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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. We've been watching bitcoin

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Speaker 1: almost as much as stocks lately because it's been so

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Speaker 1: intrinsically tied to the markets. Remember when it was supposed

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Speaker 1: to be its own universe. That was the whole point

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Speaker 1: the decentralized cryptocurrency. It is bouncing back today, up fifty

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Speaker 1: four hundred dollars in approaching ninety two thousand dollars a coin.

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Speaker 1: So maybe it bottomed unclear as we've had multiple folks

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Speaker 1: including Mike mcglohe at Bloomberg Intelligence predict another crypto winter.

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Speaker 1: Michael Sailor also preparing for one at Strategy. Despite the love,

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Speaker 1: this administration has shown the embrace of the crypto industry

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Speaker 1: as we remember the ways with Donald Trump since he

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Speaker 1: took office.

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Speaker 2: Listen last year, I promised to make America the bitcoin

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Speaker 2: superpower of the world and the crypto capital of the planet.

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Speaker 2: With the right legal framework, institutions large and swow liberated

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Speaker 2: to invest, innovate, and take part in one of the

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Speaker 2: most exciting technological revolutions in modern history. For years, you

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Speaker 2: were mocked and dismissed and counted out. You accounted out

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Speaker 2: as little as a year and a half ago, But

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Speaker 2: this signing is a massive validation.

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Speaker 1: A massive validation as we watch the gyrations in the

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Speaker 1: crypto market. Pleasure to spend some time with Gary Gensler

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Speaker 1: as we consider the crypto space regulations and the plumbing

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Speaker 1: in the market. He's with us live now, former Chair

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Speaker 1: of Course of the Securities and Exchange Commission, Professor of

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Speaker 1: the practice at MIT Sloan School of Management. Mister Gensler,

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Speaker 1: Welcome back to Bloomberg TV and radio. Is that you

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Speaker 1: buying the dip in bitcoin?

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Speaker 3: Joe? It's good to be back and good to be

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Speaker 3: with all of your viewers. But now I'm not participating

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Speaker 3: in that market.

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Speaker 1: Well, what do you think of this? We've spent a

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Speaker 1: lot of time talking about this when you were in

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Speaker 1: the job at the SEC and the many warnings that

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Speaker 1: you made about this potentially risky asset, and we're witnessing

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Speaker 1: a reckoning in the marketplace right now. What do you

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Speaker 1: think is behind it?

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Speaker 3: Look, I think it's a risk asset. In the American

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Speaker 3: public and the worldwide public has been fascinated with cryptocurrencies,

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Speaker 3: but it's a highly speculative, volatile asset. And putting aside

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Speaker 3: bitcoin for a minute, all the thousands of other tokens,

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Speaker 3: not the stable coins that are backed by US dollars,

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Speaker 3: but all the thousands of their tokens. You have to

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Speaker 3: ask yourself, what's the fundamentals, what's underlying it. You don't

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Speaker 3: get a dividend, you don't get usual returns, and so

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Speaker 3: the investing public just needs to be aware of those

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Speaker 3: risks in this highly volatile space.

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Speaker 1: What do you make of the politicization of crypto? The

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Speaker 1: fact that the Trump administration has become involved to this

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Speaker 1: extent has reportedly turned off some investors as they watched

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Speaker 1: the Trump family enriched themselves with gains, like this, is

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Speaker 1: this a democrat versus Republican thing?

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Speaker 2: Now?

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Speaker 3: No, I don't think so. I mean it's about our

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Speaker 3: capital markets. The US have the greatest capital markets and

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Speaker 3: they benefit from common sense rules of the road. And

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Speaker 3: when you buy and sell a stock or a bond,

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Speaker 3: you want to get, you know, various information, and you

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Speaker 3: want to know that you're getting the same treatment as

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Speaker 3: you know, the big investors. That's the fairness in these

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Speaker 3: capital markets that are so important.

