Jay Clayton, former Chairman of Securities and Exchange Commission, is joining Fireblocks. This $2 billion Israeli-based crypto custodian is focused on advisors and institutions.
This appointment represents the second crypto-focused engagement for the former regulator, following his March 2021 appointment to the Board of Directors at One River Asset Management, which recently filed a carbon-neutral Bitcoin ETF application with the SEC.
Clayton will lead Fireblocks, the first pure-crypto institution in his resume. He will also help to develop security for the rapidly growing firm.
In just a few months, the company had grown from 100 clients to 500. This was in sectors like crypto trading, traditional financial institutions and crypto retail. Fireblocks has been the custodian of over $1 trillion worth digital assets since its inception in 2019. Fireblocks’ focus on large institutions makes it the ideal firm for Clayton to join. This is despite the fact that Clayton spent his time at the SEC. The SEC took a conservative, risk-averse, but open-minded approach to the growing crypto industry, while also being open to the potential for blockchain technology to improve transparency and efficiency in the financial system.
Clayton states that he is very optimistic about the potential of blockchain technology and other technologies to remove frictions from the system. As we integrate blockchain technology in our financial ecosystem, you will have better and safer custody and transfer.
Fireblocks’ growth is correlated with a maturation in the industry and a surge in valuations. This saw bitcoin hit an all-time high of $64,000, and total market capitalization for all crypto assets reach over $2 trillion. It faces many obstacles ahead.
Other than bitcoin and ether?The SEC has yet to decide whether or not other native digital assets, such as DeFi tokens and NFTs, are securities.
Clayton stated that Fireblocks is ready to address any impact on 700 of the platform’s supported assets because of uncertainty around classification.
He says, ‘I know that Fireblocks CEO Michael Shaulov and his colleagues are committed towards regulatory compliance.’ “So, to the extent that the SEC decides that certain digital assets trading on platforms are securities and should be regulated accordingly,” he says.
Some industry observers and insiders may be surprised that Clayton is getting involved in another cryptocurrency venture, given the SEC’s cautious approach to the industry under his leadership. Many crypto enthusiasts and watchers were actually encouraged by President Biden’s appointment of Gary Gensler, former Chairman of the CFTC, as Clayton’s successor. Gensler had previously testified in favor of blockchain before Congress and taught courses at the Massachusetts Institute of Technology on the subject. Clayton is happy with the way that crypto was handled by the SEC during his chairmanship.
Clayton states that people need to be aware of the fact that the Commission is subject to statutes and regulations. “The Commission’s women and men do an excellent job mapping out the obligations related to digital securities offerings. They also let people know that trading in digital securities must comply with the same rules and regulations as traditional paper-based securities trading. This has, by the way, in many ways become largely digital.
He also highlighted ways the regulator could help the industry move forward.
“He says that one of the last things President’s Working Group did while he was at the SEC, was a report about stablecoins. This included the considerations for stabilitycoins and when they would not be securities. He also said that continuing this type of interagency work would benefit our overall financial ecosystem. “I hope that this progress continues.”