1 00:00:01,440 --> 00:00:05,760 Speaker 1: From Mahart where Innovation, Money and power Collie in Silicon 2 00:00:05,840 --> 00:00:10,280 Speaker 1: Vallet NBN. This is Bloomberg Technology with Caroline Hyde and 3 00:00:10,520 --> 00:00:11,600 Speaker 1: Ed Ludlow. 4 00:00:25,840 --> 00:00:29,120 Speaker 2: Live from London and San Francisco. This is Bloomberg Technology 5 00:00:29,200 --> 00:00:33,640 Speaker 2: coming up ASML's CEO on how the US China relationship 6 00:00:33,880 --> 00:00:35,360 Speaker 2: could shape the chip industry. 7 00:00:36,400 --> 00:00:39,400 Speaker 3: The future of sec Oversight will be joined live by 8 00:00:39,520 --> 00:00:41,320 Speaker 3: chair Gary Gensler. 9 00:00:42,000 --> 00:00:44,760 Speaker 2: And SAP shares saw to a new record thanks to 10 00:00:44,800 --> 00:00:48,280 Speaker 2: AI driving cloud revenue. We have that and many more 11 00:00:48,280 --> 00:00:51,280 Speaker 2: earnings for you. But first, let's just check on these markets. 12 00:00:51,280 --> 00:00:53,600 Speaker 2: We shine a light on the Nasdaq, which is currently 13 00:00:53,640 --> 00:00:55,120 Speaker 2: off by about a tenth per percent. The S and 14 00:00:55,160 --> 00:00:57,400 Speaker 2: P five founded off for two straight days. That's the 15 00:00:57,440 --> 00:00:59,840 Speaker 2: first back to back losses we've seen in six weeks. 16 00:01:00,160 --> 00:01:02,560 Speaker 2: There's some caution about where the Federal Reserve goes from here. 17 00:01:02,640 --> 00:01:04,280 Speaker 2: Does it continue to cut rates in the face of 18 00:01:04,319 --> 00:01:07,120 Speaker 2: resilient US economy even as the IMF warns of a 19 00:01:07,200 --> 00:01:10,160 Speaker 2: global slow down ed? But we see tech just off 20 00:01:10,200 --> 00:01:12,679 Speaker 2: a little bit. What's risk sentiment like for some of. 21 00:01:12,600 --> 00:01:13,440 Speaker 4: The names you're watching? 22 00:01:14,000 --> 00:01:17,360 Speaker 3: Yeah, interesting, I'm probably top story is ASML, the Dutch 23 00:01:17,400 --> 00:01:20,280 Speaker 3: producer of chip making equipment. We're about to get right 24 00:01:20,319 --> 00:01:23,240 Speaker 3: to a critical interview with the CEO. But the shares 25 00:01:23,240 --> 00:01:25,640 Speaker 3: are worth looking at because at the high of the 26 00:01:25,680 --> 00:01:27,920 Speaker 3: session in Europe they are up more than three percent. 27 00:01:27,959 --> 00:01:30,720 Speaker 3: They've paired that gain to one percent, but it's worth 28 00:01:30,760 --> 00:01:34,560 Speaker 3: noting we're down still more than fifteen percent since that 29 00:01:34,680 --> 00:01:37,400 Speaker 3: kind of fateful early release of earnings that we covered 30 00:01:37,400 --> 00:01:40,600 Speaker 3: so deeply last week. Intense focus on this name in 31 00:01:40,640 --> 00:01:43,600 Speaker 3: the context of AI and what's happening with chip investment 32 00:01:43,640 --> 00:01:44,280 Speaker 3: around the world. 33 00:01:44,400 --> 00:01:45,720 Speaker 4: Bring us the details, Carra. 34 00:01:46,680 --> 00:01:49,880 Speaker 2: Yeah, let's get to the ASML CEO Christal Fouquet, who 35 00:01:49,960 --> 00:01:53,320 Speaker 2: spoke this morning at the Bloomberg Tech Summit with our 36 00:01:53,360 --> 00:01:55,960 Speaker 2: own Tom Giles. It was right here in London. He 37 00:01:56,000 --> 00:01:58,520 Speaker 2: discussed the future of the chip industry more broadly in China, 38 00:01:58,520 --> 00:02:01,960 Speaker 2: in particular the future revenues and the impact of US regulation. 39 00:02:02,120 --> 00:02:02,680 Speaker 5: Just take a lessen. 40 00:02:04,520 --> 00:02:08,960 Speaker 6: The focus of China is on mainstream semiconductor. The demand 41 00:02:09,000 --> 00:02:13,000 Speaker 6: for that has boomed in twenty twenty one twenty two. 42 00:02:13,520 --> 00:02:15,240 Speaker 1: As a resource, the demand we. 43 00:02:15,160 --> 00:02:17,320 Speaker 6: Had in China in twenty twenty one twenty two has 44 00:02:17,320 --> 00:02:20,440 Speaker 6: boomed as well, and twenty one twenty two was the 45 00:02:20,520 --> 00:02:25,640 Speaker 6: time if you recall where the demand was extremely high 46 00:02:25,960 --> 00:02:32,000 Speaker 6: and SMR was struggling to deliver tools to everyone. Therefore 47 00:02:32,040 --> 00:02:35,000 Speaker 6: we couldn't deliver a large part of the demand in China. 48 00:02:35,600 --> 00:02:40,480 Speaker 6: Backlog in China grew twenty twenty three the rest of markets, 49 00:02:40,480 --> 00:02:43,840 Speaker 6: so offten we got tools we could ship to China, 50 00:02:44,840 --> 00:02:48,040 Speaker 6: same in twenty twenty four. So the level of business 51 00:02:48,080 --> 00:02:50,480 Speaker 6: we had with Chine twenty three twenty four was more 52 00:02:50,720 --> 00:02:54,040 Speaker 6: of a resource of the non delivered capacity in twenty 53 00:02:54,040 --> 00:02:58,200 Speaker 6: two twenty one than anything else. And we've always explained that, 54 00:02:58,280 --> 00:03:02,400 Speaker 6: you know, our fifty percent of the business in China, 55 00:03:02,520 --> 00:03:05,320 Speaker 6: or most fifty percent, this was not normal. This was 56 00:03:05,320 --> 00:03:09,200 Speaker 6: a peak resulting from basically. 57 00:03:09,520 --> 00:03:11,040 Speaker 1: A lack of a bittervery before. 58 00:03:11,720 --> 00:03:14,840 Speaker 6: The normal business in China is around twenty twenty five percent, 59 00:03:15,200 --> 00:03:19,440 Speaker 6: and that's the normal demand related to mainstreams to be conductor, 60 00:03:19,480 --> 00:03:20,919 Speaker 6: and I think we're going to go back to those 61 00:03:21,000 --> 00:03:21,800 Speaker 6: number over time. 62 00:03:22,040 --> 00:03:25,320 Speaker 7: But there is something artificial about the way we think 63 00:03:25,360 --> 00:03:29,240 Speaker 7: about China as a as a purchaser of equipment like asmls, 64 00:03:29,480 --> 00:03:33,760 Speaker 7: in the sense that many countries around the world US 65 00:03:33,800 --> 00:03:41,080 Speaker 7: principally have have have been exerting export controls on the country. 66 00:03:41,160 --> 00:03:45,640 Speaker 7: Are those controls going to become even more stringent? For example, 67 00:03:47,720 --> 00:03:50,200 Speaker 7: China is not able to buy your most advanced machines. 68 00:03:50,320 --> 00:03:54,200 Speaker 7: Is it possible that those restrictions could extend to the 69 00:03:54,280 --> 00:03:59,360 Speaker 7: DUV level, which is used for more mainstream products. 70 00:04:00,320 --> 00:04:00,520 Speaker 8: Yeah. 71 00:04:00,600 --> 00:04:03,880 Speaker 6: So if you go back to the root cause of 72 00:04:03,960 --> 00:04:07,200 Speaker 6: the say, the prime motivation of export ConTroll it to 73 00:04:07,280 --> 00:04:10,080 Speaker 6: us to prevent China to have access to advanced technology. 74 00:04:11,160 --> 00:04:12,360 Speaker 1: EWE is not in China. 75 00:04:13,320 --> 00:04:18,400 Speaker 6: By not having you in China, we pretty much stop 76 00:04:18,720 --> 00:04:22,760 Speaker 6: the ability of China to go beyond the five maybe 77 00:04:22,800 --> 00:04:26,719 Speaker 6: three nonometer note may be able to do a few chips. 78 00:04:26,920 --> 00:04:28,240 Speaker 1: You may see some of that in. 79 00:04:28,200 --> 00:04:31,440 Speaker 6: The press because of of course everyone is watching very carefully. 80 00:04:32,120 --> 00:04:37,719 Speaker 6: But fundamentally, by not having EUV, we have placed China. 81 00:04:38,120 --> 00:04:40,800 Speaker 6: The regulation have placed China I would say ten to 82 00:04:40,839 --> 00:04:44,919 Speaker 6: fifteen years behind when it comes to advanced technology. We 83 00:04:44,960 --> 00:04:48,599 Speaker 6: always talk about China. We usually forget to mention the 84 00:04:48,680 --> 00:04:52,120 Speaker 6: fact that while those restrictions have applied on China and UV, 85 00:04:52,920 --> 00:04:57,159 Speaker 6: a lot of work has been done with other player 86 00:04:57,200 --> 00:05:02,240 Speaker 6: and industry Intel, TSMC, Samsung on the most advanced EUV 87 00:05:02,400 --> 00:05:05,720 Speaker 6: technology as we know it today, et. 88 00:05:05,720 --> 00:05:06,279 Speaker 1: Cetera, et cetera. 89 00:05:06,440 --> 00:05:08,960 Speaker 6: So there's been a lot of work down every single 90 00:05:09,080 --> 00:05:13,400 Speaker 6: day to continue to widen if you want this technology gap. 91 00:05:13,279 --> 00:05:17,080 Speaker 7: Based on your interaction with the Prime Minister of the 92 00:05:17,120 --> 00:05:22,080 Speaker 7: Netherlands with the Foreign Ministry, is it your expectation that 93 00:05:22,160 --> 00:05:28,120 Speaker 7: the restrictions will become even more limiting on China's ability 94 00:05:28,160 --> 00:05:30,960 Speaker 7: to purchase machinery like asmls. 