The head of the Securities and Exchange Commission said the digitization of money is here and regulators should work in a symbiotic manner with it.
The Chair of the committee is Mike Crapo, a Republican Senator from the State of Idaho.
Senator Crapo asked Clayton about Facebook’s proposed digital currency, the Libra.
“This year Facebook announced its plan for a new crypto-currency called Libra,” Crapo stated in his question, “While the SEC is one of a number of regulators who would have jurisdiction over Libra, can you speak to how the Libra announcement has affected how the SEC and other regulators are working to be responsive to and innovative to market developments and trends like crypto-currency.”
Clayton responded, “The question highlights what happened with that announcement. I’m not going to speak about that particular product; it’s not appropriate for me to do so, but the announcement was a focal point for regulators of different types to recognize that digitization and digitization of plumbing and other aspects of our financial system including payment transfers. It is coming. What I will say just the natural economic forces that it unleashes for taking fat out of the system for lack of a better term: it is happening. Now, we have to recognize that that’s happening, recognize our mission, safety and soundness, investor protection, fair markets and ensure that as that digitization takes place we’re being true to those principles, but we should not be fighting that digitization because of we fight it, it will go around us.”
Crapo agreed with his thoughts, and Clayton then was even more direct.
Referring to the digitization of money, he said, ”It’s here,” rather than it simply coming in the future.
Crapo continued, “The issue is one which the United States and its allies and friends in the world community need to lead on and to set the rules of the road on, rather than to let it come and develop on its own through other jurisdictions who are not as friendly to the United States, and frankly, through other currencies than the US dollar.”
Crapo said that one of the first decisions on the Libra and other digital currencies is which regulator will lead and what those rules will be.
When Facebook founder, Chief Executive Officer and Chairman Mark Zuckerberg testified in front of the House Financial Services Committee, Democrat Carolyn Maloney, from the State of New York, noted that a half a dozen regulators could have jurisdiction over the Libra.
In a hearing in October Maloney said that the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of Currency, the Securities and Exchange Commission, the Commodities Futures Trading Commission, and FinCen, all potentially have oversight over Libra.