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Speaker 1: Bloomberg Audio Studios, podcasts, radio news you.

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Speaker 2: Another big story we've been covering is the executive order

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Speaker 2: that President Trump signed last week that could pave the

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Speaker 2: way for one four oh one K accounts to invest

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Speaker 2: in crypto. Bloomberg spoke with SEC Chairman Paul Akins back

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Speaker 2: in July about the possibility of private markets in retirement accounts.

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Speaker 1: Here's what he had to say.

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Speaker 3: We've heard a lot of input from both the investors

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Speaker 3: who want access to private the private markets and to

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Speaker 3: those sorts of products, and obviously from the people who

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Speaker 3: are producing the products who are about to meet that demand.

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Speaker 3: So but we have to do it carefully, I think,

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Speaker 3: because of course, the private markets are a lot different

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Speaker 3: than the public markets.

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Speaker 2: And that was Paul Atkins before President Trump signed that

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Speaker 2: executive order, and now that it has been signed, please

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Speaker 2: to say we're joined now by SEC Commissioner hester person

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Speaker 2: to discuss this topic and much more. Commissioner, great to

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Speaker 2: have you with us. Let's talk a little bit about

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Speaker 2: that EO. So it instructs the Department of Labor and

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Speaker 2: the SEC to adjust their rules and regulations to allow

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Speaker 2: those retirement accounts to invest in private assets, to invest

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Speaker 2: in crypto, or at least to allow it.

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Speaker 1: How will the SEC approach this? What does that checklist

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Speaker 1: look like, Katie, It's great to be here.

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Speaker 4: I think we've already started that process of opening the

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Speaker 4: private markets to retail and thinking about ways that we

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Speaker 4: can get them access in a way that's diversified, professionally managed,

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Speaker 4: and consistent with their investing time frames. And so I

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Speaker 4: think we'll just continue with that work.

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Speaker 2: Appreciate that contact. So as we continue on and as

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Speaker 2: you approach us, talk us through some of the potential

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Speaker 2: risks that you're thinking about, because certainly a lot of

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Speaker 2: folks on Wall Street and elsewhere have been anticipating these

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Speaker 2: rule changes. But there's also a lot of concern too

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Speaker 2: about putting what are risky assets in retirement accounts.

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Speaker 4: Yes, I mean, I think those are legitimate concerns. What

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Speaker 4: we've seen, of course, is that the public markets are

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Speaker 4: dominated by several large companies, and also companies are waiting

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Speaker 4: longer to go public, and so we're looking for a

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Speaker 4: way for retail to get earlier access to the growth

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Speaker 4: of companies, and so that's really the goal of it.

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Speaker 4: But of course you want to do it in a

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Speaker 4: way that makes sure that we're not just using retail

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Speaker 4: as dumping ground for bad assets. So I think it's

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Speaker 4: making sure again that there's professional management, that it's done

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Speaker 4: in a way that's careful, and that we're paying attention

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Speaker 4: to the risks associated with it.

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Speaker 2: A conversation I've been having around this topic is about

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Speaker 2: how this isn't as simple as switching a light switch necessarily,

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Speaker 2: that you're not going to see private assets and to

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Speaker 2: see crypto in retirement accounts. Overnight you said that you've

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Speaker 2: already started this process on your end, you're working through

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Speaker 2: that checklist. What do you see as the timeline here.

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Speaker 4: Well, I mean, I think even already we have loosened

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Speaker 4: SEC made restrictions that really were not based in law

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Speaker 4: on the percentage of private assets that could be available

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Speaker 4: in retail accounts in funds that are available to retail investors.

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Speaker 4: So I think that process has begun. We have a

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Speaker 4: new head of our division of Investment Management, and he's

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Speaker 4: working closely with the staff and working also with people

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Speaker 4: who have been thinking about how to do this in

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Speaker 4: the private sector. So it's a combination.

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Speaker 1: Of those things.