95 00:05:31,520 --> 00:05:35,720 Speaker 6: Well, if you look at the geopolitic landscape, I think 96 00:05:35,760 --> 00:05:38,719 Speaker 6: it's clear that the United States will continue to apply 97 00:05:38,839 --> 00:05:43,240 Speaker 6: pressure on their life for more restriction. Now, the question 98 00:05:44,000 --> 00:05:47,200 Speaker 6: the discussion we have with the Dutch Prime minister, I 99 00:05:47,240 --> 00:05:51,800 Speaker 6: would say the European political leader, because at the end 100 00:05:51,839 --> 00:05:56,320 Speaker 6: of the day, we are technology champion company, right, So 101 00:05:56,480 --> 00:05:59,480 Speaker 6: these other people we have this discussion with, and the 102 00:05:59,560 --> 00:06:03,480 Speaker 6: question is what is right for the Netherlands, what is 103 00:06:03,560 --> 00:06:06,160 Speaker 6: right for Europe and as a results, what is right 104 00:06:06,200 --> 00:06:06,800 Speaker 6: for SML. 105 00:06:07,640 --> 00:06:10,159 Speaker 1: So what restriction makes sense when. 106 00:06:10,040 --> 00:06:13,200 Speaker 6: It comes to national security, which has been the prime argument, 107 00:06:14,480 --> 00:06:17,440 Speaker 6: and where does it stop right because, like I said, 108 00:06:17,440 --> 00:06:19,440 Speaker 6: a lot of the focus in China today is on 109 00:06:19,520 --> 00:06:25,520 Speaker 6: mainstream semiconductor and this is very different from you know AI. 110 00:06:26,160 --> 00:06:28,200 Speaker 6: So that's the discussion we have is if the pressure 111 00:06:28,240 --> 00:06:31,359 Speaker 6: will continue to be there because you know, if you 112 00:06:31,400 --> 00:06:34,680 Speaker 6: look at the landscape, that's what it is. But I 113 00:06:34,680 --> 00:06:38,440 Speaker 6: think that the discussion will get more sophisticated over time, 114 00:06:39,279 --> 00:06:40,680 Speaker 6: the stake will become higher. 115 00:06:43,279 --> 00:06:47,400 Speaker 3: That was asmlco Crystal fuqu earlier today at the Bloomberg 116 00:06:47,640 --> 00:06:50,000 Speaker 3: Summer in London. Let's discuss this a bit more. Ioko 117 00:06:50,080 --> 00:06:54,760 Speaker 3: Yoshioka is portfolio consulting director a wealth Enhancement group. I 118 00:06:54,800 --> 00:06:56,640 Speaker 3: took a quick glance down at my Bloomberg terminal. 119 00:06:56,720 --> 00:06:57,240 Speaker 8: I think you. 120 00:06:57,160 --> 00:07:01,600 Speaker 3: Guys have a small exposure to the ADRs of ASML. 121 00:07:02,200 --> 00:07:05,920 Speaker 3: But listening to that intense conversation, the themes are clear, right. 122 00:07:06,279 --> 00:07:06,960 Speaker 8: Will there be. 123 00:07:07,000 --> 00:07:10,600 Speaker 3: More export controls from the US to China when it 124 00:07:10,600 --> 00:07:13,560 Speaker 3: relates to the lead edge of chips? Will there be 125 00:07:13,640 --> 00:07:16,760 Speaker 3: increased tensions in the supply chain? When you listen to 126 00:07:16,760 --> 00:07:20,400 Speaker 3: that interview, how do you think about a name like ASML? 127 00:07:20,520 --> 00:07:22,040 Speaker 9: Good morning, Good morning ED. 128 00:07:22,520 --> 00:07:24,840 Speaker 10: So you know, when we think about just the overall 129 00:07:24,880 --> 00:07:29,000 Speaker 10: semiconductor chip equipment industry, you know, I think one of 130 00:07:29,040 --> 00:07:32,560 Speaker 10: the key things that the CEO of ASML focus on 131 00:07:32,680 --> 00:07:36,080 Speaker 10: is the mainstream versus AI. You know, we are seeing 132 00:07:36,120 --> 00:07:40,040 Speaker 10: that growth on the AI side. We like names like 133 00:07:40,160 --> 00:07:43,440 Speaker 10: LAM Research as well, which has you know, some etching 134 00:07:43,480 --> 00:07:46,840 Speaker 10: tools for DRAM, which is used a little bit more 135 00:07:46,840 --> 00:07:49,560 Speaker 10: on the AI side, So you know, one area is 136 00:07:49,960 --> 00:07:53,080 Speaker 10: growing a lot more. I think the mainstream side is 137 00:07:53,080 --> 00:07:55,720 Speaker 10: trying to normalize a little bit, especially with everything that's 138 00:07:55,760 --> 00:07:58,000 Speaker 10: going on in China, and you just have to find 139 00:07:58,040 --> 00:08:01,120 Speaker 10: a balance between the two as we look at what 140 00:08:01,160 --> 00:08:03,680 Speaker 10: the chip industry is going to look like going forward. 141 00:08:05,400 --> 00:08:08,440 Speaker 2: Looking at it going forward, do you have any view 142 00:08:08,480 --> 00:08:13,640 Speaker 2: that it'll change post November the fifth, sixth, when we 143 00:08:13,720 --> 00:08:16,440 Speaker 2: have a different outcome from an election and post January 144 00:08:16,480 --> 00:08:18,320 Speaker 2: when we have a different administration in the US. 145 00:08:18,760 --> 00:08:22,000 Speaker 10: You know, it's definitely something that we and our clients 146 00:08:22,040 --> 00:08:24,080 Speaker 10: talk about a lot in terms of what are the 147 00:08:24,080 --> 00:08:27,760 Speaker 10: potential regulatory issues as well as what are the policies 148 00:08:27,760 --> 00:08:31,240 Speaker 10: that might get put in place, whether it's tariffs and whatnot. 149 00:08:31,360 --> 00:08:35,160 Speaker 10: And it can change things going forward, but we have 150 00:08:35,240 --> 00:08:37,959 Speaker 10: to wait and see what the actual details will be 151 00:08:38,840 --> 00:08:41,320 Speaker 10: once we know who's in office and what types of 152 00:08:41,360 --> 00:08:44,080 Speaker 10: policies they're going to be able to get past, just 153 00:08:44,160 --> 00:08:47,760 Speaker 10: also depending on the composition of Congress. 154 00:08:48,200 --> 00:08:51,680 Speaker 2: What has been so abundantly clear is that there is 155 00:08:51,760 --> 00:08:55,199 Speaker 2: the AI perspective of chips, and then there's everything else, 156 00:08:55,679 --> 00:08:58,520 Speaker 2: And from your perspective, is it investable in the everything 157 00:08:58,520 --> 00:09:00,760 Speaker 2: else at the moment when we are still seeing inventory 158 00:09:00,800 --> 00:09:04,280 Speaker 2: weigh so heavily, whether it's the auto exposure, whether it's 159 00:09:04,320 --> 00:09:05,319 Speaker 2: consumer exposure. 160 00:09:06,040 --> 00:09:07,760 Speaker 10: So in the near term, I think it's a little 161 00:09:07,800 --> 00:09:10,439 Speaker 10: bit tougher. You know, in the near term we are 162 00:09:10,480 --> 00:09:14,480 Speaker 10: seeing an oversupply of autos and some of the industrials 163 00:09:14,520 --> 00:09:18,120 Speaker 10: are still sort of struggling. So in market wise, you know, 164 00:09:18,280 --> 00:09:20,720 Speaker 10: it's not as great as it was back in twenty 165 00:09:20,760 --> 00:09:23,720 Speaker 10: twenty year, twenty twenty one. But you know, I think 166 00:09:23,760 --> 00:09:26,720 Speaker 10: going forward, as rates come down and as we see 167 00:09:26,760 --> 00:09:29,559 Speaker 10: the economy continue to stay strong, I think you can 168 00:09:29,600 --> 00:09:32,240 Speaker 10: see a lot of that continuing to grow over the 169 00:09:32,280 --> 00:09:36,280 Speaker 10: long term. You know, these cyclical industries go through these 170 00:09:36,280 --> 00:09:38,040 Speaker 10: ebbs and flows and you just have to kind of 171 00:09:38,240 --> 00:09:38,880 Speaker 10: play through that. 172 00:09:39,720 --> 00:09:42,640 Speaker 3: So that's why Caroline's question is so interesting, The conversation 173 00:09:42,760 --> 00:09:47,280 Speaker 3: is so interesting. They are historically cyclical industries, and forget 174 00:09:47,400 --> 00:09:50,240 Speaker 3: sort of the equity market portion of this. You know, 175 00:09:50,520 --> 00:09:53,240 Speaker 3: the impact of the Chips Act, what's happening in Europe, 176 00:09:53,240 --> 00:09:56,720 Speaker 3: all the money in capex commitment, is there a risk 177 00:09:56,800 --> 00:09:59,199 Speaker 3: that it's overdone, over invested. 178 00:10:00,120 --> 00:10:02,120 Speaker 10: So I think the big risk is that some of 179 00:10:02,120 --> 00:10:05,840 Speaker 10: these hyperscalers do pause and take a little bit of 180 00:10:05,880 --> 00:10:09,400 Speaker 10: their foot off the pedal when it comes to overall 181 00:10:09,640 --> 00:10:13,400 Speaker 10: capax investing on the AI side, because then you have 182 00:10:13,760 --> 00:10:17,840 Speaker 10: the cyclical low on the mainstream side and a pause 183 00:10:18,000 --> 00:10:21,959 Speaker 10: potentially on the AI side. So that would be the 184 00:10:22,000 --> 00:10:24,319 Speaker 10: biggest concern. But I think when you look at it 185 00:10:24,559 --> 00:10:27,360 Speaker 10: in a three to five year outlook, it will all 186 00:10:27,400 --> 00:10:30,640 Speaker 10: sort of equal out and provide growth on both sides. 187 00:10:31,520 --> 00:10:33,839 Speaker 3: You know what we don't talk as much about sometimes 188 00:10:33,920 --> 00:10:37,840 Speaker 3: oko is the technology bit. I'm pretty sure that Monsieur 189 00:10:37,880 --> 00:10:42,040 Speaker 3: Fouquet would say that ASML is at the absolute cutting 190 00:10:42,120 --> 00:10:44,959 Speaker 3: edge of extreme ultra violet lithography. And I bring that 191 00:10:45,040 --> 00:10:47,240 Speaker 3: up because he'd probably also say that there is no 192 00:10:47,360 --> 00:10:51,000 Speaker 3: company in China that could do what they do. So 193 00:10:51,040 --> 00:10:53,160 Speaker 3: in all of this, all the risk and the chaos 194 00:10:53,240 --> 00:10:56,480 Speaker 3: and the politics, is that not something worth considering if 195 00:10:56,520 --> 00:10:58,480 Speaker 3: you're an investor in the technology sector. 196 00:10:59,000 --> 00:11:02,960 Speaker 10: Absolutely, And you know, these chip equipment makers are down 197 00:11:03,000 --> 00:11:06,120 Speaker 10: substantially from their highs, and so I believe that they 198 00:11:06,280 --> 00:11:09,760 Speaker 10: are providing at least the stocks are providing an opportunity 199 00:11:09,840 --> 00:11:12,960 Speaker 10: to get in for investors, and the near term might not, 200 00:11:13,200 --> 00:11:16,040 Speaker 10: you know, be as rewarding as you might think right away, 201 00:11:16,080 --> 00:11:18,320 Speaker 10: but I think over the long term you can see 202 00:11:18,320 --> 00:11:21,160 Speaker 10: that benefit of these chip makers. There are not a 203 00:11:21,160 --> 00:11:23,360 Speaker 10: lot of them out there. There's only a few of 204 00:11:23,400 --> 00:11:27,400 Speaker 10: them that can do what they do from a technological standpoint. 