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Speaker 1: For a lot about the impact of ETFs on this space,

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Speaker 1: that's something you know a lot about the initial ETFs

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Speaker 1: that were greenlit to start buying crypto. Did that just

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Speaker 1: change the plumbing in the crypto market here by tying

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Speaker 1: it directly to the stock market.

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Speaker 3: Well, ever, since antiquity, finance goes towards centralization, So it's

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Speaker 3: not surprised that that which was started as a decentralized

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Speaker 3: ecosystem and that was the vision, has become more integrated

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Speaker 3: and more centralized. Investors can express themselves in gold and

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Speaker 3: silver through exchange traded funds, and as of a couple

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Speaker 3: of years ago, actually all the way back to my

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Speaker 3: first year in the job, they were exchange traded funds

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Speaker 3: on bitcoin futures, just as there is for gold and silver.

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Speaker 2: Yeah.

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Speaker 1: Well, mister chairman, I want to ask you about, speaking

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Speaker 1: of plumbing in the markets, what happened at the CME

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Speaker 1: last week and whether you think the CFTC should be

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Speaker 1: investigating this outage. Should the CME be facing additional scrutiny.

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Speaker 3: Look, it's something really well understood that our major stock

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Speaker 3: exchanges and futures markets, the Chicago Mercantile Exchange trades very

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Speaker 3: consequential parts of our US Treasury market, interst rates markets

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Speaker 3: their critical infrastructure and Thanksgiving evening, they had an outage

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Speaker 3: at a data center. Importantly, it wasn't actually their computers.

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Speaker 3: It was the chillers, as I understand it, the cooling

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Speaker 3: system in this data center, and they had an outage

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Speaker 3: for about ten hours, and so markets planned for that.

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Speaker 3: The Chicago Mercantile Exchange considered they didn't go to their

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Speaker 3: backup data center. They stayed partly because it was Thanksgiving evening.

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Speaker 3: As I understand it, I'm sure that they at the

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Speaker 3: Chicago Mercantile Exchange and the various regulators will keep looking

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Speaker 3: at it and look for lessons learned. You always look

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Speaker 3: for lessons learn and how can we do things better

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Speaker 3: in the future.

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Speaker 1: Well, we've experienced an incredible number of inquiries about this

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Speaker 1: at Bloomberg. Our readers are asking, our viewers and listeners

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Speaker 1: are asking about this. It put a real chill in

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Speaker 1: the markets. To use a terrible pun in this case,

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Speaker 1: mister chairman, you don't sound that worried about this being systemic.

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Speaker 3: Look, I think that the New York Stock Exchange, CME,

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Speaker 3: the clearing houses are systemically important, no doubt about it,

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Speaker 3: systemically important. But what happened here at this specific moment

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Speaker 3: is the cooling system as I understand how to glitch.

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Speaker 3: By the way, this data center is operated by a

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Speaker 3: third party. It's not operated by CME, so they have

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Speaker 3: a contract for a certain performance levels, and they didn't

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Speaker 3: go to their backup data center, which is I think

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Speaker 3: located elsewhere in New Jersey. If this would happen at

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Speaker 3: ten am on a Monday, I think the management team

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Speaker 3: would make a different decision and probably would switch over

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Speaker 3: to the backup data center more quickly. The markets probably

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Speaker 3: would have a little less liquidity. Not every high frequency

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Speaker 3: trading shop or principal trading firm has the same connectivity

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Speaker 3: to the backup data center, so that's an interesting business choice.

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Speaker 3: And for your institutional listeners, if that happened, they'd probably

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Speaker 3: see a little less liquidity until they get back to

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Speaker 3: that primary data center.

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Speaker 1: Always fascinating to look onto the hood with Gary Gensler,

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Speaker 1: former chair of the SEC, Professor of the Practice MIT

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Speaker 1: Sloan School of Management. Thank you, mister Chairman, for the

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Speaker 1: time