Former SEC Chair Compares Crypto to Uber

Fri, 08/26/2022 - 15:37
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During a recent interview with CNBC's "Squawk Box," former U.S. Securities and Exchange Commission Chairman Jay Clayton compared crypto to ride-hailing giant Uber when it comes to regulation.

Clayton recalled how Uber started claiming that taxi cab regulations were extremely arcane and dated. The company attempted to offer a compelling alternative that would make regulators catch up with them. Clayton described it as the "Uber effect."

Uber has had plenty of run-ins with regulators after falling afoul of existing rules. The company, which positions itself as a communications platform, was forced to suspend operations in Austin, Texas, back in 2016, after it failed to repeal stringent regulations for ride-sharing drivers in spite of lobbying efforts.

The ride-hailing company also clashes with regulators in the U.K., Denmark, Italy and Canada as it was attempting to disrupt the old taxi industry.   

Just like Uber, cryptocurrency players claim that existing securities rules are outdated, demanding a different approach. Yet, SEC Chair Gary Gensler, who has attracted strong criticism from crypto proponents because of his hawkish stance toward crypto regulation, has rejected the oft-repeated argument. As reported by U.Today, Gensler believes that cryptocurrencies should not be treated differently just because they use novel technology.

Clayton echoed this view during the latest interview. "You can't give up the core of our financial regulation. You can't give up limits on leverage, requirements of disclosure," he replied.

As Clayton explains, U.S. companies generally raise money from institutions, but cryptocurrency projects target individual investors.

He has also noted that the SEC largely regulates domestically while crypto is a global innovation.

"So, you have a regulatory overlay, which usually focuses on institutions, usually focuses domestically, and a product that is global and retail," Clayton said while speaking about how complicated cryptocurrency regulation is.

Clayton claims that there is a strong need for regulatory coordination in the U.S. "There's some securities, there's some commodities. There are a lot of banking products," he noted.