Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: We're going to bring in SEC Commissioner Hester Purse, who
Speaker 2: leads the regulator's crypto task for us. A lot of
Speaker 2: clarity that is awaited here, but let's talk first about
Speaker 2: what's already in standing. There have been a lot of
Speaker 2: enforcement at actions really bought forward by the previous Ganceler administration.
Speaker 2: Are any of those cases going to now be dropped?
Speaker 3: Well, Schanali, it's great to be here, and you point
Speaker 3: out the enforcement cases that we were left with or
Speaker 3: do complicate the situation. We have been using enforcement cases
Speaker 3: to set regulatory policy. We're trying to shift that so
Speaker 3: we actually set policy and then we bring enforcement cases
Speaker 3: as needed. But we will have to untangle the cases
Speaker 3: that are that are there, and that will require some work,
Speaker 3: but also it's facts and circumstances. We have to look
Speaker 3: at each cases on its as we go forward.
Speaker 1: As we mentioned earlier, the SEC fold request to put
Speaker 1: its case against Binance on hold. What other cases do
Speaker 1: you have to untangle?
Speaker 3: Well, I think people know that we've brought a lot
Speaker 3: of cases over recent years against a number of people
Speaker 3: of entities in the crypto space, and we have to
Speaker 3: look at each one of those on its own facts,
Speaker 3: but there are a lot of cases out there, so
Speaker 3: that is one piece of the work that's going to
Speaker 3: require time and patience.
Speaker 2: I also want to talk about the agencies themselves. If
Speaker 2: you think about the SEC and the CFTC as well,
Speaker 2: how soon do you think it's going to be worked
Speaker 2: out in terms of where ultimate authority over the crypto
Speaker 2: industry is going to be. Is there a case to
Speaker 2: be made that the SEC over the CFTC should kind
Speaker 2: of be the ultimate arbiter here or do you think
Speaker 2: it should be the other way around.
Speaker 3: I think again, there are a lot of things going
Speaker 3: on here. One is that we're working on looking at
Speaker 3: archers diction that we currently have and saying what falls
Speaker 3: inside that jurisdiction, what falls outside that jurisdiction, And then
Speaker 3: we can point out to Congress where we think there
Speaker 3: are gaps where maybe something is not covered by our jurisdiction,
Speaker 3: not the CFTCS, not the FTCs, and then it's up
Speaker 3: to Congress to fill that in. Of course, Congress is
Speaker 3: working in parallel. They're working on legislative efforts to provide
Speaker 3: more clarity, and so we're always willing to shift course,
Speaker 3: if they decide we should have more jurisdiction or less
Speaker 3: jurisdiction commission.
Speaker 2: How do you feel about this idea that's been put
Speaker 2: forward largely by academics. Really at this point about a
Speaker 2: potential merging of the two agencies, do you think that
Speaker 2: there is some sensibility here for there to be one
Speaker 2: agency rather than two disparate ones and in a move
Speaker 2: really that would clear up some confusion, not just for
Speaker 2: the crypto industry but for financial enforcement at large.
Speaker 3: That is definitely above my pay GRD. I've got a
Speaker 3: lot of issues I have to worry about, and that
Speaker 3: is not one I will take on. If Congress makes
Speaker 3: a decision, I'll work with whatever that is. We have
Speaker 3: worked well with the CFTC in the past on issues
Speaker 3: like derivatives policy, and I'm happy to work with them
Speaker 3: on crypto policy as well. In fact, we are trying
Speaker 3: to coordinate even now. Well.
Speaker 1: As we've mentioned, you're the head of the SEC's crypto
Speaker 1: task for US. You're widely seen as an advocate for
Speaker 1: the industry. I have this really basic question, why are
Speaker 1: you such a proponent proponent of crypto? In your view?
Speaker 1: What purpose does it serve?
Speaker 3: So I would take a little bit of issue with
Speaker 3: that question. I don't describe myself as an advocate of
Speaker 3: the industry. I'm a freedom maximalist though, and I think
Speaker 3: what the approach that we've been taking to crypto has
Speaker 3: been one of using regulation to stop people from trying
Speaker 3: to do interesting things they want to do. We actually
Speaker 3: have a very flexible regulatory framework. Congress saw the need
Speaker 3: to give us exemptive authority, for example, we have the
Speaker 3: ability to use these things, and instead we've just put
Speaker 3: roadblock after roadblock up against people who are trying to
Speaker 3: come in and talk to us as we've asked them
Speaker 3: to do, or come in and register as we've asked
Speaker 3: them to do. And so all I'm asking is that
Speaker 3: we have an innovation policy that allows people to innovate
Speaker 3: and that allows people to try new things. And that's
Speaker 3: really applies across the board. I think there are other
Speaker 3: areas where we need to be better on innovation too,
Speaker 3: But watching what's happened to Crypto over the past several
Speaker 3: years has just been extremely frustrating for someone who believes
Speaker 3: that government is there to serve the American people, not
Speaker 3: to stym me them when they're trying new things.
