On Monday, November 16, 2020, SEC Chairman Jay Clayton announced his intention to depart from the agency by the end of 2020. News of Clayton’s decision comes as no real surprise, as it is typical for the SEC Chair to hand the reigns to a successor around the time of an election for President. What many had speculated about, however, was the eventual timing of Clayton’s move.
The results of the November 3, 2020 election may have influenced Clayton’s decision to leave by year-end, rather than remain as Chairman into 2021 had the election results been different. Rumors of Clayton’s impending departure have swirled since June 2020 when President Trump nominated Clayton to serve as the next U.S. Attorney for the Southern District of New York (SDNY). The SDNY role never materialized, but it fueled speculation that Clayton might leave before the election.
Clayton has served as SEC Chairman since May 2017. In that time, he has set one of the agency’s most prolific rulemaking agendas in recent history. Clayton’s announcement was accompanied by a lengthy list of selected accomplishments covering rulemaking, regulatory guidance and relief, enforcement, investor protection, and even internal agency and industry considerations like diversity and inclusion. All of this took place despite several, significant developments that risked derailing Clayton’s agenda, not the least of which being the ICO wave of 2017/2018, the 6-week federal government shutdown of late 2018/early 2019, and the COVID-19 pandemic the world has been battling for most of 2020.
It is likely that President Trump will appoint one of the two remaining Republican Commissioners (Peirce or Roisman) as acting Chair for a brief period of time. On or around January 20, 2021, when many expect former Vice President Biden to be sworn in as President, it is likely that Democratic Commissioner Lee will be appointed as acting Chair, followed by an eventual, newly appointed Chair to lead the agency for the foreseeable future once that nominee clears the Senate confirmation process.
Some in the blockchain and digital currency community have yearned for Chairman Clayton’s replacement. Had the election results been different, it is conceivable that Commissioner Peirce could have become Chair for the next few years, to the likely elation of many in the crypto community. To say that Peirce has been an outspoken advocate for crypto, innovation, and regulatory flexibility is a major understatement. We likely will not see a new SEC Chair with views in line with Peirce’s. Rumors have been flying around about Clayton’s successor on the Democratic side of the policy spectrum. We should learn more in this regard over the next several weeks. Some recent names bandied about come from an enforcement background. This could be an indicator of what the next Chair’s agenda might emphasize over the next few years, for the financial markets generally and for the blockchain and crypto community specifically.