WEBVTT - SEC Commissioner Hester Peirce Talks Regulation 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.640 --> 0:00:10.280 We're going to bring in SEC Commissioner Hester Purse, who 0:00:10.360 --> 0:00:13.319 leads the regulator's crypto task for us. A lot of 0:00:13.360 --> 0:00:18.239 clarity that is awaited here, but let's talk first about 0:00:18.360 --> 0:00:21.079 what's already in standing. There have been a lot of 0:00:21.200 --> 0:00:25.720 enforcement at actions really bought forward by the previous Ganceler administration. 0:00:26.239 --> 0:00:29.240 Are any of those cases going to now be dropped? 0:00:30.440 --> 0:00:33.680 Well, Schanali, it's great to be here, and you point 0:00:33.680 --> 0:00:36.720 out the enforcement cases that we were left with or 0:00:37.159 --> 0:00:42.680 do complicate the situation. We have been using enforcement cases 0:00:42.680 --> 0:00:45.519 to set regulatory policy. We're trying to shift that so 0:00:45.560 --> 0:00:48.760 we actually set policy and then we bring enforcement cases 0:00:48.800 --> 0:00:52.479 as needed. But we will have to untangle the cases 0:00:52.479 --> 0:00:55.000 that are that are there, and that will require some work, 0:00:55.040 --> 0:00:58.000 but also it's facts and circumstances. We have to look 0:00:58.040 --> 0:01:02.280 at each cases on its as we go forward. 0:01:02.920 --> 0:01:05.119 As we mentioned earlier, the SEC fold request to put 0:01:05.120 --> 0:01:08.920 its case against Binance on hold. What other cases do 0:01:08.959 --> 0:01:09.880 you have to untangle? 0:01:11.640 --> 0:01:14.080 Well, I think people know that we've brought a lot 0:01:14.120 --> 0:01:18.320 of cases over recent years against a number of people 0:01:18.400 --> 0:01:21.640 of entities in the crypto space, and we have to 0:01:21.680 --> 0:01:23.440 look at each one of those on its own facts, 0:01:23.480 --> 0:01:26.479 but there are a lot of cases out there, so 0:01:26.840 --> 0:01:28.760 that is one piece of the work that's going to 0:01:28.760 --> 0:01:31.000 require time and patience. 0:01:32.000 --> 0:01:34.640 I also want to talk about the agencies themselves. If 0:01:34.640 --> 0:01:37.520 you think about the SEC and the CFTC as well, 0:01:37.800 --> 0:01:39.800 how soon do you think it's going to be worked 0:01:39.800 --> 0:01:43.240 out in terms of where ultimate authority over the crypto 0:01:43.319 --> 0:01:45.880 industry is going to be. Is there a case to 0:01:45.920 --> 0:01:49.800 be made that the SEC over the CFTC should kind 0:01:49.800 --> 0:01:51.720 of be the ultimate arbiter here or do you think 0:01:51.720 --> 0:01:52.880 it should be the other way around. 0:01:54.120 --> 0:01:56.520 I think again, there are a lot of things going 0:01:56.520 --> 0:01:59.480 on here. One is that we're working on looking at 0:01:59.560 --> 0:02:02.880 archers diction that we currently have and saying what falls 0:02:02.920 --> 0:02:06.680 inside that jurisdiction, what falls outside that jurisdiction, And then 0:02:06.720 --> 0:02:08.760 we can point out to Congress where we think there 0:02:08.760 --> 0:02:13.200 are gaps where maybe something is not covered by our jurisdiction, 0:02:13.360 --> 0:02:16.520 not the CFTCS, not the FTCs, and then it's up 0:02:16.520 --> 0:02:19.040 to Congress to fill that in. Of course, Congress is 0:02:19.400 --> 0:02:24.040 working in parallel. They're working on legislative efforts to provide 0:02:24.040 --> 0:02:28.080 more clarity, and so we're always willing to shift course, 0:02:28.120 --> 0:02:30.160 if they decide we should have more jurisdiction or less 0:02:30.240 --> 0:02:32.240 jurisdiction commission. 