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Speaker 2: All right, Well, appreciate you know the update there. I

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Speaker 2: hope to keep talking about that, but I do want

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Speaker 2: to move on and I want to talk about tokenization.

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Speaker 2: That obviously another big hot topic of the moment. And

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Speaker 2: when we're talking about everyday investors getting involved with tokenization,

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Speaker 2: what are some of the risks in your view that

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Speaker 2: could potentially come about.

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Speaker 4: Well, I think there has been a lot of interest

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Speaker 4: in tokenizing securities and other real world assets, and that's

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Speaker 4: something that really opened up after the SEC changed its

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Speaker 4: perspective on crypto. So we're seeing a lot of interest

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Speaker 4: from traditional financial firms and native crypto firms, and they're

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Speaker 4: different approaches that are being taken to tokenizing. So we

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Speaker 4: will work with people. We're willing to work with people

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Speaker 4: who are taking different approaches. But it's really important that

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Speaker 4: people be very careful about disclosing what the nature of

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Speaker 4: the asset is. When you tokenize something, it's still a security.

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Speaker 4: If you're tokenizing a security, it may be a security

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Speaker 4: with different characteristics, and that's something that needs to be

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Speaker 4: conveyed to investors. And you know, it's also important to

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Speaker 4: be aware of sometimes their trading restrictions or their restrictions

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Speaker 4: on who can access particular types of securities, and so

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Speaker 4: that's something people have to pay attention to.

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Speaker 2: And that's a point that you've made in the past,

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Speaker 2: that token is securities are still securities. You do have

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Speaker 2: some firms I'm thinking of Robinhood, for example, rolling out

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Speaker 2: token is stock trading. I believe that's taken hold in Europe.

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Speaker 2: So I mean, do you see that as a potential

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Speaker 2: area where you could run into some of these confrontations

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Speaker 2: over firms trying to really regulate and innovate and introduce

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Speaker 2: measures such as that, but potentially coming up against some

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Speaker 2: of these regulations that you're putting in place.

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Speaker 4: Well, without talking about any particular firms approach, I think

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Speaker 4: the bottom line is that we encourage firms to come

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Speaker 4: in and talk to us. We expect that there will

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Speaker 4: be some different approaches taken to tokenizing, and we're looking

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Speaker 4: forward to working with folks to try those different models

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Speaker 4: out and see what the market's like and see whether

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Speaker 4: or not tokenization of equity securities takes hold. I mean

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Speaker 4: that really will ultimately be up to the market. But

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Speaker 4: what our message is is that we're willing to work

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Speaker 4: through different potential models with people.

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Speaker 1: Well, you said something interesting there.

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Speaker 2: You know, if tokenized equities take hold and it's a

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Speaker 2: good reminder that this is very nascent, that we're only

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Speaker 2: just seeing the first few attempts at this come about.

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Speaker 2: But should these tokenized real world assets, should tokenize equities

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Speaker 2: really take off? Should we expect a formal pilot program

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Speaker 2: from the SEC for tokenized securities?

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Speaker 4: I think the pilot program again is more likely to

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Speaker 4: look like multiple pilots, with different people coming in and

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Speaker 4: trying to do this in different ways. And again we're

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Speaker 4: not trying to be the picker of winners and losers,

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Speaker 4: but letting the market decide. So really we expect that

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Speaker 4: there will be multiple options.

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Speaker 2: I do also want to talk about how you interact

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Speaker 2: with some of the other regulatory bodies in dc A.

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Speaker 2: For a lot of folks, it's kind of like alphabet.

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Speaker 1: So if you have the.

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Speaker 2: SEC, you also have the CFTC, And I'm wondering how

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Speaker 2: you work with the CFDC on crypto right now, if

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Speaker 2: at all, what does that relationship look like.

