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Bitcoin is a payment mechanism, not security: SEC Chair Clayton

The possibility of a Bitcoin ETF appears to be higher than ever as Clayton leaves the SEC as one of its longest-serving chairs

The outgoing SEC Chairman Jay Clayton, who has been heavily criticised by the crypto community for his stringent views on Bitcoin and cryptocurrency, told CNBC that the agency’s general assessment was that Bitcoin is not a security but a payment mechanism and a store of value.

Appearing on CNBC’s Squawk Box, the chairman explained that the “inefficiencies” in the current traditional payments systems have significantly contributed to driving Bitcoin’s popularity. Though Clayton in his tenure as the SEC Chair has never been a staunch opponent of Bitcoin in principle, he has resisted the possibility of a Bitcoin exchange-traded fund (ETF).

As Clayton’s tenure comes to an end, some Bitcoin proponents believe that the chances of receiving approval for a Bitcoin ETF are higher than ever. However, the SEC has argued that the presence of a considerable number of unregulated Bitcoin exchanges can lead to  BTC price manipulation. Clayton himself has regularly expressed his concerns on average investors being subjected to unnecessary risks when investing in a Bitcoin ETF.

Clayton had previously also explained the lack of robust mechanisms to prevent market manipulation with regards to a Bitcoin ETF, in an interview with CNBC.

It is important that “we have sophisticated rules and surveillance to ensure that people are not manipulating the stock market, those cryptocurrency markets by large do not have that, and we’re working hard to see if we can get there, but I’m not just going to flip a switch and say this is just like stocks and bonds, because it’s not”, he had said.

Clayton was also the first SEC member to warn the public of the potential pitfalls of investing in an ICO during the 2017 ICO craze. He had further reminded that such products were regarded as securities offerings and thus subject to the respective SEC regulations.

“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”, he explained.

Nominated by President Donald Trump in January 2017, Clayton is leaving the SEC as one of its longest-serving chairs. After being nominated to replace the outgoing United States Attorney for the Southern District of New York in June this year, Clayton explained that he accepted the position out of a strong desire to continue his career in public service.

Written by Harshini Nag 

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