0:02:32.280 --> 0:02:34.160 How do you feel about this idea that's been put 0:02:34.200 --> 0:02:37.560 forward largely by academics. Really at this point about a 0:02:37.600 --> 0:02:40.920 potential merging of the two agencies, do you think that 0:02:41.000 --> 0:02:44.360 there is some sensibility here for there to be one 0:02:44.480 --> 0:02:49.040 agency rather than two disparate ones and in a move 0:02:49.120 --> 0:02:52.840 really that would clear up some confusion, not just for 0:02:52.919 --> 0:02:56.519 the crypto industry but for financial enforcement at large. 0:02:57.680 --> 0:02:59.800 That is definitely above my pay GRD. I've got a 0:02:59.800 --> 0:03:01.960 lot of issues I have to worry about, and that 0:03:02.080 --> 0:03:04.440 is not one I will take on. If Congress makes 0:03:04.480 --> 0:03:08.000 a decision, I'll work with whatever that is. We have 0:03:08.120 --> 0:03:11.320 worked well with the CFTC in the past on issues 0:03:11.400 --> 0:03:16.079 like derivatives policy, and I'm happy to work with them 0:03:16.120 --> 0:03:18.480 on crypto policy as well. In fact, we are trying 0:03:18.520 --> 0:03:20.240 to coordinate even now. Well. 0:03:20.280 --> 0:03:22.280 As we've mentioned, you're the head of the SEC's crypto 0:03:22.440 --> 0:03:25.040 task for US. You're widely seen as an advocate for 0:03:25.080 --> 0:03:29.200 the industry. I have this really basic question, why are 0:03:29.240 --> 0:03:32.040 you such a proponent proponent of crypto? In your view? 0:03:32.200 --> 0:03:33.760 What purpose does it serve? 0:03:35.040 --> 0:03:37.360 So I would take a little bit of issue with 0:03:37.400 --> 0:03:40.280 that question. I don't describe myself as an advocate of 0:03:40.320 --> 0:03:42.839 the industry. I'm a freedom maximalist though, and I think 0:03:42.880 --> 0:03:47.480 what the approach that we've been taking to crypto has 0:03:47.560 --> 0:03:50.840 been one of using regulation to stop people from trying 0:03:50.880 --> 0:03:53.800 to do interesting things they want to do. We actually 0:03:53.880 --> 0:03:57.440 have a very flexible regulatory framework. Congress saw the need 0:03:57.480 --> 0:04:00.280 to give us exemptive authority, for example, we have the 0:04:00.320 --> 0:04:03.640 ability to use these things, and instead we've just put 0:04:03.720 --> 0:04:07.160 roadblock after roadblock up against people who are trying to 0:04:08.200 --> 0:04:10.200 come in and talk to us as we've asked them 0:04:10.240 --> 0:04:12.120 to do, or come in and register as we've asked 0:04:12.120 --> 0:04:14.960 them to do. And so all I'm asking is that 0:04:15.000 --> 0:04:18.760 we have an innovation policy that allows people to innovate 0:04:19.160 --> 0:04:22.599 and that allows people to try new things. And that's 0:04:22.880 --> 0:04:25.960 really applies across the board. I think there are other 0:04:26.040 --> 0:04:28.200 areas where we need to be better on innovation too, 0:04:28.240 --> 0:04:31.200 But watching what's happened to Crypto over the past several 0:04:31.240 --> 0:04:35.479 years has just been extremely frustrating for someone who believes 0:04:35.480 --> 0:04:38.560 that government is there to serve the American people, not 0:04:38.640 --> 0:04:40.440 to stym me them when they're trying new things. 0:04:40.839 --> 0:04:44.200 Does that mean that, in your view, crypto does have 0:04:44.279 --> 0:04:45.839 a purpose and what is that purpose? 0:04:47.000 --> 0:04:50.120 Well, I think that there is a lot of really 0:04:50.160 --> 0:04:53.320 interesting work that is being done and that will be 0:04:53.440 --> 0:04:57.000 done involving crypto. I mean the technology allows people to 0:04:57.080 --> 0:05:00.600 coordinate in ways that was not possible before. People who 0:05:00.640 --> 0:05:04.760 don't know each other. And you know in the past 0:05:04.760 --> 0:05:07.640 that it's been very difficult for people to build something 0:05:07.720 --> 0:05:10.560 with other people across the world they don't know. But 0:05:10.640 --> 0:05:16.360 this creates