Video Of The Week: The Sorkin-Clayton Interview

One of the big issues facing the crypto sector is the regulatory question, both in the US, where it looms largest, and elsewhere around the world. In the last few weeks we have seen the SEC reach settlements with several crypto projects and decentralized exchanges, all of which were the subject of enforcement actions or threatened enforcement actions. As I alluded to in this post last week, I fully expect to see the SEC continue to look hard at the crypto sector in an effort to rein in what it sees as violations of its rules on the offering and sale and trading of securities.

In the wake of all that, The New York Times hosted an event last week in which Andrew Ross Sorkin interviewed SEC Chairman Jay Clayton. 

This is a recording of that interview. The conversation is about an hour long. You can/should fast forward to 11 1/2 minutes in to bypass all the introductions.


Comments (Archived):

  1. William Mougayar

    Watched it earlier. The SEC will have to adapt and modify their regulations to the realities of the ICO/Token models. They keep sending cryptic messages to an industry that expects further clarity.

    1. RiganoESQ

      An initiative “that was primarily a means whereby participants could pool their own activities, their money and the promoter’s contribution in a meaningful way was not an investment contract.”- Nelson v. Stahl, 173 F.Supp.2d 153 (S.D.N.Y. 2001), citingSEC v. Aqua–Sonic Products Corp., 687 F.2d 577, 582 (2d Cir.1982).…I wrote this legal memo with extensive federal case law enables DAOs for almost any sort of R&D e.g. engineering, bio research- instead of owning equity in a co., participants own fungible IP along with other rights – as tokens tracked on a blockchain. Anyone with internet access can legally participate (democratized digital rights management).Comments, critique, etc. would only be beneficial to crypto.(background: tech lawyer NYC, A+ in legal writing in law school, significant experience w/ web3)

      1. William Mougayar

        thanks. i will read it and comment.

      2. JLM

        .An interesting read. I would quibble about one thing — you set up a three prong test for a security/investment contract and I think the classic test is a 4-prong test.You have the content right, but the 4-prong test (SEC v Howey) is a more traditional way of looking at things.The big problem with the SEC is that they like to see some enabling legislation which creates the activity, then they write rules to implement the activity. They are not legislators.When they see the industry creating products — the classic was the abusive real estate LPs of the 1970s-80s with small investments, huge 1st year writeoffs, essentially buying tax avoidance–they will act.They will go see the IRS before they act. I think this is where we are right now. The IRS has determined how they intend to tax crypto.The Congress, at the urging of the SEC and IRS, created the 1986 active v passive partnership distinction which killed the Craig Hall style LP structure. This one act sorted things out.I don’t see the SEC being forward thinking unless securities offerers are going to come forward with an offering which exactly complies with the existing law.The SEC is not going to play Congress and make law with their regulations.I ran public and private companies and dealt with the SEC on the securitization of assets and barter transactions. They are not geniuses.They are legitimate protectors of the small investor and when concerned reach for the big “NO” stamp until forced to do otherwise.Things are going to get vicious when the inevitable small investor losses begin to appear. Already, you can see this in some of the SEC’s enforcement actions.Their slow implementation of the provisions of the JOBS Act is a perfect example of their “go slow” attitude when confronted with something either novel or different.The JOBS Act came from the Oval Office.The future is going to be created by enforcement. First, we will all learn what cannot be done. This will be easy as there are a huge number of folks in crypto who should never be near public money.This is going to take some time and it will have to go through Congress.BTW, I have to give you an A- on legal writing. JKJLMwww.themusingsofthebigredca…

  2. kidmercury

    if the SEC and other nation-state governmental institutions prevents cryptocurrencies from supplanting the dollar and other reserve currencies, which i think is to be expected in light of historical precedents and the current fear many of have executing ICOs without significant legal consultation, then crypto’s potential will never be realized and it will just become another tool of surveillance by the existing nation-state system. on some level an interest in peaceful revolution via reclamation of monetary policy is needed.

    1. jason wright

      it can never be that coordinated. it’s a competitive world. even nation states compete with each other.

    2. Richard

      This is not about your favorite cereal Captain Crunch vs Quisp. With all the bad actors in the world, is really just isn’t remotely possible for people to trust a completely unregulated, black box mythological currency controlled by a handful of miners in China (this never comes up in Fred’s discussions) to be in charge of the worlds currency. You were more likely to have had George Bush fess up to your 911 conspiracy on his death bed.

      1. kidmercury

        Lol c’mon now mining won’t be how the currencies of tomorrow are created. Gotta keep up with the trends so your ammo is on target! :DThe currencies of tomorrow will be regulated, just by digital networks instead of nation states.

        1. Richard

          But I have a piggy bank of Bitcoin. What am I supposed to do with it! Maybe this gives new meaning to bulls make money, bears make money, (hodl) pig get slautered.

          1. kidmercury

            i like the bitcoin as digital gold thesis, in which gold is held as insurance against a breakdown in the global dollar-based monetary agreement. i have a large position in gold (large by my standards, that is) and a small amount of bitcoin. i often contemplate switching out of gold into bitcoin, but i just don’t trust it enough to put a sizable amount of personal capital in there.i think bitcoin as monetary insurance of sorts continues to make a lot of sense. for some i’m sure it makes more sense than gold does, though i don’t share that perspective, at least not yet.

  3. Richard

    Speaking of products that have failed to live up to expectations and that burn thru billions of dollars, is there a contrarian out there that thinks SNAP can bounce back? Not supprjsingly, SNAP greatest expense is cloud services (Amazon and Google). One would think that the block chain solve this? If not, why so?

  4. JamesHRH

    At this point, I am on the street corner begging for a crypto analogous event in tech or finance.Secondarily, I will take a trend ramp / funnel in society or finance.What I will not accept is:- this is what it does- these product capabilities have never been available beforeAnybody?Regulation isn’t one of the biggest issues……..

  5. Ronnie Rendel

    Wow, this guy is so full of it. Selling this as protecting investors. Those investors are not holding $100 notes, those investors are billionaire hedge funds siphoning value out of our economy and are the cause of poverty. i made a real effort not to curse, out of respect…