Crypto VC Electric Capital Names Ex-SEC Chair Clayton as Adviser

Former Securities and Exchange Commission Chairman Jay Clayton has joined venture firm Electric Capital as an advisor, part of a growing wave of ex-regulators flocking to the crypto space as the industry faces increasing scrutiny.

Kevin Warsh, a former member of the Federal Reserve Board of Governors, and Pratiti Raychoudhury, vice president and head of research at Meta Platforms Inc., were also named as advisors, Electric Capital said Wednesday.

Clayton is already an advisor to crypto custody firm Fireblocks Inc. and One River Asset Management, a cryptocurrency-fund manager backed by Alan Howard. Others joining crypto include former commissioner of the Commodity Futures Trading Commission Brian Quintenz, who serves as an advisory partner to Andreessen Horowitz’s crypto team, and former Acting Comptroller of the Currency Brian Brooks is now the chief executive officer of blockchain tech firm Bitfury. Ex-SEC Director Brett Redfearn oversaw capital markets at COINBASE Global Inc. before becoming a senior strategic advisor at digital-asset firm Securitize, Inc.

“They realize there’s something real happening here,” Avichal Garg, managing partner at Electric Capital, said of ex-regulators stepping into the crypto space. 

Clayton and Warsh will help Electric Capital’s portfolio companies navigate changing crypto regulations around securities law, stablecoins and decentralized finance, Garg said in an interview. Warsh, a one-time Bitcoin skeptic, said in a statement that he is “thrilled to help” Electric Capital. The VC firm, which raised $1 billion for crypto investments in February, has previously backed nonfungible token marketplace Magic Eden, blockchain developer Mysten Labs and crypto exchange Kraken. 

Regulations around privacy will also be an area of focus for Clayton and Warsh, according to Garg. He pointed to sanctions put in place by the US Treasury Department against Tornado Cash as being an example of how regulators can butt heads with crypto projects over privacy issues. The Treasury barred US companies and individuals from using the crypto mixer to help further anonymize their transactions, alleging that it allowed North Korean hackers to illegally launder more than $7 billion.  

As for Meta’s Raychoudhury, Garg said her experience working at the social media giant will allow her to help crypto founders create more user-friendly experiences on their platforms.

“It’s really about unlocking how we get from a couple of million people to 2 billion people using this stuff,” he said.