a trust mechanism that really does enable people 0:05:16.400 --> 0:05:19.000 to do interesting things. You can build things on a 0:05:19.040 --> 0:05:22.320 public blockchain, and you can you can build things in 0:05:22.360 --> 0:05:27.080 the financial world. We might see some integration of blockchain 0:05:27.120 --> 0:05:31.520 technology into the traditional financial world. You can do things 0:05:31.560 --> 0:05:34.800 outside of finance as well using the technology. So I 0:05:34.800 --> 0:05:36.680 think it remains to be seen where it will go, 0:05:36.800 --> 0:05:39.840 but I'm excited to see where it takes us. 0:05:39.960 --> 0:05:42.760 You refer to yourself as a freedom maximalist. Does a 0:05:42.760 --> 0:05:46.039 freedom maximalist does that mean there should be no regulation 0:05:46.320 --> 0:05:47.000 in this space? 0:05:48.120 --> 0:05:50.560 We look, we live in a country where we have 0:05:50.839 --> 0:05:55.880 a very established financial regulatory framework and other regulatory frameworks 0:05:55.920 --> 0:05:57.719 as well. The one I've worked in is the financial 0:05:57.760 --> 0:06:02.680 regulatory framework and I'm committed to using the existing statutory 0:06:02.720 --> 0:06:06.520 framework that we have. And as I've said in announcing 0:06:06.520 --> 0:06:08.640 this task force, it doesn't mean a free for all. 0:06:08.680 --> 0:06:10.320 It doesn't mean you get to do whatever you want. 0:06:10.360 --> 0:06:12.920 We have rules in place and those rules will be enforced. 0:06:13.560 --> 0:06:18.160 But I think in this country, regulation is designed to 0:06:18.240 --> 0:06:22.760 create some basic parameters and then let people have the 0:06:22.800 --> 0:06:26.440 maximum freedom to innovate and try new things within that 0:06:26.960 --> 0:06:31.880 and frankly allowing people who desire to participate as investors 0:06:31.920 --> 0:06:35.400 or purchasers to have that freedom too, with the understanding 0:06:35.480 --> 0:06:39.680 that with that comes responsibility and that if something goes wrong, 0:06:39.800 --> 0:06:43.040 you don't necessarily have someone to run to. But of 0:06:43.080 --> 0:06:45.120 course we have rules in place, and of course we 0:06:45.160 --> 0:06:47.039 will continue to enforce those rules. 0:06:47.120 --> 0:06:49.320 Commissioner, I want to go back also to a letter 0:06:49.360 --> 0:06:51.280 that you wrote, a statement that you wrote a week ago, 0:06:51.600 --> 0:06:56.120 and the title of this is the Journey Begins. In 0:06:56.160 --> 0:06:59.320 that letter you talk about how the Commission is working 0:06:59.360 --> 0:07:03.680 hard to process applications for exemptive relief. Could you give 0:07:03.760 --> 0:07:06.800 us some clarity, some more color around what types of 0:07:06.839 --> 0:07:09.720 exemptive relief you are looking to grant companies right now. 0:07:10.880 --> 0:07:13.640 Well, so there are a couple different strands that we're 0:07:13.640 --> 0:07:16.160 working on. There have been a lot of exchange traded 0:07:16.200 --> 0:07:18.880 product applications that have come in and so that's one 0:07:18.920 --> 0:07:21.640 thing that we're looking at. But we've also invited people 0:07:21.640 --> 0:07:26.280 in to get relief from particular provisions of the statutes 0:07:26.320 --> 0:07:32.120 and regulations where they're bumping up into problems because there's 0:07:32.160 --> 0:07:36.200 something unusual about the technology that doesn't fit with the 0:07:37.200 --> 0:07:42.200 legacy statutes and regulations. So we have this authority to use. 0:07:42.240 --> 0:07:44.160 We can use it on a case by case basis, 0:07:44.160 --> 0:07:46.880 we can do it on a class basis if there's 0:07:46.920 --> 0:07:50.080 a set of people in the industry who need relief. 