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Speaker 1: Joining us. Now, I'm glad to say to continue this

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Speaker 1: conversation is an SEC commissioner. Commissioner Hester Purs is joining

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Speaker 1: us now. Thank you very much for your time, Commissioner.

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Speaker 1: It's very good to see you again. In what a

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Speaker 1: day to have you. I know there will be a

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Speaker 1: lot that you cannot say, but when we look at

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Speaker 1: this apparent deal that has been broken, not just with

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Speaker 1: the DJ but also the CFTC, what ultimately could this

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Speaker 1: mean for the SEC's case against finance.

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Speaker 2: Well, Kaylee, it's great to be hear and as you

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Speaker 2: as you guessed, I can't talk about ongoing cases, but

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Speaker 2: I will say that with all of these cases that

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Speaker 2: move forward, we should really be thinking proactively about building

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Speaker 2: a regulatory framework that would work and allow companies to

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Speaker 2: do business in the United States. And that's what I'm

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Speaker 2: hoping we can work on in the coming months and years.

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Speaker 1: Okay, so I know you can't speak about this specific case.

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Speaker 1: I just wonder conceptually if you see a world in

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Speaker 1: which someone pleading guilty and potentially stepping down from operation

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Speaker 1: of an exchange could be something of a remedy, a

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Speaker 1: remedy to also settle civil charges or are those just

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Speaker 1: those issues just too separate.

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Speaker 2: Again, It's it's difficult for me. The facts and circumstances

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Speaker 2: of each case are different. There it is common for

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Speaker 2: people to deal with criminal the criminal piece first, and

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Speaker 2: then deal with the civil piece. But you know, again

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Speaker 2: it depends on each fact on each case and the

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Speaker 2: facts and circumstances.

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Speaker 3: I understand you can't speak to the specifics of the

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Speaker 3: finance case, but to the extent that you can glean,

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Speaker 3: you know what it means for an industry for such

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Speaker 3: a big figure to be pleading guilty to criminal charges.

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Speaker 3: You know, how does this either set crypto back or

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Speaker 3: help it turn the page? How do you view this?

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Speaker 2: Again, I can't comment on the specific news that that

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Speaker 2: you all just covered, but I can say that what

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Speaker 2: we really need to be doing is is to be

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Speaker 2: working proactively to figure out regulatory framework, and I think

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Speaker 2: then we would see some of the issues that we've

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Speaker 2: seen in the industry not happening. You know, if you

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Speaker 2: try to shut the industry out from access to all

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Speaker 2: of the traditional financial rails, then you actually end up

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Speaker 2: with the situation in which everyone is worse off. So

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Speaker 2: I hope that we can work on really doing something

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Speaker 2: that's more productive.

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Speaker 3: Hester can you bring us inside the dynamic here of

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Speaker 3: the SEC. You know, it's pretty well known that you've

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Speaker 3: really been an advocate of the industry in many ways.

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Speaker 3: The SEC is clearly clamped down left and right when

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Speaker 3: you think about how they have approached exchanges in particular,

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Speaker 3: let alone the listing of digital assets. What is the dynamic,

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Speaker 3: What does the dispute look like inside the agency?

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Speaker 2: Well, Shanali, I would take issue with the characterization that

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Speaker 2: I'm an advocate for the industry. What I'm an advocate

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Speaker 2: for is people being able to come into the SEC

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Speaker 2: and figure out what regulations and then comply with those regulations.

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Speaker 4: That's where I think we've.

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Speaker 2: Fallen down on the job, and I think that's where

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Speaker 2: the where the conflict has sometimes arisen between me and

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Speaker 2: my colleagues. You know, I think we need to do

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Speaker 2: a better job of providing some guidelines to people. But

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Speaker 2: we all get along very well, and so these are

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Speaker 2: these are constant conversations that we're having and I hope

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Speaker 2: that we can get to a more, as I said,

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Speaker 2: a more productive place. But it is quite frustrating to

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Speaker 2: a lot of people in the industry, and I share

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Speaker 2: their frustration. That you know, it's one thing to say

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Speaker 2: that there's been a violation.

