Giving a clear regulation to cryptocurrency and stablecoins, even going so far as to issue tokenized ETFs, this is what was said during a webinar attended by Jay Clayton, head of the SEC and Brian Brooks, Chief Operating Officer of OCC.
During the discussion there was talk about the potential of the blockchain, cryptocurrency, stablecoin, and a very uncertain regulatory framework.
In his words Jay Clayton admitted that the moment of uncertainty has been overcome, and that the blockchain has been able to demonstrate its efficiency. This opens the door to the shares’ tokenization. Because, explains Clayton, now payments are all in electronic format and governed by an algorithm, and even the trading world respects these canons.
However, we must not forget that there are people who issue shares and that those shares have purposes, this leads to responsibilities. Clayton admits that perhaps something was wrong in giving excessive confidence to blockchain, forgetting that there must always be a principle of accountability and transparency, but now the scenario is clear and therefore you can intervene.
SEC and OCC: stablecoin on blockchain to be more competitive
The first area of intervention is to establish what security is. Jay Clayton starts by explaining what is not security:
“If you’re not trying to finance your network, you’re not trying to give people a return on your network, it’s probably not a security. But if what you’re trying to do is finance the build out of your network with your token or provide people with a return for using the network with your token, you look at the traditional tested security, it’s pretty clear it’s a security. And we’re working to make it clear where those lines are”.
Brian Brooks adds:
“One of the things that can potentially help innovate the payment system and make us more internationally competitive would be leaning into stablecoin-powered blockchains”
This is why the OCC has recently established that banks can deal with stablecoins, hosting the physical deposits of fiat money to which they are pegged.
Moreover, U.S. regulators have had to take note of Libra, Mastercard which is building a platform for CBDC and Paypal which will sell cryptocurrency. In short, the financial framework is changing and in this sense there is a need for regulation.
In this regard, the OCC representative has established that it is not up to them as regulators to say which project is right and which is wrong, which is destined to live and which is destined to fail. It is up to them to create the regulatory framework that allows a project to enter the market or, on the contrary, to be identified as something fraudulent:
“What I do think we need to do as regulators is articulate what we think blockchain adds to the ecosystem and where the risks are and where the benefits are and where there are benefits we should not be stupid and get in the way of american success and competitiveness and where there are issues of scams and frauds and other things we shouldn’t be shy about saying so. And I think that’s what we’re trying to do today is to say “here are some rules“.
In this context Jay Clayton has also opened up to tokenized ETFs saying explicitly that the SEC has the doors open for those who find a system to make this product on blockchain. What will not be tolerated, adds Clayton, is that some products are passed off as ETFs or “financial vehicles” when they are just payment methods or vice versa.
In short, the SEC and OCC will work together to define a regulatory framework in which digital assets can be secure tools.
In this scenario it is plausible that we will see greater use of those products based on blockchain.