0:07:50.320 --> 0:07:55.200 So we're looking at all kinds of different adjustments that 0:07:55.240 --> 0:07:59.040 people need to be made, again maintaining our commitment to 0:07:59.720 --> 0:08:02.400 our repart mission, which does include investor protection. 0:08:02.960 --> 0:08:05.160 The other part I'm wondering about is when it comes 0:08:05.160 --> 0:08:10.560 to exchanges, in particular for the path to registration, do 0:08:10.640 --> 0:08:15.240 you see a path prior to any legislation taking a fact, 0:08:15.400 --> 0:08:18.000 do you think that this process could be facilitated faster? 0:08:20.320 --> 0:08:22.119 I think the first question that we have to ask 0:08:22.320 --> 0:08:25.240 is is this a trading platform that's trading something that 0:08:25.400 --> 0:08:28.000 is a security, in which case there would be a 0:08:28.040 --> 0:08:31.520 need to register with us, and we have exchanges and 0:08:31.560 --> 0:08:36.080 we have ATS's as well, which are a different form 0:08:36.120 --> 0:08:38.920 of trading venue, and so that's something that people can 0:08:39.440 --> 0:08:42.839 try to use in the crypto space. So we're willing 0:08:42.880 --> 0:08:46.520 to work with people on those kinds of applications as well. 0:08:47.480 --> 0:08:50.160 Finally, you mentioned kind of the etss that have been 0:08:50.200 --> 0:08:52.800 looking to register. Of course there has been a lot 0:08:52.880 --> 0:08:55.560 of them tied to many different assets. How are you 0:08:55.760 --> 0:08:59.880 looking at these filings coming through and to the extent 0:08:59.880 --> 0:09:02.400 that there could be some restrictions, where would they be 0:09:02.480 --> 0:09:03.440 and what would they involve. 0:09:05.440 --> 0:09:08.000 I think what we're trying to do is apply precedent 0:09:08.320 --> 0:09:10.600 the way that it it, you know, in a way 0:09:10.640 --> 0:09:14.800 that's consistent, so that we're trying to stay consistent with 0:09:14.840 --> 0:09:17.640 the past, yet looking to the new technology to see 0:09:17.679 --> 0:09:22.880 if there's anything about it that enables us to tailor 0:09:22.880 --> 0:09:27.560 craft or approach. So we're really looking at the whole gamut. 0:09:27.559 --> 0:09:29.880 We're getting a lot of these in and so we're 0:09:29.880 --> 0:09:33.000 trying to take a holistic look yet also looking at 0:09:33.040 --> 0:09:36.200 each one in its facts and circumstances, and we'll provide 0:09:36.640 --> 0:09:39.480 guidance as we can do it. If there's sort of 0:09:39.559 --> 0:09:42.719 universal guidance we can provide. We'll do that, but it's 0:09:42.760 --> 0:09:44.199 still early stages. 0:09:44.360 --> 0:09:47.600 Commissioner, does the President and First Lady launching their own 0:09:47.600 --> 0:09:49.520 mean coins make your job more difficult? 0:09:51.920 --> 0:09:54.240 You know? I think one of the things we're trying 0:09:54.280 --> 0:09:58.040 to do is look at categories of tokens that are 0:09:58.040 --> 0:10:01.880 out there. There are lots of people who are introducing 0:10:01.880 --> 0:10:05.280 meme coins right now. Facts and circumstances matter. We always 0:10:05.280 --> 0:10:07.800 have to look at the facts and circumstances. But many 0:10:07.880 --> 0:10:11.360 of the meme coins that are out there probably do 0:10:11.480 --> 0:10:16.319 not have a home as in the SEC under our 0:10:16.360 --> 0:10:19.959 current set of regulations. And so again, if that's something 0:10:19.960 --> 0:10:23.440 that Congress wants wants to address, they can do that. 0:10:24.120 --> 0:10:28.079 Maybe that's something the CFTC wants to address, But many 0:10:28.080 --> 0:10:30.920 of those I think probably are not within our jurisdiction. Now. 0:10:30.960 --> 0:10:32.640 Finally, I want to ask you before we let you 0:10:32.720 --> 0:10:36.360 go here, we had referenced the sixty day pause of 0:10:36.600 --> 0:10:40.840 the SEC binance lawsuit. Do you see a pathway to 0:10:40.920 --> 0:10:43.600 drop the lawsuit entirely or is this something that the 0:10:43.679 --> 0:10:45.920 new SEC will still want to be pursuing. 