205 00:11:28,400 --> 00:11:32,240 Speaker 2: And there in lies the heart of ultimately competition, which 206 00:11:32,240 --> 00:11:34,880 Speaker 2: is what Ed's getting at. And what's so interesting is 207 00:11:34,920 --> 00:11:38,000 Speaker 2: not just competition coming from chip makers against chip makers, 208 00:11:38,000 --> 00:11:42,440 Speaker 2: but eventually these hyperscalers, whether we see them remain committed 209 00:11:42,520 --> 00:11:45,080 Speaker 2: to purchasing in vidio chips at the rate that they are, 210 00:11:45,400 --> 00:11:47,760 Speaker 2: what about making their own chips? What that means to 211 00:11:47,800 --> 00:11:48,800 Speaker 2: the ecosystem? 212 00:11:48,840 --> 00:11:49,319 Speaker 1: How are you. 213 00:11:49,400 --> 00:11:51,960 Speaker 2: Trying to see that out over the next three to 214 00:11:52,000 --> 00:11:52,760 Speaker 2: five years as well? 215 00:11:52,880 --> 00:11:55,360 Speaker 10: Okay, sure, I think you have to, you know, keep 216 00:11:56,320 --> 00:11:58,680 Speaker 10: your pulse on all of it, because you know, from 217 00:11:58,960 --> 00:12:01,920 Speaker 10: the hyper scalers perspective, I don't think anybody wants to 218 00:12:01,960 --> 00:12:05,800 Speaker 10: be solely reliant on in Nvidia, and especially given some 219 00:12:05,840 --> 00:12:08,600 Speaker 10: of the supply issues that they've had as well, So 220 00:12:09,000 --> 00:12:11,360 Speaker 10: you know, it's it's something that we continue to monitor 221 00:12:11,400 --> 00:12:14,959 Speaker 10: on a quarter by quarter basis and do our research on. 222 00:12:16,520 --> 00:12:17,440 Speaker 4: On your research. 223 00:12:17,640 --> 00:12:21,080 Speaker 3: The invitations the CES have started going out this week 224 00:12:21,400 --> 00:12:23,480 Speaker 3: and heading into the U. I just wondered if you 225 00:12:23,520 --> 00:12:27,480 Speaker 3: suspect we'll be talking about exactly the same stuff in January, 226 00:12:27,800 --> 00:12:29,600 Speaker 3: or if we might have moved on to something new 227 00:12:29,640 --> 00:12:32,160 Speaker 3: that you've found through your research. 228 00:12:33,040 --> 00:12:35,120 Speaker 10: I think we're going to continue to be talking a 229 00:12:35,120 --> 00:12:38,040 Speaker 10: lot about AI for quite some time. I think there's 230 00:12:38,040 --> 00:12:41,840 Speaker 10: still a lot of areas to, you know, unfold. There 231 00:12:41,840 --> 00:12:46,200 Speaker 10: could be a killer app that potentially surprises us at CES. 232 00:12:47,040 --> 00:12:49,200 Speaker 10: You know, we never know, and I think that's why 233 00:12:49,280 --> 00:12:50,640 Speaker 10: you have to keep your finger. 234 00:12:50,400 --> 00:12:50,960 Speaker 1: On the pulse. 235 00:12:52,200 --> 00:12:54,400 Speaker 2: Oh, We're only gonna be talking about quantum them, I'm sure. 236 00:12:54,600 --> 00:12:57,320 Speaker 2: I Oka, yes, Ka, We thank you so much. Portfolio 237 00:12:57,360 --> 00:12:59,320 Speaker 2: Consulting director over at Wealthy Enhancement Group. 238 00:12:59,480 --> 00:13:00,080 Speaker 5: We need to have. 239 00:13:00,480 --> 00:13:03,439 Speaker 2: Coming up we're going to be hearing from the essay PCFO. 240 00:13:03,480 --> 00:13:08,560 Speaker 2: That's Dominique Assam. What's now Europe's biggest software company with 241 00:13:08,640 --> 00:13:09,439 Speaker 2: some stellar numbers. 242 00:13:09,440 --> 00:13:10,960 Speaker 5: This is bluem Meg Technology. 243 00:13:25,320 --> 00:13:28,520 Speaker 2: SAP shares jumping to a record after the company announced 244 00:13:28,520 --> 00:13:31,480 Speaker 2: a twenty five percent increase in cloud revenue over the year. 245 00:13:31,880 --> 00:13:35,160 Speaker 2: The company's CFO Dominique Assam spoke with Bloomberg earlier. 246 00:13:35,200 --> 00:13:35,760 Speaker 5: Take a listen. 247 00:13:36,320 --> 00:13:40,400 Speaker 11: We had actually, if you adjust for currency fluctuation, constant 248 00:13:40,400 --> 00:13:44,800 Speaker 11: currency cloud revenue growth of twenty seven percent, and by 249 00:13:44,840 --> 00:13:48,520 Speaker 11: now have actually more cloud revenues in our total revenue 250 00:13:48,559 --> 00:13:51,880 Speaker 11: base than any other source of revenue. So we can 251 00:13:51,920 --> 00:13:55,440 Speaker 11: say after four years of heavy transformation towards the cloud, 252 00:13:55,480 --> 00:13:58,520 Speaker 11: our strategy is paying off handsomely. If you look at 253 00:13:58,520 --> 00:14:02,000 Speaker 11: the composition where that comes from, eighty four percent of 254 00:14:02,040 --> 00:14:05,400 Speaker 11: that cloud revenue is generated but by what we call 255 00:14:05,480 --> 00:14:08,080 Speaker 11: Cloud year Peace feed, which is the core cloud offering 256 00:14:08,160 --> 00:14:11,760 Speaker 11: of SAP, that has actually growing thirty six percent in 257 00:14:11,840 --> 00:14:15,520 Speaker 11: constant currency terms, and that's the eleventh quarter where that 258 00:14:15,559 --> 00:14:18,520 Speaker 11: growth has exceeded the thirty percent growth mark. So that's 259 00:14:18,559 --> 00:14:21,440 Speaker 11: really the core engine powering our growth. And what is 260 00:14:21,600 --> 00:14:25,240 Speaker 11: even better, our so called CCB current cloud backlog, which 261 00:14:25,280 --> 00:14:30,560 Speaker 11: is the twelve months ahead committed subscription revenue is roaring 262 00:14:30,640 --> 00:14:34,600 Speaker 11: at twenty nine percent, so there's also good visibility on 263 00:14:34,680 --> 00:14:35,800 Speaker 11: the growth lying ahead. 264 00:14:37,200 --> 00:14:39,200 Speaker 12: When it comes to the market, to the market cap, 265 00:14:39,360 --> 00:14:41,000 Speaker 12: the stock is up about fifty percent a little over 266 00:14:41,040 --> 00:14:43,120 Speaker 12: fifty percent year today, so you can you can take 267 00:14:43,640 --> 00:14:45,680 Speaker 12: something of a victory lap on that front. The market 268 00:14:45,680 --> 00:14:47,720 Speaker 12: cap is up about one hundred billion US or one 269 00:14:47,760 --> 00:14:51,840 Speaker 12: hundred billion euros since this time last year. It means 270 00:14:51,880 --> 00:14:54,680 Speaker 12: that on your listing you're bumping up against that fifteen 271 00:14:54,760 --> 00:14:58,320 Speaker 12: percent cap. Is Germany still a good place to be listed? 272 00:14:58,600 --> 00:15:00,600 Speaker 12: That is a bit of a challenge for at this point, 273 00:15:00,640 --> 00:15:00,920 Speaker 12: is it not? 274 00:15:02,080 --> 00:15:03,320 Speaker 1: Well, you're right, we. 275 00:15:03,280 --> 00:15:05,400 Speaker 11: Would like to see that kind of fifteen percent cap 276 00:15:05,480 --> 00:15:08,680 Speaker 11: disappear because it constrains a little bit the demand in Germany. 277 00:15:08,960 --> 00:15:11,880 Speaker 11: But we are really focusing on the large pools of 278 00:15:11,960 --> 00:15:14,240 Speaker 11: capital available in the United States. There are still a 279 00:15:14,240 --> 00:15:16,120 Speaker 11: lot of runway, a lot of room for us to 280 00:15:16,240 --> 00:15:19,800 Speaker 11: grow and attract new investors. We would like not to 281 00:15:19,840 --> 00:15:23,200 Speaker 11: exit Germany, but to the country attract capital into Germany, 282 00:15:23,320 --> 00:15:25,480 Speaker 11: and on that front, I have to agree the fifteen 283 00:15:25,480 --> 00:15:28,440 Speaker 11: percent cap in the decks is not very helpful. There's 284 00:15:28,520 --> 00:15:31,400 Speaker 11: other regulation in Europe, for instance, on so called use 285 00:15:31,400 --> 00:15:34,480 Speaker 11: its funds which are actively managed. Many of them are 286 00:15:34,520 --> 00:15:36,680 Speaker 11: actively managed, which are also a little bit constraining, and 287 00:15:36,720 --> 00:15:39,960 Speaker 11: we are currently trying to convince those who run these indecs, 288 00:15:40,200 --> 00:15:44,400 Speaker 11: those in charge of legislation, to reconsider that cap. 289 00:15:46,240 --> 00:15:50,200 Speaker 3: There was sap CFO Dominique Assam earlier on Bloomberg also 290 00:15:50,240 --> 00:15:53,760 Speaker 3: speaking say m CEO Rene Haas, who says he's open 291 00:15:53,960 --> 00:15:56,360 Speaker 3: to a secondary listener listing listen to this. 292 00:15:57,320 --> 00:16:00,400 Speaker 13: We listed in New York over a year ago, and 293 00:16:00,480 --> 00:16:03,000 Speaker 13: at that time are comments where we would look at 294 00:16:03,000 --> 00:16:06,440 Speaker 13: a secondary listening. We're still open to it. It's not 295 00:16:06,520 --> 00:16:09,920 Speaker 13: something that's top of mind right now quite candidly, but 296 00:16:10,440 --> 00:16:12,680 Speaker 13: will continue to have discussions with both stakeholders and the 297 00:16:12,720 --> 00:16:14,480 Speaker 13: government and in the local change. 298 00:16:16,800 --> 00:16:20,720 Speaker 2: Another conversation we had was with tech investment Giant Process, 299 00:16:20,760 --> 00:16:24,640 Speaker 2: the CEO Fabricio Bluisi. We talked about the current roadblocks 300 00:16:24,680 --> 00:16:28,120 Speaker 2: facing adopting generative AI and where he will continue to 301 00:16:28,160 --> 00:16:29,240 Speaker 2: invest in the technology. 302 00:16:29,280 --> 00:16:32,480 Speaker 5: He's just part of our conversation the leaders. 303 00:16:32,960 --> 00:16:35,000 Speaker 14: The leaders have to stop being the guy that say 304 00:16:35,480 --> 00:16:37,360 Speaker 14: or the woman that's say I'm going to invest a 305 00:16:37,400 --> 00:16:39,520 Speaker 14: billion dollars or one hundred million dollars and be the 306 00:16:39,520 --> 00:16:43,640 Speaker 14: person that leads using spend time understanding what is the technology, 307 00:16:43,680 --> 00:16:46,640 Speaker 14: spend time understanding that we are just starting that is 308 00:16:46,720 --> 00:16:48,040 Speaker 14: so much development ahead. 