Speaker 1: Does that mean that, in your view, crypto does have
Speaker 1: a purpose and what is that purpose?
Speaker 3: Well, I think that there is a lot of really
Speaker 3: interesting work that is being done and that will be
Speaker 3: done involving crypto. I mean the technology allows people to
Speaker 3: coordinate in ways that was not possible before. People who
Speaker 3: don't know each other. And you know in the past
Speaker 3: that it's been very difficult for people to build something
Speaker 3: with other people across the world they don't know. But
Speaker 3: this creates a trust mechanism that really does enable people
Speaker 3: to do interesting things. You can build things on a
Speaker 3: public blockchain, and you can you can build things in
Speaker 3: the financial world. We might see some integration of blockchain
Speaker 3: technology into the traditional financial world. You can do things
Speaker 3: outside of finance as well using the technology. So I
Speaker 3: think it remains to be seen where it will go,
Speaker 3: but I'm excited to see where it takes us.
Speaker 1: You refer to yourself as a freedom maximalist. Does a
Speaker 1: freedom maximalist does that mean there should be no regulation
Speaker 1: in this space?
Speaker 3: We look, we live in a country where we have
Speaker 3: a very established financial regulatory framework and other regulatory frameworks
Speaker 3: as well. The one I've worked in is the financial
Speaker 3: regulatory framework and I'm committed to using the existing statutory
Speaker 3: framework that we have. And as I've said in announcing
Speaker 3: this task force, it doesn't mean a free for all.
Speaker 3: It doesn't mean you get to do whatever you want.
Speaker 3: We have rules in place and those rules will be enforced.
Speaker 3: But I think in this country, regulation is designed to
Speaker 3: create some basic parameters and then let people have the
Speaker 3: maximum freedom to innovate and try new things within that
Speaker 3: and frankly allowing people who desire to participate as investors
Speaker 3: or purchasers to have that freedom too, with the understanding
Speaker 3: that with that comes responsibility and that if something goes wrong,
Speaker 3: you don't necessarily have someone to run to. But of
Speaker 3: course we have rules in place, and of course we
Speaker 3: will continue to enforce those rules.
Speaker 2: Commissioner, I want to go back also to a letter
Speaker 2: that you wrote, a statement that you wrote a week ago,
Speaker 2: and the title of this is the Journey Begins. In
Speaker 2: that letter you talk about how the Commission is working
Speaker 2: hard to process applications for exemptive relief. Could you give
Speaker 2: us some clarity, some more color around what types of
Speaker 2: exemptive relief you are looking to grant companies right now.
Speaker 3: Well, so there are a couple different strands that we're
Speaker 3: working on. There have been a lot of exchange traded
Speaker 3: product applications that have come in and so that's one
Speaker 3: thing that we're looking at. But we've also invited people
Speaker 3: in to get relief from particular provisions of the statutes
Speaker 3: and regulations where they're bumping up into problems because there's
Speaker 3: something unusual about the technology that doesn't fit with the
Speaker 3: legacy statutes and regulations. So we have this authority to use.
Speaker 3: We can use it on a case by case basis,
Speaker 3: we can do it on a class basis if there's
Speaker 3: a set of people in the industry who need relief.
Speaker 3: So we're looking at all kinds of different adjustments that
Speaker 3: people need to be made, again maintaining our commitment to
Speaker 3: our repart mission, which does include investor protection.
Speaker 2: The other part I'm wondering about is when it comes
Speaker 2: to exchanges, in particular for the path to registration, do
Speaker 2: you see a path prior to any legislation taking a fact,
Speaker 2: do you think that this process could be facilitated faster?
Speaker 3: I think the first question that we have to ask
Speaker 3: is is this a trading platform that's trading something that
Speaker 3: is a security, in which case there would be a
Speaker 3: need to register with us, and we have exchanges and
Speaker 3: we have ATS's as well, which are a different form
Speaker 3: of trading venue, and so that's something that people can
Speaker 3: try to use in the crypto space. So we're willing
Speaker 3: to work with people on those kinds of applications as well.
