On Tuesday morning Securities and Exchange Commission (SEC) chairman Jay Clayton will testify before congress on the regulatory future of Bitcoin and other digital coins, intensifying the world's focus on the technology as its value plummeted on Monday.

According to Clayton's prepared comments, released on Monday afternoon, the SEC will tell the Senate Committee on Banking, Housing, and Urban Affairs that the federal regulator is open to "exploring" regulations for cryptocurrency exchanges—where digital coins are bought and sold—with Congress. "We also are supportive of regulatory and policy efforts to bring clarity and fairness to this space," Clayton's prepared testimony reads.

I must also note that Clayton's testimony begins with the line, "Chairman Crapo, Ranking Member Brown," and that Chairman Mike Crapo and Ranking Member Sherrod Brown are both very real lawmakers in the US Senate.

Crucially, Clayton noted that many exchanges opt to be regulated as money-transmission services, which puts them under the purview of state regulators, but investors need federal protections. "In short, the currently applicable regulatory framework for cryptocurrency trading was not designed with trading of the type we are witnessing in mind," Clayton's comments read.

Clayton's testimony comes at a pivotal time for cryptocurrency regulation globally. China has already banned domestic exchanges, and People's Bank of China-affiliated news site Financial Times reported on Monday that the state will also seek to ban foreign exchanges, effectively putting the kibosh on exchange trading in China. Meanwhile, another huge market for cryptocurrencies—South Korea—recently announced that citizens will be required to trade cryptocurrencies using accounts associated with their bank.

It's important to note that regulation is not necessarily a bad thing. Clarity is desperately needed around taxation for Bitcoin, for example. Cryptocurrency think tank Coin Center also recently published a report laying out how a unified federal approach to regulation might solve some of the problems inherent in a state-by-state solution.