Beautiful Virgin Islands

Thursday, Jul 24, 2025

Former SEC chair Jay Clayton says he's optimistic about crypto in the wake of FTX's collapse — and breaks down 3 ways regulation can deter bad behavior

Former SEC chair Jay Clayton says he's optimistic about crypto in the wake of FTX's collapse — and breaks down 3 ways regulation can deter bad behavior

Former US Securities and Exchange Commission chairman Jay Clayton is optimistic about blockchain technology's potential to improve traditional financial systems, even as turmoil continues to weigh on cryptocurrency markets.
Despite FTX's sudden downfall last month, Clayton says "the promise of distributed ledger technology is remarkable given how many transactions are already taking place around the globe 24/7 with very few frictions." (Clayton is referring to the blockchain's ability to conduct borderless transactions, along with faster trading settlements than traditional equities.) 

"That undeniably demonstrates that the opportunity to improve the efficiency of traditional financial markets is vast," Clayton said in an interview with Goldman Sachs.

Clayton added: "But, again, we cannot and will not give up a proven and widely accepted regulatory framework in order to achieve those efficiencies more quickly."

FTX, the once $32 billion crypto empire started by Sam Bankman-Fried, filed for bankruptcy protection last month. Around $8 billion of customer funds went missing and FTX backers, including some of the largest venture capital firms, wrote their investments down to zero. 

Bankman-Fried was arrested this week in the Bahamas on charges including conspiracy to commit money laundering, violating campaign finance laws, and wire fraud. US prosecutors are accusing the disgraced founder of orchestrating a years-long scheme to defraud investors. 

"We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto," SEC Chair Gary Gensler said in a statement on Tuesday.

Regulatory oversight of digital assets are at the top of mind in the wake of FTX's fallout.

In the report from Goldman Sachs, former Commodity Futures Trading Commission (CFTC) chairman Timothy Massad argues that a lack of regulatory clarity has been detrimental to the industry while Clayton calls this viewpoint "garbage."

There are three things regulators can do to crack down on bad behavior in the space, according to Clayton:

1. The SEC and CFTC should require all crypto intermediaries to adhere to basic set of customer protections, while the "classification issues that many entities have been exploiting are resolved," Clayton says.

"[This] could easily be drawn from existing requirements for US securities and derivatives exchanges, and mandate that all crypto trading venues abide by them if they're not already registered entities with the SEC or CFTC," he added.

2. Regulators need to "vigorously" crack down on existing digital asset regulations such as enforcing platforms that are trading securities to comply with SEC rules. 

"The SEC's crackdown on unregistered initial coin offerings (ICOs) that I oversaw was necessary because these offerings flouted the rules for public offerings, often failing to provide even basic financial information or risk disclosures," Clayton said.

He added: "Both the SEC and the CFTC have also brought a variety of actions against unregistered or illegal products, Ponzi schemes, and other scams, and they should continue doing so."

3. Stablecoins need to be brought into compliance. 

Algorithmic stablecoin TerraUSD, which was billed as a safe way to park assets while earning yields, collapsed earlier this year as well. This caused many retail investors, those who used the crypto as a high yield-bearing savings accounts, to lose a lot of their money.

"Many stablecoins have unstable features often associated with counterparty and credit risk that should be regulated as cash equivalents would be for traditional financial intermediaries," Clayton said, adding that banking regulators can "take the lead on this."
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
South African Police Minister Suspended Amid Organised Crime Allegations
Nvidia CEO Claims Chinese Military Reluctance to Use US AI Technology
×