From Hindering Bitcoin ETFs to Advising Crypto Institutions: Former SEC Chairman's Past and Present

Former SEC Chairman Jay Clayton, who during his nearly four-year tenure repeatedly rejected Bitcoin ETF applications, is now serving as an advisor for the cryptocurrency asset management firm One River, where his role has shifted to helping advance related crypto funds.

Experiencing the ICO, STO, and DeFi Craze

Jay Clayton, nominated by Trump, took office as the chairman of the U.S. Securities and Exchange Commission (SEC) in May 2017. He announced his resignation in November last year, ending his three-and-a-half-year term. During his tenure, he experienced the booming ICO market of 2017 as well as the emergence of STOs and DeFi projects in the bear market.

During his time at the SEC, the commission charged several projects with selling unregistered securities, most notably Telegram. The founder, Pavel Durov, attempted to launch the blockchain project TON and eventually settled with the SEC for $18.5 million.

Although Clayton stated in an interview towards the end of his term that Bitcoin should not be classified as a security, he blocked all Bitcoin ETF applications during his tenure, dampening enthusiasm for the much-anticipated product. It wasn't until last year that the number of applications started to increase, including one from One River, an institution he advised.

Carbon-Neutral Bitcoin ETF

In late March of this year, Jay Clayton joined the advisory council of One River, a cryptocurrency asset management firm that acquired $600 million worth of Bitcoin and Ethereum in November last year, with plans to increase its holdings to around $1 billion this year.

One River applied for a fund called the "Carbon-Neutral Bitcoin ETF," which collaborates with the carbon credit platform MOSS. The carbon credits are represented in the form of MCO2 tokens. One River will pre-purchase tokens through MOSS to offset the carbon footprint expected from holding Bitcoin in the ETF.

This application stands out among the many unsuccessful Bitcoin ETF applications, as it attempts to navigate the SEC under the premise of meeting Environmental, Social, and Governance (ESG) criteria, making Jay Clayton's role in this process particularly noteworthy.

Revolving Door between Government and Business

Adam Pritchard, a professor at the University of Michigan Law School, stated in an interview with Forbes:

No longer a government official, Jay Clayton needs to work to pay for his luxurious Manhattan apartment. Remaining neutral on these issues no longer pays the bills, so hiring him as an advisor is about enhancing reputation. If he wants to make money based on reputation, he has to pick a side.

He pointed out that the salary for an SEC chairman is less than $200,000, meaning officials must seek additional income after leaving office. He questioned whether there are concrete regulations to change this situation, even though the regulations have not yet been officially implemented.

In 2021, institutions have shown a strong interest in Bitcoin ETFs, with a wave of applications and traditional institutions gradually entering the crypto space.

Ben Slavin, Global Head of ETFs at BNY Mellon, stated at the end of July that he believes Bitcoin ETFs will launch before the end of 2021. He emphasized that there is significant demand for such services, saying:

The Bitcoin market has matured, and adopting Bitcoin ETFs is the right move. We may witness the launch by the end of this year or next year, depending on the regulatory framework.