309 00:16:48,640 --> 00:16:49,640 Speaker 8: They should lead. 310 00:16:49,760 --> 00:16:53,760 Speaker 14: They should show how they use AI to be more productive, 311 00:16:54,120 --> 00:16:57,200 Speaker 14: to distribute more in the company. 312 00:16:57,240 --> 00:17:00,080 Speaker 8: Will follow. Actually, the younger people, they. 313 00:17:00,280 --> 00:17:02,400 Speaker 14: Even at the state why we're having this discussion, They 314 00:17:02,480 --> 00:17:05,280 Speaker 14: use share, GPT or other things every day or week 315 00:17:05,560 --> 00:17:11,760 Speaker 14: to study. More So leaders lead showing what is a 316 00:17:11,800 --> 00:17:16,000 Speaker 14: good usage of AI instead of just writing mayuse about 317 00:17:17,280 --> 00:17:18,640 Speaker 14: how much you are investing on that. 318 00:17:18,800 --> 00:17:21,920 Speaker 2: You're going to invest in anymore General to AI companies, we. 319 00:17:21,920 --> 00:17:23,560 Speaker 8: Are going to invest a lot. 320 00:17:23,840 --> 00:17:26,680 Speaker 14: Process has a very big investment capacity, and we want 321 00:17:26,760 --> 00:17:30,040 Speaker 14: to help the own emerging market and growth markets to 322 00:17:30,320 --> 00:17:33,080 Speaker 14: lead this new revolution happening right now. 323 00:17:33,119 --> 00:17:34,840 Speaker 8: We can't afford to be out of that. 324 00:17:37,240 --> 00:17:40,960 Speaker 2: Process. And aspecy of Abricia Luisi there of course biggest 325 00:17:41,000 --> 00:17:43,960 Speaker 2: holder of Tencent as a stockholder, but have so many 326 00:17:44,000 --> 00:17:46,720 Speaker 2: investments said across the emerging market. So really a conversation 327 00:17:46,760 --> 00:17:49,840 Speaker 2: about how in Africa, South Africa, how also in Poland 328 00:17:49,840 --> 00:17:52,040 Speaker 2: they're adopting general to AI. In fact they say, look 329 00:17:52,080 --> 00:17:55,080 Speaker 2: they're cutting costs by some thirty percent thanks to the implementation. 330 00:17:56,119 --> 00:17:59,360 Speaker 3: YEP also exposure in not just ten Cent but other 331 00:17:59,440 --> 00:18:02,280 Speaker 3: parts in year Southeast Asia. And he's a CEO to 332 00:18:02,320 --> 00:18:06,320 Speaker 3: watch why moonshot package worth tracking his progress. 333 00:18:06,600 --> 00:18:07,240 Speaker 1: Another story that. 334 00:18:07,240 --> 00:18:10,199 Speaker 3: We're watching here on Bloomberg Technology, Chipotle rolling out an 335 00:18:10,280 --> 00:18:15,920 Speaker 3: artificial intelligence assistant aimed at improving efficiency. It's called Avocado 336 00:18:16,560 --> 00:18:20,040 Speaker 3: and will cover many administrative tasks in the recruiting process. 337 00:18:20,359 --> 00:18:22,000 Speaker 3: The chain hopes will cut the time it takes to 338 00:18:22,119 --> 00:18:25,159 Speaker 3: hire workers by as much as seventy five percent. It 339 00:18:25,160 --> 00:18:28,880 Speaker 3: will be powered by conversational AI from tech firm Paradox. 340 00:18:37,040 --> 00:18:41,080 Speaker 3: Meta is fighting back against fake celebrity scams, deploying facial 341 00:18:41,119 --> 00:18:45,600 Speaker 3: recognition technology to weed out the imposters bloombers Kirkwagner joins 342 00:18:45,680 --> 00:18:47,600 Speaker 3: us with the details, and I guess what is the 343 00:18:47,640 --> 00:18:50,600 Speaker 3: kind of malicious activity that Meta is trying to counter 344 00:18:50,680 --> 00:18:52,960 Speaker 3: here in terms of celebrity image. 345 00:18:53,840 --> 00:18:57,919 Speaker 9: Yeah, so sometimes scammers will run that links to like 346 00:18:57,960 --> 00:19:00,520 Speaker 9: a scammy website right where they'll try to steal your data, 347 00:19:00,560 --> 00:19:02,719 Speaker 9: they'll try to get you to, you know, send money, 348 00:19:03,200 --> 00:19:05,720 Speaker 9: and they will use as part of the ad pictures 349 00:19:05,760 --> 00:19:08,120 Speaker 9: of real celebrities to try and make it seem more 350 00:19:08,200 --> 00:19:09,560 Speaker 9: authentic or more legitimate. 351 00:19:09,640 --> 00:19:09,720 Speaker 15: Right. 352 00:19:09,880 --> 00:19:12,639 Speaker 9: Oftentimes people will see an image of a celebrity and 353 00:19:12,680 --> 00:19:14,879 Speaker 9: therefore think, oh, it's an endorsement by them, or it's 354 00:19:14,880 --> 00:19:17,280 Speaker 9: someone they're familiar with, and they're more likely to click. 355 00:19:17,600 --> 00:19:19,879 Speaker 9: And so in this case, Meta saying, hey, we notice 356 00:19:19,920 --> 00:19:22,359 Speaker 9: these ads are happening. We know these scams are happening, 357 00:19:22,680 --> 00:19:25,919 Speaker 9: and so they're now going to use facial recognition software 358 00:19:26,000 --> 00:19:28,439 Speaker 9: to try and match is there a celebrity in this 359 00:19:28,560 --> 00:19:31,479 Speaker 9: ad doesn't match up with the celebrity on the service, 360 00:19:31,480 --> 00:19:33,800 Speaker 9: and if Stowe, you know, maybe that's a scam. We 361 00:19:33,840 --> 00:19:35,160 Speaker 9: should try to take that ad down. 362 00:19:36,480 --> 00:19:38,560 Speaker 2: And then for anyone who's ever been locked out of 363 00:19:38,600 --> 00:19:41,840 Speaker 2: their accounts many of us have, you're no longer going 364 00:19:41,880 --> 00:19:44,160 Speaker 2: to have to suddenly get your passport ready. They might 365 00:19:44,240 --> 00:19:46,440 Speaker 2: use the technology for that as well. 366 00:19:46,560 --> 00:19:48,679 Speaker 9: That's right, So they're going to start testing this idea 367 00:19:48,720 --> 00:19:51,520 Speaker 9: of sending in a video sell fie right, So it's 368 00:19:51,520 --> 00:19:53,399 Speaker 9: pretty much exactly what it sounds like. You hold up 369 00:19:53,440 --> 00:19:56,760 Speaker 9: your phone, take a short video of your face, send 370 00:19:56,840 --> 00:20:00,359 Speaker 9: it into Meta. They will then match that video two 371 00:20:00,359 --> 00:20:03,720 Speaker 9: photos associated with the account. If there's a match, they'll say, okay, 372 00:20:03,720 --> 00:20:05,960 Speaker 9: this is indeed you know Kurt's account. 373 00:20:06,080 --> 00:20:07,080 Speaker 4: And you can get back in. 374 00:20:07,119 --> 00:20:09,320 Speaker 9: They said the whole thing could take about a minute, 375 00:20:09,359 --> 00:20:12,320 Speaker 9: and they'll delete the video and any data associated with 376 00:20:12,359 --> 00:20:15,359 Speaker 9: it immediately after. This is something that they're trying to 377 00:20:15,400 --> 00:20:18,200 Speaker 9: do to expedite this process because as you mentioned, Caroline, 378 00:20:18,240 --> 00:20:20,359 Speaker 9: right now, they have other ways to verify identity, but 379 00:20:20,400 --> 00:20:22,120 Speaker 9: it's a lot more cumbersome. You might have to send 380 00:20:22,119 --> 00:20:24,480 Speaker 9: in a picture of your ID or a passport or 381 00:20:24,520 --> 00:20:26,600 Speaker 9: something like that. And so they're thinking that this could 382 00:20:26,640 --> 00:20:29,679 Speaker 9: be a faster way of getting people back into their 383 00:20:29,680 --> 00:20:31,840 Speaker 9: accounts automatically if they do get locked out. 384 00:20:32,760 --> 00:20:36,359 Speaker 3: Kurt, why does Meta do this? What's the motivation for them? 385 00:20:37,119 --> 00:20:39,959 Speaker 9: Well, I think think of the scale that met operates on, right, 386 00:20:40,000 --> 00:20:45,680 Speaker 9: there's almost, I believe three point three billion users across Instagram, Facebook, WhatsApp, 387 00:20:45,680 --> 00:20:48,399 Speaker 9: all of their different services, and so people are getting 388 00:20:48,400 --> 00:20:50,919 Speaker 9: locked out every single day. They can't keep up with 389 00:20:50,960 --> 00:20:54,560 Speaker 9: this from a human standpoint, right, they need to automate 390 00:20:54,600 --> 00:20:56,400 Speaker 9: these things, and I think as AI has gotten better 391 00:20:56,440 --> 00:20:58,840 Speaker 9: as their technology has gotten better, they're seen, hey, here's 392 00:20:58,880 --> 00:21:01,080 Speaker 9: a way to do this much quicker. Presumably in the 393 00:21:01,119 --> 00:21:03,400 Speaker 9: future you've been much cheaper, you don't need humans involved, 394 00:21:04,119 --> 00:21:05,639 Speaker 9: and so, you know, I think it's just part of 395 00:21:05,640 --> 00:21:08,560 Speaker 9: their overall push toward AI and these advancements and technology 396 00:21:08,560 --> 00:21:09,520 Speaker 9: to help people out. 397 00:21:10,600 --> 00:21:11,719 Speaker 5: In just thirty seconds. 398 00:21:11,720 --> 00:21:15,160 Speaker 2: Though, Kat, there is a complex relationship with facial recognition 399 00:21:15,200 --> 00:21:16,040 Speaker 2: technology and META. 400 00:21:16,080 --> 00:21:19,119 Speaker 9: In the past well, MET has been sued several times 401 00:21:19,160 --> 00:21:22,200 Speaker 9: in the past for using this technology to profit without 402 00:21:22,240 --> 00:21:27,560 Speaker 9: really giving users appropriate recognition, appropriate way to opt in, right, 403 00:21:27,640 --> 00:21:30,400 Speaker 9: and so this is a type of technology they've sort 404 00:21:30,440 --> 00:21:33,040 Speaker 9: of been hammered on in the past. They've walked away 405 00:21:33,040 --> 00:21:34,399 Speaker 9: from it for a couple of years, and now it 406 00:21:34,440 --> 00:21:36,359 Speaker 9: feels like they're sort of dipping their toe back into it. 407 00:21:36,400 --> 00:21:39,160 Speaker 9: So it'll be interesting to see if there's a more 408 00:21:39,520 --> 00:21:42,119 Speaker 9: lawsuits that ultimately come of them trying to kind of 409 00:21:42,160 --> 00:21:44,439 Speaker 9: give back into the facial recognition space. 