Jay Clayton, the chairman of the US Securities and Exchange Commission, is coming under fire from Republican lawmakers amid growing concerns over his harsh approach to regulatory enforcement — which critics claim strangles the free market and inhibits technological innovation.

In 2018, the SEC launched a massive crackdown on the crypto industry, which has been roiled by high-profile ICO scams and suspicions of market manipulation.

Clayton was appointed SEC chair in 2017 by President Trump, with a mandate to enforce securities laws while ensuring that regulations are pro-business and promote the free market.

But critics say Clayton lacks the “vision of market-driven change” that Republicans had hoped for on issues relating to cryptocurrencies and emerging technologies, Reuters reported.

As a result, some lawmakers and lobbyists say the US crypto industry has been stalled in its progress toward mainstream adoption and its bid to become a preeminent market leader.

‘Clayton Lives In an Ivory Tower’

“Jay Clayton has shown the industry that he lives in an ivory tower with his resistance to approve registration statements for token offerings,” said Anthony Tu-Sekine, head of the blockchain and crypto group at law firm Seward & Kissel. “It is frustrating.”

One lobbyist said he doesn’t understand why the pro-business Trump Administration hired Clayton, whom they feel has adopted a draconian approach to regulation.

How did we end up with this guy? We can’t get anything out of him.

In August 2018, the SEC rejected 9 bitcoin ETF applications, citing the applicants’ failure to demonstrate how they could prevent fraud and market manipulation, as CCN.com reported.

Diego Zuluaga, a policy analyst at the libertarian Cato Institute, called the rejection “most disappointing.”

In March 2017 and again in June 2018, the SEC rejected the bitcoin ETF (exchange-traded fund) applications submitted by the Winklevoss twins, Tyler and Cameron.

And two weeks ago, the SEC once again delayed making a decision on VanEck’s bitcoin ETF application until February 27, 2019. It was the second or third such postponement this year.

Clayton: Strict Enforcement Helps Industry

In February 2018, Clayton signaled that his agency would investigate cryptocurrencies when he testified before the US Senate Banking Committee. At the time, he said: “I believe every ICO I’ve seen is a security.”

Weeks later, the SEC targeted ICOs by issuing “dozens of subpoenas” to crypto-related tech companies and advisors to investigate how ICOs are structured.

The SEC’s rampant crackdowns on the virtual currency market has led many in the community to conclude that Clayton is anti-crypto. But he insisted that he’s not.

In April 2018, Clayton said increased regulatory scrutiny will benefit the industry by ridding it of scam artists who give the entire space a bad name.

He also said driving out bad actors early will ensure that the government won’t adopt such a hard-line stance that it will choke off the nascent industry, Clayton reasoned.

If we don’t stop the fraudsters, there is a serious risk that the regulatory pendulum – the regulatory actions – will be so severe that they will restrict the capacity of this new security.

Other Republicans approve of Clayton’s measured approach to the crypto industry, saying they expect the SEC to offer greater regulatory clarity in 2019.

“A lot of people would like things to move more quickly, but that’s the system,” said Paul Atkins, a former Republican SEC commissioner. “In the new year, you’ll see a lot of these seeds [Clayton has] planted will start to germinate.”

Meanwhile, US lawmakers have already proposed legislation designed to prevent price manipulation and position the United States as a leader in the crypto industry.

US Bills Seeks to Protect Cryptocurrency Investors from Market Manipulation https://t.co/xeTXBHA5vZ — CCN.com (@CCNMarkets) December 7, 2018

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