “measured, yet proactive regulatory approach” and according to Clayton, they mainly protect the interest of investors and businesses.

The chairman mentioned that the SEC assesses digital assets in their Strategic Hub for Innovation and Financial Technology, also known as FinHub.

Clayton also shared some of the important actions the SEC took when it comes to fraudulent activities such as illegal promotion of ICOs. There are a couple of stories where companies try to raise capital using this approach.

This October the agency attained a restraining order against Telegram Group Inc. and the $1.7 billion unregistered ICO from its subsidiary.

As expected, Clayton was questioned about Facebook’s Libra coin and whether the project is a security. The chairman couldn’t make an immediate verdict but shared his opinion:

“But if what you’re doing is using a digital asset to raise capital for a project with the idea that you’re gonna get a return as a result of investing in that project, [it] sounds like a security.”

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