410 00:21:45,560 --> 00:21:49,120 Speaker 2: Looking at you, Illinois and Texas, Kerle Wagner, great reporting, 411 00:21:49,200 --> 00:21:49,800 Speaker 2: We thank you. 412 00:21:50,680 --> 00:21:53,560 Speaker 3: We want to welcome our Bloomberg Radio and television audience 413 00:21:53,640 --> 00:21:57,080 Speaker 3: right now to a special conversation with us SEC Chair 414 00:21:57,600 --> 00:22:01,600 Speaker 3: Gary Glentzler and mister Gensler. The SEC clearly looking closer 415 00:22:02,119 --> 00:22:04,480 Speaker 3: at the use of AI tools in finance. We know 416 00:22:04,600 --> 00:22:09,400 Speaker 3: that from the agency's latest exam priorities. But in parallel 417 00:22:09,400 --> 00:22:12,920 Speaker 3: a year ago, you embarked on this rule making process, 418 00:22:13,119 --> 00:22:15,199 Speaker 3: and I want to start by asking what sort of 419 00:22:15,320 --> 00:22:20,280 Speaker 3: additional authority or power you feel you need through a 420 00:22:20,400 --> 00:22:24,960 Speaker 3: rule that you wouldn't be able to regulate through through 421 00:22:25,040 --> 00:22:26,960 Speaker 3: examinations so. 422 00:22:27,840 --> 00:22:28,439 Speaker 4: Let me say this. 423 00:22:28,560 --> 00:22:31,920 Speaker 16: I think that the use of artificial intelligence, which has 424 00:22:32,280 --> 00:22:36,600 Speaker 16: been around for at least ten years, has taken on 425 00:22:36,840 --> 00:22:40,240 Speaker 16: and it's an important transformative part of our economy. 426 00:22:40,359 --> 00:22:41,879 Speaker 4: Every bit is transformative. 427 00:22:41,960 --> 00:22:46,080 Speaker 16: Is the Internet, probably more every bit is transformative as 428 00:22:46,320 --> 00:22:50,080 Speaker 16: one hundred years ago when we electrified so many things 429 00:22:50,080 --> 00:22:53,720 Speaker 16: in our markets. Our factory is the automobile, the refrigerator. 430 00:22:54,040 --> 00:22:59,040 Speaker 16: That transformative. In finance, it's being used today by many 431 00:23:00,280 --> 00:23:06,120 Speaker 16: brokerage apps and investment advisors when they're selling to the public, 432 00:23:06,440 --> 00:23:06,879 Speaker 16: just as. 433 00:23:06,880 --> 00:23:08,720 Speaker 4: When we're looking at. 434 00:23:09,720 --> 00:23:12,360 Speaker 16: Movie apps that have figured out long ago that I'm 435 00:23:12,359 --> 00:23:14,159 Speaker 16: a rom com type of guy and I want to 436 00:23:14,200 --> 00:23:17,720 Speaker 16: watch those movies, and so it's it's to ensure that 437 00:23:17,960 --> 00:23:22,000 Speaker 16: in the algorithm, in the actual math of the algorithm, 438 00:23:22,520 --> 00:23:26,080 Speaker 16: that they ensure that they put the public's interest, their 439 00:23:26,119 --> 00:23:29,879 Speaker 16: customers interest, ahead of the investment advisor and broker dealer. 440 00:23:30,440 --> 00:23:31,520 Speaker 4: That's it in a nutshell. 441 00:23:33,400 --> 00:23:37,640 Speaker 2: In a nutshell, do you think that there's financial systemic 442 00:23:37,800 --> 00:23:41,199 Speaker 2: risk still looming large because of adoption of AI and 443 00:23:41,280 --> 00:23:44,800 Speaker 2: AI models ultimately being too similar from one brokerage to 444 00:23:44,800 --> 00:23:45,200 Speaker 2: the next. 445 00:23:45,600 --> 00:23:46,520 Speaker 4: I do think. 446 00:23:46,560 --> 00:23:46,639 Speaker 15: So. 447 00:23:46,880 --> 00:23:49,080 Speaker 16: I said I liked rom coms, so I'll just go 448 00:23:49,160 --> 00:23:52,560 Speaker 16: with that wonderful movie her when Scarlett Johansson, you know, 449 00:23:52,640 --> 00:23:56,600 Speaker 16: played this virtual assistant when she went offline late in 450 00:23:56,640 --> 00:24:01,280 Speaker 16: the movie eight three hundred and six teen, folks were 451 00:24:01,280 --> 00:24:05,400 Speaker 16: broken hearted. We could see that in finance there's right 452 00:24:05,440 --> 00:24:09,640 Speaker 16: now two or three large cloud providers that are backing 453 00:24:09,720 --> 00:24:13,920 Speaker 16: some of the biggest investments in what's called generative AI. 454 00:24:14,520 --> 00:24:17,000 Speaker 4: As the financial sector more and more. 455 00:24:16,880 --> 00:24:23,000 Speaker 16: Relies on those big base models, it is not only 456 00:24:23,320 --> 00:24:27,600 Speaker 16: possible but likely that some financial crisis in the future 457 00:24:27,720 --> 00:24:30,960 Speaker 16: is that everybody's relying on it. And whether it's like 458 00:24:31,040 --> 00:24:35,080 Speaker 16: Scarlett Johansson going offline or if Scarlett Johanson of the 459 00:24:35,119 --> 00:24:40,119 Speaker 16: future I'm talking about the AA model is hurting and 460 00:24:40,160 --> 00:24:45,439 Speaker 16: taking the capital markets off of some various cliff and 461 00:24:45,520 --> 00:24:49,119 Speaker 16: I think that's a hard project to solve because of 462 00:24:49,160 --> 00:24:52,800 Speaker 16: the dominance of a few base models likely in the future. 463 00:24:54,600 --> 00:24:56,600 Speaker 2: Do therefore more clear rules need. 464 00:24:56,520 --> 00:24:58,200 Speaker 4: To be envisaged. 465 00:24:58,240 --> 00:25:00,560 Speaker 2: Here is examination the tool of choice. 466 00:25:00,800 --> 00:25:05,160 Speaker 4: So I'm separating out there's important. 467 00:25:04,920 --> 00:25:08,720 Speaker 16: Investor protection issues directly about the conflicts, and I think 468 00:25:08,760 --> 00:25:12,600 Speaker 16: we can do that and proceed for I've asked staff 469 00:25:12,600 --> 00:25:16,040 Speaker 16: for recommendations on a reproposal of that role. I think 470 00:25:16,080 --> 00:25:18,360 Speaker 16: a secondary we didn't talk about is fraud. 471 00:25:19,280 --> 00:25:20,159 Speaker 4: Fraud is fraud. 472 00:25:20,160 --> 00:25:22,760 Speaker 16: If you use the algorithm and the AI model to 473 00:25:22,760 --> 00:25:25,200 Speaker 16: defraud the public, it's still fraud. But I think that 474 00:25:25,200 --> 00:25:28,239 Speaker 16: that's going to play out not only for US, but 475 00:25:28,320 --> 00:25:31,840 Speaker 16: in other agencies around the country, the Federal Trade Commission 476 00:25:31,880 --> 00:25:35,720 Speaker 16: and elsewhere, but on these systemic issues. On these systemic issues, 477 00:25:36,440 --> 00:25:40,800 Speaker 16: I think it's a tough challenge that global regulators need 478 00:25:40,840 --> 00:25:44,080 Speaker 16: to come together and how do we protect against what 479 00:25:44,200 --> 00:25:51,280 Speaker 16: is likely to be a very concentrated, interconnected system that's 480 00:25:51,320 --> 00:25:55,199 Speaker 16: relying you know, like I say, three hundred and sixteen, 481 00:25:55,280 --> 00:25:58,800 Speaker 16: relying on Scarlet Johansson for their love was one thing 482 00:25:58,840 --> 00:26:00,240 Speaker 16: in a fictional movie. 483 00:26:00,320 --> 00:26:01,399 Speaker 4: But what do we do here? 484 00:26:02,720 --> 00:26:05,200 Speaker 3: If you're just joining us on Bloomberg Television and radio, 485 00:26:05,280 --> 00:26:09,399 Speaker 3: we're speaking with the SEC chair, Gary Gensler and mister Ginsley. 486 00:26:09,440 --> 00:26:12,680 Speaker 3: You're also busy in parallel with the crypto industry. I 487 00:26:12,680 --> 00:26:16,919 Speaker 3: think there's consensus on the eve of an election that 488 00:26:17,880 --> 00:26:20,760 Speaker 3: all of those parties involved in responsible want to hammer 489 00:26:20,800 --> 00:26:25,920 Speaker 3: out some sort of new jurisdictional framework for crypto regulators 490 00:26:26,760 --> 00:26:31,280 Speaker 3: to make some progress on settling oversight of that industry. 491 00:26:31,520 --> 00:26:33,399 Speaker 3: Can you talk to us about the work you're doing 492 00:26:33,600 --> 00:26:37,440 Speaker 3: there and if you're making any progress in that field. 493 00:26:37,680 --> 00:26:46,359 Speaker 16: Look, there's nothing incompatible about the ledger technology. You know, 494 00:26:46,440 --> 00:26:49,440 Speaker 16: it's just this Halloween, it will be sixteen years since 495 00:26:49,760 --> 00:26:56,399 Speaker 16: Toshinakamaldo wrote that white paper, So happy sweet sixteen in 496 00:26:56,400 --> 00:27:01,680 Speaker 16: a week. There's nothing incompatible about a ledger technology, decentralized 497 00:27:01,720 --> 00:27:05,560 Speaker 16: ledger technology, and the securities laws. And it's important that 498 00:27:05,760 --> 00:27:09,199 Speaker 16: in the securities market that investors get to decide on 499 00:27:09,240 --> 00:27:11,959 Speaker 16: their investments, but they get the proper disclosure that we 500 00:27:12,000 --> 00:27:14,800 Speaker 16: goard against conflicts of interest. 501 00:27:14,560 --> 00:27:15,040 Speaker 4: And the like. 502 00:27:15,800 --> 00:27:17,879 Speaker 16: And we're going to continue to do that at the 503 00:27:17,920 --> 00:27:21,199 Speaker 16: Securities and Exchange Commission. If a market's ever going to 504 00:27:21,240 --> 00:27:24,720 Speaker 16: have trust, it also needs to come into compliance. And 505 00:27:24,800 --> 00:27:27,480 Speaker 16: a lot of this field, and we've seen the challenges 506 00:27:27,480 --> 00:27:29,679 Speaker 16: in this field where a lot of people have lost money. 