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Outgoing SEC Chair Jay Clayton reveals what’s driving the rise of BTC

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The outgoing SEC Chairman Jay Clayton, who oversaw the rejection of nine Bitcoin ETFs during his tenure, has told CNBC that “inefficiencies” in the current payments systems are continuing to drive the popularity of Bitcoin.

Appearing on CNBC’s Squawk Box yesterday Clayton, who is due to step down by the end of the year, confirmed his agency’s general assessment that Bitcoin was not a security but a payment mechanism and store of value.

The chairman has been widely criticized by the Bitcoin community for keeping a tight rein on Bitcoin and cryptocurrency. However, during his years as SEC chair, Clayton was never a staunch opponent of Bitcoin in principle, but regularly expressed his fears that average investors could be subjected to unnecessary risk when investing in a Bitcoin ETF.

This risk is due to the SEC’s perception that the largely unregulated nature of some Bitcoin exchanges makes it too easy for the price of BTC to be manipulated. With Clayton out as SEC chair, some Bitcoin proponents believe the chance of a Bitcoin ETF being approved is now greater than ever.

Clayton believes Bitcoin will continue to grow, while regulations evolve.

What we are seeing is that our current payment mechanisms, domestically and internationally, have inefficiencies. Those inefficiencies are the things that are driving the rise of Bitcoin… And we’re gonna see more of that. We’re gonna see this mature and we’re gonna see more regulation around the digital payment space.

Clayton was the first member of the SEC to issue a warning about the potential pitfalls of ICO investing during the 2017 ICO craze, reminding the public that such products were usually regarded as securities offerings and subject to the regulations accompanying them.

“We did not regulate Bitcoin as a security,” said Clayton, explaining that BTC was “much more a payment mechanism and stored value” than a security.

When people use crypto assets as securities to raise capital for a venture, the SEC regulates that. And what was happening in the ICO craze was people were using ICOs and essentially making offerings of public securities without registering them with the SEC.

Clayton was nominated for SEC Chair by President Donald Trump in January 2017 and is leaving the position as one of the agency’s longest-serving chairs. In June 2020, Clayton was nominated by Trump to replace the outgoing United States Attorney for the Southern District of New York, a position which he says he sought out of a strong desire to continue his career in public service.





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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.