SEC Chairman Jay Clayton Says they Are Open for Tokenization of Crypto ETF

Last week while speaking at an online event with the Chamber of Digital Commerce, Jay Clayton, the chairman of the U.S. Securities and Exchange Commission (SEC) some at length about the latest innovations in the decentralized space.

Surprisingly, Clayton said that he is open to the idea of having a tokenized cryptocurrency exchange-traded-fund (ETF). An ETF is an investment vehicle similar to stock but tracks the entire index.

The SEC chairman said: “We're willing to try that; our door is wide open. If you want to show how to tokenize the ETF product in a way that adds efficiency, we want to meet with you, we want to facilitate that”.

In the past, the SEC has been hard on Bitcoin ETFs and has not approved even a single proposal so far from several industry players. The regulator has been knocking down all proposals that came their way.

Mr. Clayton said: ”we got off on the wrong foot in this innovation. There was the theory that because it was so efficient, because it could have had so much promise, we could toss aside some of those principles of responsibility and transparency.”

He further added: “you have to stay true to the principles, which is people who are distributing stock. People who are insiders of the companies for which the stock has been issued—they have responsibilities”.

The SEC chairman said that the agency won’t appreciate anyone who tries to bypass the rules or trick the regulator “What we don't like is when someone says, ‘you know, the function is payments,’” he said. “Don't pretend that it's a payment system when it's actually a financing vehicle.” 

The SEC chairman also noted that in the future, it is very much possible that all stock trading would be tokenized. “It may very well be the case that [...stocks] all become tokenized,” said Clayton.

Clayton’s latest remarks come at a time when regulators have been making efforts to bridge the gap between traditional financial institutions and the crypto world. Over the last month, we have seen regulators initiate some concrete measures to allow traditional financial institutions to serve businesses from the crypto space.

Just ten days back, the U.S. banking regulator OCC allowing all national banks to hold reserve funds for stablecoins while assuring the safety and security of the investors simultaneously.