507 00:27:30,359 --> 00:27:33,959 Speaker 16: Regular investors have lost money in a field that's not 508 00:27:34,960 --> 00:27:39,920 Speaker 16: providing the fundamental disclosure about their projects, about these these 509 00:27:40,320 --> 00:27:46,719 Speaker 16: investment contracts and these schemes, and that a field that 510 00:27:46,760 --> 00:27:48,680 Speaker 16: has a lot of conflicts in the middle of it. 511 00:27:49,640 --> 00:27:51,880 Speaker 3: Something interesting has been happening over the last year where 512 00:27:51,920 --> 00:27:56,480 Speaker 3: you've been focusing on policy and regulation in the Fifth 513 00:27:56,520 --> 00:27:59,920 Speaker 3: Circuit Court of Appeals, there have been many suits file 514 00:28:00,480 --> 00:28:03,680 Speaker 3: in what is a kind of business friendly courts? How 515 00:28:03,720 --> 00:28:06,119 Speaker 3: do you have to respond to that and adjust the 516 00:28:06,160 --> 00:28:09,240 Speaker 3: policy side in response to the litigation side. 517 00:28:09,240 --> 00:28:12,520 Speaker 16: Misticenza No, No, I think ed it's a really good question. 518 00:28:13,280 --> 00:28:15,600 Speaker 16: We do everything we do within the law and how. 519 00:28:15,440 --> 00:28:16,719 Speaker 4: The courts interpret the law. 520 00:28:16,760 --> 00:28:20,960 Speaker 16: If the courts interpret it differently, we adjust. 521 00:28:21,200 --> 00:28:22,040 Speaker 4: That's what we do. 522 00:28:23,040 --> 00:28:28,200 Speaker 16: It's part of our great democracy. But I do think 523 00:28:28,280 --> 00:28:31,159 Speaker 16: that we're focused every day on how we drive lower 524 00:28:31,200 --> 00:28:34,240 Speaker 16: cost in the system. That's why we did equity market reform, 525 00:28:34,320 --> 00:28:37,119 Speaker 16: I would note unanimously through our five member commission. 526 00:28:37,320 --> 00:28:38,320 Speaker 4: That's why we've. 527 00:28:38,080 --> 00:28:42,560 Speaker 16: Worked so hard on the treasury markets, this twenty eight 528 00:28:42,560 --> 00:28:45,240 Speaker 16: trillion dollar market at the base of our capital markets, 529 00:28:45,480 --> 00:28:49,120 Speaker 16: and driving lower cost which is called efficiency, and lower 530 00:28:49,200 --> 00:28:54,560 Speaker 16: risk which is called resiliency in these really consequential, significant markets. 531 00:28:56,760 --> 00:28:59,760 Speaker 2: Just for a moment reminding our TV and radio audience 532 00:28:59,800 --> 00:29:02,920 Speaker 2: were in a conversation with SEC Chair Gary Gensler, and 533 00:29:03,000 --> 00:29:05,400 Speaker 2: just to stick with the crypto aspect for a moment more. 534 00:29:06,280 --> 00:29:09,160 Speaker 2: There is, though this ongoing narrative that you haven't changed 535 00:29:09,200 --> 00:29:11,760 Speaker 2: that much. You haven't adjusted much in terms of it 536 00:29:11,800 --> 00:29:14,880 Speaker 2: is regulation via enforcement. Will that change? 537 00:29:14,960 --> 00:29:15,480 Speaker 5: Ultimately? 538 00:29:15,560 --> 00:29:18,840 Speaker 2: Do you see laws coming to bear from Congress rather 539 00:29:18,880 --> 00:29:23,360 Speaker 2: than you having to enforce via enforced and regulate Caroline. 540 00:29:23,640 --> 00:29:29,480 Speaker 16: We have benefited for nine decades from robust laws from 541 00:29:29,520 --> 00:29:34,320 Speaker 16: Congress and rules from various agencies, not just the SEC, 542 00:29:34,520 --> 00:29:41,040 Speaker 16: but the Commodity Future's Trading Commission, another significant and great 543 00:29:41,120 --> 00:29:44,640 Speaker 16: agency that I was honored a chair, to help promote 544 00:29:44,680 --> 00:29:50,680 Speaker 16: the markets, to protect investors, to promote capital formation, and 545 00:29:50,720 --> 00:29:51,880 Speaker 16: the markets in the middle. 546 00:29:51,920 --> 00:29:53,560 Speaker 4: And that's what will continue to do. 547 00:29:54,000 --> 00:29:58,280 Speaker 16: Whether it's related to the stock markets fifty sixty trillion 548 00:29:58,320 --> 00:30:01,920 Speaker 16: dollars stock markets, whether it's related to the treasury markets 549 00:30:01,920 --> 00:30:04,960 Speaker 16: as I said, nearly thirty trillion dollars, whether it's related 550 00:30:05,000 --> 00:30:09,320 Speaker 16: to the bonds and fixed income markets, and yes, even 551 00:30:09,400 --> 00:30:14,040 Speaker 16: related to this newer market, where as I said, all 552 00:30:14,120 --> 00:30:17,200 Speaker 16: too many people have been hurt, All too many people 553 00:30:17,280 --> 00:30:20,120 Speaker 16: have lost money and lined up in bankruptcy court to 554 00:30:21,000 --> 00:30:26,320 Speaker 16: deal with their claims. And fundamentally, what President Roosevelt laid 555 00:30:26,320 --> 00:30:31,320 Speaker 16: out and has been looked at over the years, Congress 556 00:30:31,320 --> 00:30:34,640 Speaker 16: could adjust, but at the fundamentally it's about disclosure to 557 00:30:34,720 --> 00:30:37,760 Speaker 16: the public. So the public can decide, and then guarding 558 00:30:37,800 --> 00:30:42,719 Speaker 16: the public against the conflicts and the fraud and things 559 00:30:42,720 --> 00:30:47,120 Speaker 16: that happen in the capital markets that are unregulated. We 560 00:30:47,200 --> 00:30:50,120 Speaker 16: saw that happen in the nineteen twenties. None of us 561 00:30:50,120 --> 00:30:54,160 Speaker 16: were alive, but you can read about it, and we 562 00:30:54,240 --> 00:30:57,120 Speaker 16: don't want that to happen to the investing public and 563 00:30:57,320 --> 00:31:00,320 Speaker 16: undermine the trust in the overall it's hapital mark markets 564 00:31:00,360 --> 00:31:02,120 Speaker 16: as we know them. 565 00:31:02,160 --> 00:31:05,880 Speaker 2: Talking of disclosures, one disclosure from former President Trump is 566 00:31:05,880 --> 00:31:10,320 Speaker 2: that he would fire you ultimately unsurprising to you, I'm sure. 567 00:31:10,440 --> 00:31:13,360 Speaker 2: But also he's got some plans purported plans, of course, 568 00:31:13,400 --> 00:31:16,000 Speaker 2: to introduce his own crypto platform and has been working 569 00:31:16,000 --> 00:31:16,200 Speaker 2: on it. 570 00:31:16,240 --> 00:31:17,040 Speaker 8: What do you make of that. 571 00:31:17,720 --> 00:31:22,600 Speaker 16: I'm not going to comment on any one project. I 572 00:31:22,640 --> 00:31:26,800 Speaker 16: think your viewing audience can appreciate that. It's just not 573 00:31:27,840 --> 00:31:31,560 Speaker 16: well we do and so our Caroline, I'll let you 574 00:31:31,600 --> 00:31:32,640 Speaker 16: go to your next question. 575 00:31:33,320 --> 00:31:34,960 Speaker 4: Well missed against I'll jump in. 576 00:31:35,040 --> 00:31:37,960 Speaker 3: You talked about the investing public that you serve, right, 577 00:31:38,200 --> 00:31:42,640 Speaker 3: and there is something happening where private credit firms are 578 00:31:42,720 --> 00:31:47,640 Speaker 3: taking private market assets where you could debate the real valuation, 579 00:31:48,520 --> 00:31:52,240 Speaker 3: and they're wrapping them in products like ETFs that are 580 00:31:52,320 --> 00:31:56,959 Speaker 3: somewhat sort of more retail friendly. It's a newer area, 581 00:31:57,000 --> 00:31:59,479 Speaker 3: it's something interesting happening, and I know it's an intense 582 00:31:59,520 --> 00:32:02,560 Speaker 3: interest our audience. How do you regulate that and how 583 00:32:02,640 --> 00:32:05,120 Speaker 3: much are you personally thinking about that right now? 584 00:32:05,640 --> 00:32:09,160 Speaker 16: Let me put it in context our dollar credit markets, 585 00:32:09,200 --> 00:32:14,600 Speaker 16: where you can your commercial credit and you're borrowing probably 586 00:32:14,640 --> 00:32:19,200 Speaker 16: worldwide in excess of thirty trillion dollars, and banks and 587 00:32:19,280 --> 00:32:23,120 Speaker 16: non banks alike play important roles in that. And so 588 00:32:23,160 --> 00:32:26,600 Speaker 16: what we've private credit existed when I started at Goldman 589 00:32:26,640 --> 00:32:28,120 Speaker 16: Sachs forty some years ago. 590 00:32:28,200 --> 00:32:29,959 Speaker 4: I mean, there were direct. 591 00:32:29,440 --> 00:32:33,280 Speaker 16: Loans that could be made outside of the banking system. 592 00:32:33,440 --> 00:32:39,160 Speaker 16: But today you've seen a growing share involved in that. 593 00:32:39,440 --> 00:32:43,680 Speaker 16: I think that competition is good for borrowers, investors, savers 594 00:32:43,680 --> 00:32:47,160 Speaker 16: and the like. That's competition in our capital markets, but 595 00:32:47,200 --> 00:32:49,560 Speaker 16: it still has to sort of comply with the basic 596 00:32:49,640 --> 00:32:55,360 Speaker 16: tenants of risk management, disclosure, transparency and the like. Our 597 00:32:55,480 --> 00:33:00,480 Speaker 16: role in it is a capital markets oversight is an 598 00:33:00,520 --> 00:33:06,360 Speaker 16: important one. But I think the competition is actually benefiting 599 00:33:06,440 --> 00:33:10,120 Speaker 16: a lot of borrowers. I would note this, it hasn't 600 00:33:10,240 --> 00:33:13,240 Speaker 16: at this size, it hasn't lived through a downturn, so 601 00:33:14,040 --> 00:33:17,520 Speaker 16: it hasn't been tested in you know, the inevitable at 602 00:33:17,520 --> 00:33:21,520 Speaker 16: some point downturns that would come. There's also some intersections 603 00:33:21,560 --> 00:33:26,720 Speaker 16: between this private credit merging system and the insurance sector 604 00:33:27,160 --> 00:33:30,320 Speaker 16: and the banking sector. But particularly it's intersection with the 605 00:33:30,320 --> 00:33:35,360 Speaker 16: insurance sector. That's you know, bears look and ratings as 606 00:33:35,400 --> 00:33:38,160 Speaker 16: well the use of private letter. 607 00:33:38,040 --> 00:33:39,200 Speaker 4: Ratings on some of this. 608 00:33:39,400 --> 00:33:42,280 Speaker 16: So we're looking at some of this, but I think 609 00:33:42,320 --> 00:33:47,719 Speaker 16: overall it's capital markets benefiting and the public benefiting from competition. 