Jay Clayton praises blockchain as he joins crypto platform Fireblocks

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Jay Clayton, the former US Securities and Exchange Commission chair, has said he believes both in the promise of blockchain technology and the need for more regulation for the crypto sector.

“There’s a US government interest in ensuring that, to the extent the world starts to digitise, US regulation continues to be as robust, continues to be the gold standard, but also facilitates the adoption of the technology,” he told the Financial Times, as he joined the advisory board of digital asset infrastructure provider Fireblocks.

“I’ve always loved the potential efficiencies of this technology,” he added. “But just because technology holds great promise doesn’t mean you can use it to evade the law.”

New York-based Fireblocks provides a “one-stop” platform for institutions to hold, transfer and issue digital assets across different jurisdictions. Its clients include the London challenger bank Revolut, retail trading platform eToro and crypto bank Galaxy Digital. 

Last month, Fireblocks raised a Series D funding at a $2bn valuation with Sequoia Capital, Stripes and Spark Capital leading the round. Its investors include Bank of New York Mellon, the venture arm of Silicon Valley Bank, and the venture arm of Thailand’s Siam Commercial Bank, SCB 10X. 

Clayton said he had not known Fireblocks, which has secured more than $1tn in digital asset transfers, until they approached him about the role. But he said that a shift to blockchain technology in the financial infrastructure sector was “close to inevitable” and that he appreciated that the start-up was “committed around the globe to doing things in the right way from a regulatory perspective”.

“The back office space, the institution to institution space, where people are already familiar with digital entry and the like, is a good place,” he said.

During his tenure at the SEC between 2017 and 2020, Clayton was known for curtailing the freewheeling initial coin offering (ICO) market by designating the digital fundraisings as securities. His staff also refused to approve a Bitcoin exchange traded fund, frustrating many in the industry at the time. 

Clayton told the FT that the securities law framework was already “well structured to deal with digital asset securities”, but anticipated that new regulation might be needed to oversee other emerging digital assets that did not fit into the securities category, such as digital collectibles or trading cards. 

He also warned that stablecoins, increasingly important assets in the digital economy, could be an entry point for illicit transactions “if they’re not created, maintained and monitored in a regulated environment”. He commended Janet Yellen, Treasury secretary, for bringing US regulators together recently to carve out a framework to govern them. “Questions like this should not be decided on an agency by agency basis,” he said. 

Clayton is just the latest US financial watchdog head to pursue opportunities in the crypto economy.

Christopher Giancarlo, former head of the Commodity Futures Trading Commission, joined the board of bitcoin lender BlockFi earlier this year, and has also founded a research initiative exploring options for a US central bank digital currency. 

In March, Clayton joined the advisory board of a crypto asset manager One River Asset Management, which has submitted its own bitcoin ETF application. Since leaving the SEC, he has also joined Apollo Global Management as lead independent director.