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Speaker 4: It's a whole other.

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Speaker 2: Issue to say, okay, now here's here's the framework that

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Speaker 2: you can comply with realistically and you can then avoid

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Speaker 2: future violations.

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Speaker 1: Well, Commissioner, when we're talking about conversations that you are

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Speaker 1: having internally at the SEC, whether it is commissionered to

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Speaker 1: commissioner or a chair Commissioner to staff, we have heard

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Speaker 1: a lot of report in another matter that has gotten

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Speaker 1: a lot of attention regarding as spot ETF that there

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Speaker 1: is ongoing conversations between issuers who have filed some of

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Speaker 1: these applications and individuals at the SEC. And I wonder

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Speaker 1: if you can shed any light on how much you,

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Speaker 1: as a commissioner might be involved in that, or really

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Speaker 1: if this is just happening at the lower staff level

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Speaker 1: at the moment.

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Speaker 4: No, again, I.

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Speaker 2: Really can't comment on that, but I think I've been

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Speaker 2: very transparent that I've thought for many years now that

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Speaker 2: there is no reason for us to stand in the

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Speaker 2: way of a spot bitcoin exchange traded product.

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Speaker 4: Every one, of course.

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Speaker 2: Must be judged on its own unique set of facts

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Speaker 2: and circumstances. But we've had number come before us, where

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Speaker 2: I've said, I don't see the reason that we're denying

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Speaker 2: these and so I think we got a little bit

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Speaker 2: of a nudge from the court and we'll see where

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Speaker 2: things go from here.

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Speaker 1: And that nudge from the court, I'm guessing you're alluding

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Speaker 1: to the gray Scale case in which they found the

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Speaker 1: SEC was arbitrary and capricious and denying Greyscale's attempts to

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Speaker 1: convert GPTC into an ETF. There has been a lot

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Speaker 1: of questions, Commissioner about where exactly Greyscale is going to

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Speaker 1: fall in terms of the timeline here. Do you think

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Speaker 1: that would be resolved theoretically before actually one of these

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Speaker 1: other spot filings are approved, or could all of this

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Speaker 1: happen simultaneously.

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Speaker 4: I just I can't speak to that.

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Speaker 2: All of those are under consideration now, so I can't

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Speaker 2: speak to them.

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Speaker 3: I'm curious about the path forward, Commissioner, because if we

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Speaker 3: look at the way that the industry has been fighting

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Speaker 3: back against a lot of the cases that the SEC

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Speaker 3: has brought forward, do you think that the agency will

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Speaker 3: continue to have particularly aggressive posture moving forward with more

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Speaker 3: suits or do you think that kind of losing some

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Speaker 3: of these cases will take some of the steam off

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Speaker 3: the industry.

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Speaker 2: Well, I will say that litigation is not the most

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Speaker 2: effective way to carry out regulation.

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Speaker 4: So certainly, enforcement actions are one that we have in

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Speaker 4: our toolbox.

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Speaker 2: But we have other tools, and so I think that

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Speaker 2: we should start really thinking about using some of those

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Speaker 2: other tools.

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Speaker 4: Now.

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Speaker 2: You know, I haven't noticed a slowdown necessarily in the

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Speaker 2: cases that we've announced. You see cases being announced, So

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Speaker 2: I think we're still on an enforcement track, but I'm

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Speaker 2: still trying to urge us to try to take a

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Speaker 2: more productive approach.

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Speaker 3: When does that happen. Do you think that it would

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Speaker 3: only come under a change in regime or do you

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Speaker 3: think that this could happen under the Gensler administration.

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Speaker 2: Well, I think one thing that could really change things

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Speaker 2: is Congress. Of course, Congress has been quite interested in

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Speaker 2: these topics, and so Congress weighing in would.

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Speaker 4: Certainly affect the way we move forward. But realistically, I.