610 00:33:48,600 --> 00:33:52,000 Speaker 3: Apollo and State Street have such a private market ETF 611 00:33:52,040 --> 00:33:56,080 Speaker 3: pending before the SEC. My colleagues tell me it's controversial. 612 00:33:56,560 --> 00:33:59,080 Speaker 3: What can you tell me about that specific case study. 613 00:33:59,200 --> 00:34:00,720 Speaker 16: I guess I could tell you the same thing I 614 00:34:00,760 --> 00:34:04,040 Speaker 16: told Caroline earlier that you know, in a role like mine, 615 00:34:05,360 --> 00:34:08,719 Speaker 16: i'm a very asked to be disciplined. I try to 616 00:34:08,719 --> 00:34:13,400 Speaker 16: state this one. I don't comment on specific prod ducts 617 00:34:13,520 --> 00:34:16,160 Speaker 16: or projects that may be in front of the staff 618 00:34:16,239 --> 00:34:18,040 Speaker 16: or in front of our five member commission. 619 00:34:18,120 --> 00:34:19,640 Speaker 4: So I'm going to demure on that. 620 00:34:19,680 --> 00:34:25,160 Speaker 16: But I hope you're listening public understands why. 621 00:34:23,520 --> 00:34:26,680 Speaker 2: Do you worry about that ill liquidity mismatch? Though a 622 00:34:26,680 --> 00:34:27,759 Speaker 2: potential one. 623 00:34:27,520 --> 00:34:31,440 Speaker 16: Look there's an illiquidity mismatch in banks. So our twenty 624 00:34:31,480 --> 00:34:35,160 Speaker 16: six trillion dollar banking system in the US has twenty 625 00:34:35,160 --> 00:34:38,319 Speaker 16: trillion dollars in deposits runnable deposits. 626 00:34:38,960 --> 00:34:39,839 Speaker 4: Of course, a lot of. 627 00:34:39,760 --> 00:34:42,279 Speaker 16: Them are insured, but a lot of them are uninsured. 628 00:34:42,600 --> 00:34:49,520 Speaker 16: And so banks themselves transform liquidity, transform what's called maturity 629 00:34:49,600 --> 00:34:50,320 Speaker 16: or duration. 630 00:34:51,040 --> 00:34:52,359 Speaker 4: And then you think about it. 631 00:34:52,560 --> 00:34:56,400 Speaker 16: In the non bank sector, you have, frankly, a better 632 00:34:56,560 --> 00:35:02,120 Speaker 16: match of maturity of the the liability side of a 633 00:35:02,160 --> 00:35:04,840 Speaker 16: private fund and the assets they hold. 634 00:35:05,000 --> 00:35:08,520 Speaker 4: So it may it's not without risk, but it might 635 00:35:08,560 --> 00:35:09,239 Speaker 4: be in. 636 00:35:10,440 --> 00:35:12,680 Speaker 16: A part of the market that they can better bear 637 00:35:12,800 --> 00:35:14,240 Speaker 16: that illiquidity risk. 638 00:35:16,160 --> 00:35:19,120 Speaker 2: It's really interesting how you've got this is a line 639 00:35:19,160 --> 00:35:23,560 Speaker 2: of sight, but also everything we've just articulated AI crypto 640 00:35:23,760 --> 00:35:26,319 Speaker 2: private markets a lot to get on with. And your 641 00:35:26,400 --> 00:35:30,120 Speaker 2: term is what until June twenty twenty six? But will 642 00:35:30,120 --> 00:35:32,880 Speaker 2: it run until then? Many feel that perhaps not. What 643 00:35:32,920 --> 00:35:35,320 Speaker 2: do you want to get done in the remaining months 644 00:35:35,400 --> 00:35:35,600 Speaker 2: or so? 645 00:35:35,840 --> 00:35:38,640 Speaker 16: Look, I think it's the greatest privilege of my life, 646 00:35:38,640 --> 00:35:41,160 Speaker 16: other than having these three wonderful daughters that I have. 647 00:35:41,280 --> 00:35:45,120 Speaker 16: But I'm talking about professional privilege. And so every day 648 00:35:45,160 --> 00:35:48,520 Speaker 16: I come into work and think with my colleagues and 649 00:35:48,560 --> 00:35:51,279 Speaker 16: fellow commissioners, how do we get things done for the 650 00:35:51,320 --> 00:35:57,000 Speaker 16: investing public and the issuing public that the markets in 651 00:35:57,040 --> 00:36:00,239 Speaker 16: the middle work for them, not that the issue and 652 00:36:00,280 --> 00:36:03,160 Speaker 16: the investors are working for the intermediaries and the markets 653 00:36:03,160 --> 00:36:06,080 Speaker 16: in the middle, but the markets work for them. So 654 00:36:06,080 --> 00:36:11,319 Speaker 16: that's like lowering cost through competition, transparency and the like, 655 00:36:11,719 --> 00:36:15,759 Speaker 16: and access to the markets, and then resiliency trying to 656 00:36:15,880 --> 00:36:19,000 Speaker 16: use like central clearing and so forth, the backside and 657 00:36:19,000 --> 00:36:23,360 Speaker 16: the plumbing. So we've gotten We laid out an agenda 658 00:36:23,400 --> 00:36:26,440 Speaker 16: of fifty or fifty five projects three and a half 659 00:36:26,560 --> 00:36:26,959 Speaker 16: years ago. 660 00:36:27,000 --> 00:36:28,120 Speaker 4: We've actually gotten. 661 00:36:27,920 --> 00:36:31,280 Speaker 16: Across the line, proposed and adopted forty three of those. 662 00:36:31,800 --> 00:36:35,280 Speaker 4: You can do the math. The other projects, a number 663 00:36:35,320 --> 00:36:35,840 Speaker 4: of them. 664 00:36:35,719 --> 00:36:39,400 Speaker 16: I've asked staff to we consider possible reproposals. 665 00:36:39,800 --> 00:36:40,680 Speaker 4: But we're still. 666 00:36:40,480 --> 00:36:45,680 Speaker 16: Working on some rules around market structure of the treasury markets, 667 00:36:45,760 --> 00:36:50,360 Speaker 16: some rules around central clearing and segregation of funds and 668 00:36:50,360 --> 00:36:53,520 Speaker 16: the like. But we're going to continue to move forward, 669 00:36:54,520 --> 00:36:57,400 Speaker 16: you know, And elections have consequences. That's a great thing 670 00:36:57,440 --> 00:36:59,719 Speaker 16: of our democracy. 671 00:37:00,120 --> 00:37:00,480 Speaker 5: They do. 672 00:37:00,920 --> 00:37:03,560 Speaker 2: SEC Chair Gary Gensler, I'll let you return to some 673 00:37:03,640 --> 00:37:08,160 Speaker 2: rom coms. Thank you so much for us. Coming up, 674 00:37:08,360 --> 00:37:10,080 Speaker 2: we're going to talk a little bit more about though 675 00:37:10,120 --> 00:37:12,279 Speaker 2: we were just were crypto. At least Colleen founder and 676 00:37:12,360 --> 00:37:14,319 Speaker 2: managing partner is still Mark joins us. 677 00:37:14,320 --> 00:37:37,040 Speaker 5: Next. That's a good big technology. 678 00:37:43,480 --> 00:37:45,680 Speaker 2: Let's check in on crypto for you. Bitcoin at one 679 00:37:45,719 --> 00:37:48,680 Speaker 2: point was almost at seventy thousand yesterday. We're now training 680 00:37:48,680 --> 00:37:52,600 Speaker 2: about sixty seven thousand dollars level right now. We're looking 681 00:37:52,640 --> 00:37:55,920 Speaker 2: at ETF inflows. Of course resurgence there more than two 682 00:37:55,960 --> 00:37:58,520 Speaker 2: billion dollars in recent week or so. But what does 683 00:37:58,520 --> 00:38:01,400 Speaker 2: the election mean for crypto deed regulation? At least Colleen 684 00:38:01,440 --> 00:38:03,879 Speaker 2: found a managing partner at Stillmont. You are listening into 685 00:38:03,880 --> 00:38:06,799 Speaker 2: that conversation with Gary Gensler, and I'm interested as to 686 00:38:06,960 --> 00:38:09,080 Speaker 2: what you think the election means for your space. 687 00:38:11,160 --> 00:38:14,000 Speaker 15: The election means that we are going to be attending 688 00:38:14,080 --> 00:38:18,960 Speaker 15: to the disposition of a new administration towards innovation, and 689 00:38:19,000 --> 00:38:21,080 Speaker 15: that includes bitcoin innovation. 690 00:38:21,360 --> 00:38:24,240 Speaker 17: So what we're hoping to see, regardless of the. 691 00:38:24,200 --> 00:38:29,160 Speaker 15: Administration INSIDU, is that they take a thoughtful approach, that 692 00:38:29,200 --> 00:38:33,240 Speaker 15: they take a studied approach, and that they are discerning 693 00:38:33,440 --> 00:38:37,040 Speaker 15: and how they apply regulation within the bitcoin ecosystem and 694 00:38:37,200 --> 00:38:40,800 Speaker 15: industry to make sure that we are updating rules of 695 00:38:40,840 --> 00:38:43,400 Speaker 15: the past so that they fit well with the current innovation, 696 00:38:43,960 --> 00:38:47,360 Speaker 15: that they are not just protecting investors and participants in 697 00:38:47,360 --> 00:38:51,040 Speaker 15: the ecosystem, but that they are also fostering innovation so 698 00:38:51,080 --> 00:38:53,240 Speaker 15: that America can continue to lead here. 699 00:38:55,400 --> 00:38:58,480 Speaker 2: Does it continued to lead from your perspective with the 700 00:38:58,520 --> 00:39:04,520 Speaker 2: regulatory environment and suddenly, the potential next President, Donald Trump, 701 00:39:04,840 --> 00:39:08,240 Speaker 2: he's certainly saying he wants us to be the crypto capital. 702 00:39:08,880 --> 00:39:11,960 Speaker 2: If regulation stays as it is, var enforcement, will it 703 00:39:12,000 --> 00:39:12,480 Speaker 2: remain so. 704 00:39:14,200 --> 00:39:14,439 Speaker 12: Well? 705 00:39:14,560 --> 00:39:17,720 Speaker 15: So the US has an advantage now and that many 706 00:39:17,760 --> 00:39:21,280 Speaker 15: of the top founders, the most innovative companies in the space, 707 00:39:21,360 --> 00:39:26,080 Speaker 15: including those advancing bitcoins payment technology, for example, are based 708 00:39:26,080 --> 00:39:29,759 Speaker 15: in the United States. They can continue to innovate from 709 00:39:29,800 --> 00:39:33,760 Speaker 15: here with a regulator that sees the advantages of having 710 00:39:34,760 --> 00:39:38,200 Speaker 15: that activity in the US, and we are hopeful that, 711 00:39:38,280 --> 00:39:43,280 Speaker 15: regardless of the administration, that those involved will be looking 712 00:39:43,280 --> 00:39:46,600 Speaker 15: to foster such innovation. I also want to note that, 713 00:39:46,680 --> 00:39:50,120 Speaker 15: of course, the coin innovation is not happening in the silo. 714 00:39:50,239 --> 00:39:54,560 Speaker 15: It's relevant to other industries that are of national relevance, 715 00:39:55,239 --> 00:40:00,239 Speaker 15: such as the transition to renewable energy the explosion of 716 00:40:00,400 --> 00:40:03,520 Speaker 15: interest and opportunity and generative AI and l A. 717 00:40:03,600 --> 00:40:04,000 Speaker 17: Lambs. 