Former Securities and Exchange Commission (SEC) Chair Jay Clayton recently voiced his concerns about the regulatory approach of the SEC. The American attorney expressed his views on the evolving ethos of the agency under Gensler’s leadership, highlighting potential overreach.

Clayton criticized the focus of the Securities and Exchange Commission on aggressively pursuing legal action.

Clayton emphasized balancing regulatory enforcement and considering the consequences of potential defeats for the securities regulator.

The former official told CNBC,

“What you’re hearing from leaders of the regulatory organizations is, if we’re not losing cases, if we’re not being pushed back on by the courts, We’re not doing enough.”

A must watch. Former SEC Chairman Jay Clayton describes the new and deeply un-American ethos of the @SECGov under @GaryGensler — if we're not losing cases, we aren't suing enough businesses. This is a total abuse of power. pic.twitter.com/G0HxL4s8Y1

He highlighted this as a fundamental shift in how Americans traditionally view the government’s role. He expressed concern that the SEC may bring cases they anticipate losing.

Clayton says this contradicts the state’s responsibility to pursue cases likely to withstand judicial scrutiny. Clayton thinks it “may be fine for private litigants” to bring these cases against each other.

He noted, “I don’t want to be in a place where I know the government is going to bring cases they think they’re going to lose.”

Doug Cifu, the CEO of Virtu Financial (VIRT), echoed Clayton’s sentiments, stating, “Gary is just a politician, not a regulator. His legacy will be litigation costs and more defeats for the SEC, and he won’t get the Treasury seat he covets. Sad.”

Cifu’s response reflects a belief among some executives that Gensler’s approach is more politically motivated than focused on effective regulation.

Take a minute to read our explainer on what is the impact of a regulatory framework focused on crypto: Crypto Regulation: What Are the Benefits and Drawbacks?

However, some users on Twitter questioned the sincerity of Clayton’s critique. They suggest it may be an attempt to deflect from his own record during his tenure as SEC Chair. Clayton is a senior policy advisor and counsel at Sullivan & Cromwell LLP.

The New York Times reported that the SEC brought the fewest insider trading cases in decades under Clayton’s leadership, raising concerns about the agency’s approach to the white-collar crime. According to reports, the SEC filed 83 insider trading prosecutions in 2019, the fewest instances since 1995.

Interestingly, Clayton has reiterated his position that many cryptocurrencies could be classified as securities, even as the industry continues to clash with the SEC over regulatory issues.

He said in a recent conference,

“I think the market has evolved, but many, if not the vast majority, of the tokens that were sold for cash would fall within the definition of a security in America.”

However, Clayton acknowledged that the definition of security is intentionally broad and flexible, noting that something once labeled a security might not always remain classified as such.

In the past months, he has consistently maintained that regulators have not effectively handled crypto as an asset class.

Read more: 9 Best Fiat Onramps for Cryptocurrency: A Guide for 2023

Nasdaq-listed crypto exchange Coinbase established a Global Advisory Council comprising current and former US lawmakers in the past month. Observers interpreted the move as a response to the progressively more challenging regulatory environment in the United States.

Coinbase and Binance are dealing with a lawsuit filed by the SEC. While this happens, market participants press the authorities to approve fresh applications for a spot Bitcoin ETF. Moreover, Commissioner Hester Peirce has disagreed with the SEC on several occasions.

In a recent quote, she emphasized the need to ensure that the regulatory framework does not automatically assume that everything is a financial asset.

Clayton’s criticisms of the agency’s current approach have spurred a discussion on clarifying the SEC’s role in enforcement proceedings and also regulating a larger crypto framework.

The post Former SEC Chair Jay Clayton Says Gary Gensler Overstepping His Power appeared first on BeInCrypto.

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