As this Law360 article notes, SEC Chair Gary Gensler appeared with former SEC Chair Jay Clayton at the Digital Asset Compliance & Market Integrity Summit yesterday, and they expressed a rare meeting of minds when it comes to regulating digital assets. When Gensler called for crypto firms to come within the SEC’s current registration framework, Clayton stated “we’re very much of the same mind on this, ask what is the form and function that’s being provided, what is the product, and map that to the traditional model space, and look to that for the type of regulation that applies.” The article goes on to note:
“While acknowledging the potential for blockchain technology to transform the modern financial system, both Gensler and Clayton were dubious of the notion that the decentralized quality of certain DeFi products and platforms, or indeed just their being labeled as “decentralized,” excused those products from the SEC’s reach.”
During Clayton’s tenure at the SEC, the ICO boom reached a fevered pitch, and the SEC took a number of steps toward trying to regulate the sale of tokens that were “investment contracts” under the Howey test, such as through the The DAO Section 21(a) Report, numerous Staff statements on the applicability of the federal securities laws to token offerings, no-action letters and a variety of Enforcement actions.
– Dave Lynn