Speaker 2: Finally, you mentioned kind of the etss that have been
Speaker 2: looking to register. Of course there has been a lot
Speaker 2: of them tied to many different assets. How are you
Speaker 2: looking at these filings coming through and to the extent
Speaker 2: that there could be some restrictions, where would they be
Speaker 2: and what would they involve.
Speaker 3: I think what we're trying to do is apply precedent
Speaker 3: the way that it it, you know, in a way
Speaker 3: that's consistent, so that we're trying to stay consistent with
Speaker 3: the past, yet looking to the new technology to see
Speaker 3: if there's anything about it that enables us to tailor
Speaker 3: craft or approach. So we're really looking at the whole gamut.
Speaker 3: We're getting a lot of these in and so we're
Speaker 3: trying to take a holistic look yet also looking at
Speaker 3: each one in its facts and circumstances, and we'll provide
Speaker 3: guidance as we can do it. If there's sort of
Speaker 3: universal guidance we can provide. We'll do that, but it's
Speaker 3: still early stages.
Speaker 1: Commissioner, does the President and First Lady launching their own
Speaker 1: mean coins make your job more difficult?
Speaker 3: You know? I think one of the things we're trying
Speaker 3: to do is look at categories of tokens that are
Speaker 3: out there. There are lots of people who are introducing
Speaker 3: meme coins right now. Facts and circumstances matter. We always
Speaker 3: have to look at the facts and circumstances. But many
Speaker 3: of the meme coins that are out there probably do
Speaker 3: not have a home as in the SEC under our
Speaker 3: current set of regulations. And so again, if that's something
Speaker 3: that Congress wants wants to address, they can do that.
Speaker 3: Maybe that's something the CFTC wants to address, But many
Speaker 3: of those I think probably are not within our jurisdiction. Now.
Speaker 2: Finally, I want to ask you before we let you
Speaker 2: go here, we had referenced the sixty day pause of
Speaker 2: the SEC binance lawsuit. Do you see a pathway to
Speaker 2: drop the lawsuit entirely or is this something that the
Speaker 2: new SEC will still want to be pursuing.
Speaker 3: Well, I can't talk about any specific case. I think
Speaker 3: we are looking at each case on its facts and circumstances,
Speaker 3: and bearing in mind this is a really unusual situation
Speaker 3: for us to be in. During the past several years,
Speaker 3: in florsement cases have been used as a way to
Speaker 3: make regulatory policy. That is very atypical, and we're trying
Speaker 3: to get back to the path where we're really using
Speaker 3: our other tools to make policy and we're dealing with
Speaker 3: enforcement issues using our enforcement tools, and so that all
Speaker 3: needs to be worked out.
Speaker 1: Commissioner, before we let you go, a question about deferred
Speaker 1: resignation offers. Can you tell us how many employees have
Speaker 1: taken the administration's deferred resignation offer and is there some
Speaker 1: sort of target for how many staff the agency could
Speaker 1: lay off.
Speaker 3: So I don't know the answer to your question. As
Speaker 3: you know, the deferred resignation program has the timeline has
Speaker 3: been extended out on that due to court consideration of
Speaker 3: that program. What I will say is that we have
Speaker 3: a lot of really fantastic people working at the SEC.
Speaker 3: I've had the chance to work with them now for
Speaker 3: the past seven years, and they're doing really important work.
Speaker 1: And.
Speaker 3: I've want to continue working with such wonderful people, and
Speaker 3: so we'll of course be as I think everyone in
Speaker 3: the government is doing. Thinking about how we can do
Speaker 3: our jobs more efficiently and effectively. That's something that should
Speaker 3: always be on our minds. But we do have a
Speaker 3: wonderful workforce.
Speaker 1: Is it overstaffed in your view?
Speaker 3: I think one thing to remember is that the capital
Speaker 3: markets in the United States are not only very large,
Speaker 3: but they're very important, the most important in the world,
Speaker 3: and so there are always more things that you can
Speaker 3: do with your resources. We can always examine more firms,
Speaker 3: we can always look at more registration statements, we can
Speaker 3: always bring more enforcement actions. It's a question of getting
Speaker 3: the balance right and thinking how can we best use
Speaker 3: the resources we have, the very talented people we have,
Speaker 3: do we need to redeploy them? Are they being used
Speaker 3: in the right way? And those are questions that any
Speaker 3: SEC leadership is always asking. How can we best use
Speaker 3: the resources we have? Where do we need to move people?
Speaker 3: Where do we need to keep people in place? Those
Speaker 3: are always questions we're asking.
Speaker 1: Nicec Commissioner Hester Purse, thanks so much for joining us.
Speaker 1: Really appreciate you. Thanks taking the time today.