Securities and Exchange Commission Chairman Jay Clayton testified Tuesday before the U.S. Senate Committee on Banking, Housing, and Urban Affairs.
SEC Optimistic On Blockchain
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A lot of the concerns raised by Congress members during the hearing related to the agency’s regulation of cryptocurrencies and the underlying blockchain technology.
In written testimony ahead of the hearing, Clayton told Congress that he is optimistic about blockchain technology contributing to the U.S. economy.
“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,” the SEC chairman said.
Clayton: We Shouldn’t Fight Digitization
“Digitization of the plumbing and other aspects of our financial system including payment transfers — it’s coming,” Clayton told Congress during his oral testimony. “It’s just the natural economic forces ... taking fat out of the system.”
The U.S. should not fight that digitization, Clayton said.
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"If we fight it, it will go around us."
The SEC's Measured Approach
The SEC chairman told Congress that the agency has taken a “measured, yet proactive regulatory approach” that protects the interests of businesses and investors.
Most of the assessment of digital assets take place in the SEC’s Strategic Hub for Innovation and Financial Technology, better known as FinHub, Clayton told Congress.
Clayton highlighted actions the agency has taken against fraud related to digital assets, including unlawful promotion of initial coin offerings, a method by which companies seek to raise capital by offering native cryptocurrencies.
In October, the SEC obtained an emergency restraining order against Telegram Group Inc and its subsidiary’s $1.7-billion ICO, Clayton said.
Is Facebook’s Libra A Security?
The SEC chairman was asked to describe the agency’s stance on whether the Facebook Inc (NASDAQ:FB)-led Libra cryptocurrency project is a security.
Clayton said that he couldn’t make a decision about that on the spot.
“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,” he said in response to a question from Rep. Patrick McHenry, a North Carolina Republican.