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Regulation

Jay Clayton will step down as US SEC chair by year’s end

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Jay Clayton, who has served as the chairman of the United States Securities and Exchange Commission since May 2017, will be leaving the agency by the end of 2021.

In its official news release, the agency noted that Clayton has been one of its longest-standing chairs. Crypto enthusiasts will likely be familiar with the agency’s work, whose activities have engaged some of the most controversial regulatory questions facing the new asset class. 

These include early debates as to whether or not certain crypto assets should be defined as a security in accordance with the 71-year-old Howey Test.

As chairman, Clayton also warned Bitcoin (BTC) investors last year that they would be “sorely mistaken” in expecting that the cryptocurrency could be traded on mainstream exchanges without more robust regulation in place.

During Clayton’s tenure, the SEC reportedly obtained orders for over $14 billion in monetary remedies, including a record $4.68 billion in the fiscal year 2020 alone, and returned approximately $3.5 billion to harmed investors. The commission also paid out roughly $565 million to whistleblowers, which included the largest single award sum paid out to a whistleblower to date of $114 million. In his departure statement, Clayton said:

“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 today’s news release does not give any hints as to the chairman’s next moves, U.S. Attorney General William Barr recently announced Clayton’s nomination to serve as the next United States Attorney for the Southern District of New York.



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Regulation

New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.