0:10:46.760 --> 0:10:49.680 Well, I can't talk about any specific case. I think 0:10:49.760 --> 0:10:53.000 we are looking at each case on its facts and circumstances, 0:10:53.480 --> 0:10:56.240 and bearing in mind this is a really unusual situation 0:10:56.320 --> 0:10:59.440 for us to be in. During the past several years, 0:10:59.679 --> 0:11:02.160 in florsement cases have been used as a way to 0:11:02.240 --> 0:11:06.160 make regulatory policy. That is very atypical, and we're trying 0:11:06.160 --> 0:11:08.400 to get back to the path where we're really using 0:11:08.440 --> 0:11:11.480 our other tools to make policy and we're dealing with 0:11:11.640 --> 0:11:15.400 enforcement issues using our enforcement tools, and so that all 0:11:15.440 --> 0:11:16.400 needs to be worked out. 0:11:16.800 --> 0:11:20.560 Commissioner, before we let you go, a question about deferred 0:11:20.600 --> 0:11:23.760 resignation offers. Can you tell us how many employees have 0:11:23.840 --> 0:11:28.319 taken the administration's deferred resignation offer and is there some 0:11:28.360 --> 0:11:30.960 sort of target for how many staff the agency could 0:11:31.000 --> 0:11:31.400 lay off. 0:11:32.640 --> 0:11:34.760 So I don't know the answer to your question. As 0:11:34.800 --> 0:11:39.200 you know, the deferred resignation program has the timeline has 0:11:39.720 --> 0:11:43.719 been extended out on that due to court consideration of 0:11:44.080 --> 0:11:47.240 that program. What I will say is that we have 0:11:47.320 --> 0:11:51.480 a lot of really fantastic people working at the SEC. 0:11:51.559 --> 0:11:53.320 I've had the chance to work with them now for 0:11:53.440 --> 0:11:57.400 the past seven years, and they're doing really important work. 0:11:57.240 --> 0:11:57.320 And. 0:11:59.559 --> 0:12:03.200 I've want to continue working with such wonderful people, and 0:12:03.240 --> 0:12:07.440 so we'll of course be as I think everyone in 0:12:07.480 --> 0:12:09.920 the government is doing. Thinking about how we can do 0:12:09.960 --> 0:12:14.079 our jobs more efficiently and effectively. That's something that should 0:12:14.080 --> 0:12:16.080 always be on our minds. But we do have a 0:12:16.160 --> 0:12:17.160 wonderful workforce. 0:12:17.320 --> 0:12:18.520 Is it overstaffed in your view? 0:12:20.520 --> 0:12:22.720 I think one thing to remember is that the capital 0:12:22.760 --> 0:12:25.400 markets in the United States are not only very large, 0:12:25.440 --> 0:12:28.640 but they're very important, the most important in the world, 0:12:28.720 --> 0:12:32.079 and so there are always more things that you can 0:12:32.120 --> 0:12:35.000 do with your resources. We can always examine more firms, 0:12:35.080 --> 0:12:37.719 we can always look at more registration statements, we can 0:12:37.720 --> 0:12:41.880 always bring more enforcement actions. It's a question of getting 0:12:41.920 --> 0:12:44.839 the balance right and thinking how can we best use 0:12:44.880 --> 0:12:47.680 the resources we have, the very talented people we have, 0:12:48.880 --> 0:12:51.080 do we need to redeploy them? Are they being used 0:12:51.120 --> 0:12:53.559 in the right way? And those are questions that any 0:12:53.679 --> 0:12:56.640 SEC leadership is always asking. How can we best use 0:12:56.640 --> 0:12:59.440 the resources we have? Where do we need to move people? 0:13:00.840 --> 0:13:03.280 Where do we need to keep people in place? Those 0:13:03.280 --> 0:13:04.960 are always questions we're asking. 0:13:05.400 --> 0:13:08.640 Nicec Commissioner Hester Purse, thanks so much for joining us. 0:13:08.720 --> 0:13:10.760 Really appreciate you. Thanks taking the time today.