SEC Chairman Jay Clayton Blames Weak Payments System and Inefficiencies for Bitcoin’s Rise
Jay Clayton, the outgoing Chairman of the U.S. Securities and Exchange Commission (SEC) has attributed the recent price surge in Bitcoin to the weak performance and the inefficiencies of the existing payments systems.
Well, in a way Clayton is all right, after all the failure of the banking system is the very reason behind Bitcoin’s existence. While appearing on CNBC’s Squawk Box, Clayton said: “We determined that bitcoin was not a security, it was much more a payment mechanism and stored value. Our current payment mechanisms--have inefficiencies those inefficiencies are the things that are driving the rise of bitcoin.”
Although not an outright critic of Bitcoin, the SEC Chairman has rejected proposals for several Bitcoin ETFs in the past. Besides, he’s also the man going after several cryptocurrencies and calling them as security tokens.
Interestingly, during his recent interview, Clayton seemed optimistic about the future of cryptocurrencies. He added that with more regulations in the digital currency space, the crypto market will continue to mature.
Speaking about the SEC’s crackdown on cryptocurrencies launched through ICOs, Clayton said that these crypto projects raised funding even without registering with the regulator. He added: “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 the first one to issue warning about a possible market crash during the ICO craze of 2017. Since then the SEC has been educating the public that such product are subjected to securities offerings and legal only if the regulator approves it.
Just like the ICO frenzy, Clayton believes that in case of Bitcoin ETF, an average investor would be subjected to unnecessary risks. The SEC believes that the highly unregulated nature of Bitcoin exchanges makes it a potential platform for high BTC manipulations and exploit gullible investors.
Well, nothing has deterred Bitcoin investors as BTC continues to be the top pick of investors. With the Coronavirus-led economic crisis, Bitcoin has turned to be an even more favourable inflation hedge as investors prefer the crypto over the yellow metal Gold.
At press time, Bitcoin (BTC) is trading at $18,298 with a market cap of $339 billion.