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Speaker 4: We have a good relationship with the CFTC. We've worked

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Speaker 4: with them. I personally have worked with the CFTC over

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Speaker 4: the years on a number of issues, including security based swaps,

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Speaker 4: and so right now we're both agencies are coming off

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Speaker 4: the Presidence Working Group report recommendations. We're both trying to

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Speaker 4: implement those recommendations, the ones that we can start already

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Speaker 4: absent market structure regulation legislation, and so we're coordinating with

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Speaker 4: the CFTC on moving forward on those recommendations.

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Speaker 2: Well. To that point, one of the recommendations was that

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Speaker 2: crypto exchanges and other crypto and entities that are registered

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Speaker 2: with the SEC that they should have to pay transaction

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Speaker 2: fees the same way that traditional brokerages do.

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Speaker 1: For example. Do you agree with that.

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Speaker 4: I certainly understand that we need to have the fees

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Speaker 4: fall on the people who are benefiting from the revenue

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Speaker 4: of the fees. So I think that as the markets change,

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Speaker 4: those changes should be reflected in fee revenue and Commissioner.

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Speaker 2: You also brought up market structure. We know that that

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Speaker 2: crypto market Structure bill is working its way through. This

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Speaker 2: sense seems to be on the street that it faces

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Speaker 2: a much tougher go ahead than the stable coin bill,

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Speaker 2: for example.

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Speaker 1: I would love to hear your thoughts there.

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Speaker 4: Well. I don't prognosticate about legislation any more than I

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Speaker 4: do about where the markets might go. In terms of

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Speaker 4: which models of tokenization they might embrace. But I do

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Speaker 4: think that the work has been really on the part

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Speaker 4: of the House and the Senate is now looking at

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Speaker 4: these issues.

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Speaker 1: It's a very.

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Speaker 4: Complicated piece of legislation to work out, but I think

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Speaker 4: important and we're happy to work with people in both

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Speaker 4: the House and the Senate on trying to get it

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Speaker 4: to the place where it will help to guide the

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Speaker 4: shaping of the industry.

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Speaker 1: And just game planning here.

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Speaker 2: Let's say that Congress doesn't isn't able to finish this

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Speaker 2: market structure bill by November.

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Speaker 1: What would that.

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Speaker 2: Mean for the SEC and your approach to regulation.

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Speaker 4: I think one thing that's important to underscore is that

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Speaker 4: we at the SEC are not waiting for legislation to work.

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Speaker 4: We have a lot of work that we can do

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Speaker 4: under the existing authority that we have, and we think

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Speaker 4: that the President's Working Group report urged us to take

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Speaker 4: those steps, and so we've been working since January on

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Speaker 4: providing guidance about where the securities laws apply and then

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Speaker 4: where they do apply, helping helping firms to navigate those rules.

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Speaker 4: And so that's something that we are hard at work on.

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Speaker 4: We're working on rulemaking and we think that what we

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Speaker 4: do will be consistent with whatever market structure legislation comes out.

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Speaker 2: And Commissioner, I do want to talk a little bit

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Speaker 2: about Project Crypto. I know that you know that's put

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Speaker 2: together to help implement the Presidential Working Group's recommendations. How

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Speaker 2: is that project going right now? What does that look like?

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Speaker 1: I mean, it's going it's going very well.

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Speaker 4: We're working very collaboratively with staff all across the Crypto

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Speaker 4: Task Force is working collaboratively with staff across the building

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Speaker 4: at the SEC. We are meeting with industry and with

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Speaker 4: other interested parties. We're taking written comments as well, and

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Speaker 4: we're putting that together into a package of reforms. As

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Speaker 4: I said, we've already gotten some guidance out the door,

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Speaker 4: but we are hoping to get some rulemaking, proposed rulemaking

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Speaker 4: out the door.

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Speaker 1: As well well.

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Speaker 2: Commissioner, we really appreciate you taking the time to speak

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Speaker 2: with us today. That is SEC Commissioner Hester Purce