Jay Clayton, the previous chairman at the US Securities and Exchange Commission (SEC) recently spoke about the current state of crypto regulations and why they were necessary in an CNBC interview. The interview came as the BTC price briefly dropped below $50,000 per coin for the first time since March 7th.
All areas in crypto require transparency, says former chairman
Clayton was asked whether or not this had something to do with regulatory scrutiny, and if there will be heightened regulations. He responded that increased regulations should, indeed, be expected. After all, the crypto sector offers a variety of use cases. Crypto can be used as a payment method, a store of value, or facilitation of financial transactions.
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According to him, all of these areas require transparency in order to prevent criminal activity. Things like prevention of terrorism financing, money laundering, and alike, all directly depend on strong rules. Even taxation rules are of extreme importance for cryptocurrencies, since they have allowed many to get extreme amounts of money through trading and investments.
A lot of it was already achieved, and many exchanges now conduct AML and KYC procedures, while taxation of the crypto-related profits has existed for several years now.
When to expect new regulatory rules?
All of the areas related to crypto need to have a legitimate, well-functioning system that would not facilitate bad actors, according to Clayton.
When asked about when the regulatory clarity might arrive, he stressed that this is an evolving issue that has already started some time ago. The SEC has a group of dedicated people who are working on it, and indeed — many other countries have them, as well. The issue will continue to evolve as the problems regarding regulations are being addressed.
He explained the situation by using a store of value — one of the potential use cases for Bitcoin. He noted that
To have a store of value, you still need to be connected to our financial system. If you are a retail customer who wants to get involved in digital assets for store of value — are you comfortable with custody? Are you comfortable with the market in which trading is not being manipulated?
In short, the disclosure rules need to evolve, and one of the jobs at SEC is to find a way to make this happen.