According to former chairman of the SEC, Jay Clayton, cryptocurrencies serve a variety of functions and are tied to a range of industries, and the SEC should regulate only those industries that are related to them.

Jay Clayton, the former chairman of the Securities and Exchange Commission, or SEC, was appointed to the position by ex-President Donald Trump in 2017.

Clayton frequently supported Bitcoin (BTC) as a store of value throughout his time as the SEC’s chairman. Jay discussed bitcoin and how it should be controlled in the future during an appearance with CNBC’s Squawk Box broadcast on Wednesday.

The former SEC chair stated that he is a “huge believer in crypto technology” and that the benefits of its efficiency in the financial sector and tokenization are immeasurable.

Clayton tweeted:

“I am a huge believer in this technology. The efficiency benefits in the financial system and otherwise from tokenization are immense.”

Clayton’s comments come after the current SEC head, Gary Gensler, recently stated that the watchdog has no intentions to ban cryptocurrency, but that Congress may do so. However, Gensler cautioned that cryptocurrency in its current state is akin to the wild west without proper regulation.

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When questioned if the current chairperson is imposing too many limitations on the crypto industry, Jay responded that cryptocurrencies serve a number of purposes and are linked to a variety of industries, and the SEC should only regulate those industries.

“Crypto is a wide variety of products, with a wide variety of functions, and the rules of our financial system are clear and long-standing. If you are raising capital for a project, you have to register your capital raising with SEC. If you are trading securities it has to be on a registered venue, But there are many crypto sectors like stablecoins that are not securities and outside of SEC purview.”

Cryptocurrencies, according to Clayton, should be allowed, but with adequate regulation. He believes the government should be “reactive to people who are violating our well-defined laws but proactive in encouraging the adoption of this technology throughout our financial system.” according to him.

During Clayton’s tenure, a Bitcoin ETF was not approved, which will now happen in 2021 under Gary Gensler. Since then, the SEC has been chastised for rejecting spot ETF applications but allowing Bitcoin futures ETFs. “There is no basis for the position that investing in derivatives for an asset is acceptable for investors but not investing in the asset itself,” Grayscale said to SEC secretary Vanessa Countryman in a letter. Under the Administrative Protections Act, or APA, the SEC was accused of treating the two Bitcoin ETF proposals unequally.

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