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Speaker 2: Mean, any any of us could get up tomorrow and

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Speaker 2: say we're going to try to take a different approach.

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Speaker 4: We need to have three of us agreeing on that.

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Speaker 2: But if we did, I think we could we could

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Speaker 2: turn things around more quickly. Do you get a sense

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Speaker 2: Commissioner that there is a third that may be willing

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Speaker 2: to join you.

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Speaker 4: Is there a real.

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Speaker 1: Shift in the mood music at the SEC, if you will.

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Speaker 2: Again, it's hard for me to see that from what

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Speaker 2: we've been doing publicly, but I'm always hopeful.

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Speaker 1: Fair enough hope is a certain kind of strategy. You

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Speaker 1: mentioned that Congress doing something would be quite helpful here.

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Speaker 1: Of course, we have seen some moves in that regard.

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Speaker 1: The Financial Services Committee in the House did pass some

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Speaker 1: market structure legislation this summer that has yet to proceed forward.

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Speaker 4: I wonder what your.

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Speaker 1: Thought is on that kind of legislation, the delineation it

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Speaker 1: makes between the authorities of of your agency, the SEC,

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Speaker 1: and the CFTC, or whether there should be changes to that.

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Speaker 2: Look, I think Congress is the right body to be

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Speaker 2: making these kinds of decisions. It's ultimately they who are

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Speaker 2: directly accountable to the American people, and so they're the

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Speaker 2: right ones to decide. I think that there are ways

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Speaker 2: that we could work together with the CFTC. We do

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Speaker 2: it all the time in other areas, and I think

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Speaker 2: we can do it in this area as well.

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Speaker 4: But ultimately it's.

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Speaker 2: Up to Congress to decide which pieces need to go where,

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Speaker 2: and doing that is not easy because crypto is not

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Speaker 2: just financial. It could have a lot of implications for

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Speaker 2: different areas of our lives as well, and so they're

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Speaker 2: undertaking a big job and trying to draft this legislation.

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Speaker 3: Commissioner, how does the crypto community think about the SEC's

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Speaker 3: agenda ahead? On one hand, there are these enforcement actions.

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Speaker 3: On the other hand, you do have a very busy

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Speaker 3: agenda outside of the crypto industry as well. There are

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Speaker 3: these ETFs in the pipeline. What can investors expect moving

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Speaker 3: forward in terms of the order of priorities.

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Speaker 2: Well, I think you're correct in pointing to the rest

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Speaker 2: of the agendas as being really important.

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Speaker 4: Here.

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Speaker 2: The mission is really the busiest that it's been in

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Speaker 2: my memory. We're working on many, many rules, most of

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Speaker 2: which have nothing to do with crypto, and we also

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Speaker 2: have a very busy enforcement calendar. And so I think

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Speaker 2: that given all of the priorities that we have, I

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Speaker 2: think that means that crypto doesn't necessarily get a slot

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Speaker 2: on the rule making agenda, as we've seen, and where.

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Speaker 4: It does, frankly, it doesn't look great.

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Speaker 2: Some of the initial steps that we've taken with respect

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Speaker 2: to regulating crypto said either you have to centralize, you

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Speaker 2: have to get out of the US, or you have

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Speaker 2: to shut down. Those are not great options and they

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Speaker 2: totally undermine the whole point of crypto, which is to

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Speaker 2: facilitate decentralization, which then can make for a more robust

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Speaker 2: financial system and other parts of the economy as well

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Speaker 2: can be decentralized. And that's the strength and that the

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Speaker 2: transparency that comes with with not relying on centralized entities,

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Speaker 2: and the you know, equal terms of access that apply

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Speaker 2: to everyone.

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Speaker 4: These are really valuable things.

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Speaker 2: And if you force centralization, there are some points where

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Speaker 2: there will be centralization, of course, but just forcing that

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Speaker 2: is not uh, it's missing out on a

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Speaker 3: Point SEC Commissioner has to purs We thank you so

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Speaker 3: much