718 00:40:05,120 --> 00:40:09,360 Speaker 15: Bitcoin's relevance to that brings more attention to bitcoin. 719 00:40:09,040 --> 00:40:12,000 Speaker 17: Technologies itself, and regulators will. 720 00:40:11,840 --> 00:40:15,360 Speaker 15: Hopefully respond to take themselves a studied approach to the 721 00:40:15,360 --> 00:40:16,120 Speaker 15: bitcoin space. 722 00:40:17,280 --> 00:40:19,960 Speaker 3: What we could have asked SEC chair Against there a 723 00:40:19,960 --> 00:40:22,279 Speaker 3: few moments ago, at least so I suspect he would 724 00:40:22,320 --> 00:40:26,440 Speaker 3: have declined to answer, was his understanding of the relative 725 00:40:26,520 --> 00:40:31,240 Speaker 3: policy platforms of Vice President Harris and former President Trump 726 00:40:31,320 --> 00:40:35,359 Speaker 3: when it comes to crypto and the fundamental differences between them. 727 00:40:35,840 --> 00:40:38,000 Speaker 3: We won't get that answer, but do you have that 728 00:40:38,120 --> 00:40:41,919 Speaker 3: kind of clear understanding of what either outcome might mean 729 00:40:42,000 --> 00:40:43,360 Speaker 3: from a policy perspective. 730 00:40:44,800 --> 00:40:48,319 Speaker 15: I'm quite happy that both candidates are paying attention to 731 00:40:49,360 --> 00:40:54,400 Speaker 15: participants in the ecosystem. They both have advanced policy agendas 732 00:40:55,040 --> 00:40:56,160 Speaker 15: and let us. 733 00:40:56,040 --> 00:40:58,879 Speaker 17: Know that they're paying attention to the space now. 734 00:40:59,000 --> 00:41:04,080 Speaker 15: Instead of evaluating policies during a campaign, what we're really 735 00:41:04,120 --> 00:41:07,160 Speaker 15: looking to see and to participate in and then to 736 00:41:07,280 --> 00:41:12,840 Speaker 15: evaluate is the inaction of policy itself and action rather 737 00:41:12,960 --> 00:41:17,280 Speaker 15: than campaign promises. And it looks to us as though 738 00:41:18,680 --> 00:41:22,000 Speaker 15: both campaigns have an intention to partner with the industry 739 00:41:22,719 --> 00:41:27,440 Speaker 15: to study and to apply a thoughtful approach. And now 740 00:41:27,440 --> 00:41:30,799 Speaker 15: we'll have to look at the rest of the candidates 741 00:41:30,840 --> 00:41:35,520 Speaker 15: in their administrations, the potential administration's behavior, so that we 742 00:41:35,520 --> 00:41:39,759 Speaker 15: can decide whether optimism is deserved. But I think there's 743 00:41:39,760 --> 00:41:44,080 Speaker 15: a reason to be optimistic regardless of the outcome of 744 00:41:44,080 --> 00:41:44,600 Speaker 15: this election. 745 00:41:46,000 --> 00:41:49,600 Speaker 3: That conversation was about, I guess regulatory in the context 746 00:41:49,600 --> 00:41:54,880 Speaker 3: of the risks crypto poses to the financial system, rather 747 00:41:55,000 --> 00:41:58,480 Speaker 3: than how we use the underlying technology against the called 748 00:41:58,480 --> 00:42:03,520 Speaker 3: it the ledger right in the financial system, modernizing global finance. 749 00:42:04,080 --> 00:42:04,600 Speaker 8: Do you think we. 750 00:42:04,600 --> 00:42:06,520 Speaker 3: Should kind of go back to talking about that a 751 00:42:06,560 --> 00:42:06,960 Speaker 3: little bit? 752 00:42:08,440 --> 00:42:09,680 Speaker 17: I think so again. 753 00:42:09,800 --> 00:42:15,040 Speaker 15: Gary Gensler also spoke about his concerns about the stability 754 00:42:15,080 --> 00:42:20,760 Speaker 15: of core technologies like LLM models, and as he's thinking 755 00:42:20,800 --> 00:42:24,200 Speaker 15: about that, or as perhaps the next to take his 756 00:42:24,320 --> 00:42:27,400 Speaker 15: seat is thinking the same, they should be looking to 757 00:42:27,440 --> 00:42:31,239 Speaker 15: how bitcoin can support the robustness of a generative AI 758 00:42:31,400 --> 00:42:36,680 Speaker 15: and LLM ecosystem. So, for example, here energy stabilities, so 759 00:42:36,719 --> 00:42:42,200 Speaker 15: the stability of the grid, the demands that LMS and 760 00:42:42,840 --> 00:42:45,760 Speaker 15: applications running on top of them will have for energy 761 00:42:46,080 --> 00:42:51,759 Speaker 15: will require robustness of the supply, and bitcoin can help 762 00:42:51,840 --> 00:42:55,520 Speaker 15: facilitate that. Of course, we know that bitcoin is an 763 00:42:55,560 --> 00:42:58,560 Speaker 15: off taker of energy in the same way that AI 764 00:42:59,800 --> 00:43:00,439 Speaker 15: is as well. 765 00:43:00,440 --> 00:43:02,600 Speaker 17: But the difference here is that bitcoin. 766 00:43:02,239 --> 00:43:05,680 Speaker 15: Is price responsive, and what that means is that bitcoin 767 00:43:05,760 --> 00:43:08,520 Speaker 15: can off take energy at low prices when there's low 768 00:43:08,600 --> 00:43:11,600 Speaker 15: demand that can shut off and peak times. So bitcoin 769 00:43:11,640 --> 00:43:15,359 Speaker 15: will not contribute to peak times in the grid, which 770 00:43:15,400 --> 00:43:18,520 Speaker 15: means that it will not destabilize the grid and can 771 00:43:18,560 --> 00:43:23,279 Speaker 15: allow for instead healthy growth of renewable generation in a 772 00:43:23,280 --> 00:43:28,640 Speaker 15: way that contributes also to the LM ecosystem's. 773 00:43:27,920 --> 00:43:30,560 Speaker 17: Own stability, a place where Gensler express concern. 774 00:43:32,400 --> 00:43:34,719 Speaker 2: It's interesting that, of course a proof of work, proof 775 00:43:34,760 --> 00:43:36,800 Speaker 2: of stake, that's something in other parts of the crypto 776 00:43:36,880 --> 00:43:40,520 Speaker 2: ecosystem that have to deal with their energy impact. But 777 00:43:40,719 --> 00:43:43,520 Speaker 2: more broadly, everyone is waiting when the killer app is 778 00:43:43,520 --> 00:43:46,000 Speaker 2: really going to be here. From your perspective, does it 779 00:43:46,040 --> 00:43:49,200 Speaker 2: remain as an asset class as an area to invest 780 00:43:49,200 --> 00:43:51,600 Speaker 2: in if you're worried about inflation and that's why you 781 00:43:51,600 --> 00:43:54,520 Speaker 2: get into gold and crypto, or does at some point 782 00:43:54,560 --> 00:43:57,400 Speaker 2: what you're investing in, the projects you invest in end 783 00:43:57,520 --> 00:43:59,520 Speaker 2: up being of service to society. 784 00:44:00,320 --> 00:44:03,239 Speaker 15: This is a great question. So there's two things happening here. 785 00:44:03,320 --> 00:44:07,680 Speaker 15: In terms of advancement of the ecosystem. We've seen, of course, 786 00:44:07,680 --> 00:44:11,200 Speaker 15: the bitcoin is a store of value has matured. At 787 00:44:11,640 --> 00:44:15,600 Speaker 15: the Bitcoin ETF has reached over twenty billion in aggregate 788 00:44:15,680 --> 00:44:19,840 Speaker 15: assets in less than the year's time, which exceeds what 789 00:44:19,960 --> 00:44:22,920 Speaker 15: goal dts did on their launch. And of course the 790 00:44:22,920 --> 00:44:26,960 Speaker 15: Bitcoin spot ETF launch was one of the most successful 791 00:44:26,960 --> 00:44:31,680 Speaker 15: in history. So Bitcoin as a store of value has 792 00:44:31,760 --> 00:44:36,520 Speaker 15: secured its place in history. But what's also happening, of course, 793 00:44:36,760 --> 00:44:41,359 Speaker 15: is that we've seen stable coins find product market fit 794 00:44:42,680 --> 00:44:44,279 Speaker 15: both internationally and. 795 00:44:46,160 --> 00:44:48,759 Speaker 17: Within the US. At the same time the. 796 00:44:48,719 --> 00:44:51,560 Speaker 15: Stable coins have achieved this product market fit, they're coming 797 00:44:51,680 --> 00:44:55,680 Speaker 15: to the bitcoin payment system, which is Likening Network. In July, 798 00:44:55,960 --> 00:45:01,600 Speaker 15: Likening Network launched payment channels that can hand other assets, 799 00:45:01,640 --> 00:45:06,840 Speaker 15: including stable coins, which brings the market that Lightning Network 800 00:45:06,840 --> 00:45:11,200 Speaker 15: has been able to achieve. For example, their Lightning Network 801 00:45:11,280 --> 00:45:14,840 Speaker 15: processes over two hundred thousand transactions a day, over eighty 802 00:45:14,880 --> 00:45:18,080 Speaker 15: million dollars in value a month. And now stable coins 803 00:45:18,080 --> 00:45:20,799 Speaker 15: are coming to the Lightning Network. And so when we're 804 00:45:20,840 --> 00:45:23,640 Speaker 15: looking about what the killer app is for Bitcoin, and 805 00:45:23,840 --> 00:45:27,520 Speaker 15: we're thinking about bitcoin asystore of value and Bitcoin technologies 806 00:45:27,520 --> 00:45:28,719 Speaker 15: for stable coins. 807 00:45:29,560 --> 00:45:33,480 Speaker 2: Ane Colleen founder and managing partner of Stillmock, inter Twining 808 00:45:33,480 --> 00:45:35,800 Speaker 2: stable Coins and Clote. We thank you very much. Indeed, 809 00:45:35,800 --> 00:45:39,120 Speaker 2: now that does it for this edition of Bloomberg Technology. 810 00:45:38,800 --> 00:45:40,919 Speaker 3: Ed jam packed with the interviews. Check out the pod 811 00:45:41,000 --> 00:45:43,239 Speaker 3: you know exactly where to find it. From London in 812 00:45:43,280 --> 00:45:45,600 Speaker 3: San Francisco, this is Bloomberg Technology