Gary Gensler Testifies! - Bankless Restreaming Coverage

Transcript

we expect to get through a lot today um so let's get started with digital assets under your leadership this year's Exchange Commission has brought nearly 50 separate enforcement actions against digital asset firms and now your agency is requesting an additional 78 million dollars to expand your enforcement agenda at the same time you've refused to provide Clarity on whether digital assets offered we expect part of an investment contractor subject to Securities laws and more importantly how these firms should comply with those laws you're punishing digital asset firms for allegedly not adhering to the law when they don't know it will apply to them it's nonsensical

the administration said it the FED has said it and I'll say it again Congress must provide clear rules of the road for the digital asset ecosystem because The Regulators cannot agree regulation by enforcement is not sufficient nor sustainable your approach is driving Innovation overseas and endangering American competitiveness the ranking member and I have worked for more than a year on this issue and I'll continue to work we'll continue to work this Congress but let me be clear our goal is to make law we expect you to play a constructive role in that process uh

now next up we'll discuss your overly aggressive and very expensive rulemaking agenda in the past two years the commission has proposed 53 new rules at a Breakneck Pace that's twice as many rules as your predecessor Mary Jo White and Jay Clayton in the same amount of time this raises serious concerns that the rulemaking process is being rushed undermining the quality of our Securities laws and risking negative unintended consequences these concerns have been echoed by senior Personnel at your own agency and they are similar concerns raised while you are at the cftc time and time again you've cut public the public out of the rulemaking process

with unreasonably short comment periods even for major rules like your disastrous climate disclosure proposal and Equity Market structure overhaul you fail to justify these significant rules with thorough with thorough evidence careful studies and even cost benefit analysis I look forward to hearing why the commission is rushing to make such dramatic changes in our public markets based on poultry economic analysis and limited public input finally it appears you've been so busy weaponizing the security Exchange Commission to push your agenda that you've forgotten a key pillar of the commission's statutory Mission Capital formation

unlike you this committee is working to strengthen public markets help small businesses and entrepreneurs and increase Market access for all investors to ensure the long-term growth and prosperity of this country I'll close with this at chair Gensler your response is to Congressional inquiries have been unacceptable you have a constitutional duty to conduct your business and your in your agency but we too have a constitutional duty to conduct oversight of your agency under our jurisdiction we intend to do that and we'll continue to do so aggressively but it is your duty to respond and comply with Congressional inquiries

if you continue toward this institution By ignoring our our requests and providing incomplete responses we will be left with no choice but to pursue all avenues to compel the information or documents we need and the American people need and deserve to see themselves so with that I yield back the chair now recognizes the ranking member of the committee the general woman from California for four minutes for the purposes of an opening statement thank you Mr chairman um good morning and welcome chair Gensler right now our financial system is still recovering from the sudden collapse of Silicon Valley Bank and Signature Bank our nation's affordable housing crisis

is worsening and we are on the brink of a republican impose debt default that will create unprecedented and Untold levels of harm to the United States and global economy but unfortunately today's hearing is not focused on addressing any of those looming crisis instead we're here this morning because last Congress Republicans threatened to do a big number on the SEC and chair againstler and today is the start of their making good on that promise this Playbook is new committee Democrats and the American public have seen it all

before under the first Consumer Financial Protection Bureau director Richard cordray Republicans worked around the clock to harass the agency with Sham investigations baseless subpoenas and non-stop hearings all in hopes of delaying or impeding the important work of the agency this is the same exact strategy they plan to use on the SEC and unfortunately everyday people will pay the price the SEC has on average provided over twice the legally right bankless Nation welcome to this live stream of Gary gensler's testimony um this is an experiment for us this is

not something that we've done before but I think it's pretty fun I'm already having fun I hope you're having fun so thank you for tuning in uh I'm going to take this time to talk over Maxine Waters because she is clearly just making it political about a Republican versus Democrats I'm assuming this is going to be a reoccurring theme that happens as people are given some of their time to stand up on a Podium instead of going after Gary Gensler they're going to make it partisan which is what Max say Miss Maxine Waters seems to be doing so I'm going to have to give Maxine Waters a solid 2 out of 10 points on her criticism of Gary Gensler while she did address the issue she has totally ignored the main point of why we are here today anyways I will uh return to Maxine Waters in transparency

and I will uh Heckle later and address issues that arose during the game stop events and identified by investigations this committee LED Additionally the SEC has proposed rules to require greater transparency for private equity and hedge funds which are opaque even though they have significant impacts on our economy and Society these reforms are not being rushed they are long overdue and this committee held several hearings and considered legislation addressing all of these issues meanwhile Republicans are eager to rush forward

with measures that would deregulate our Capital markets we just witnessed that Trump's deregulation means in the bank and sector and financial stability as the collapse of svb and Signature Bank threatened confidence across the banking system I can't believe that this committee is rushing to take off more guard rails when we should be adding them I would also like to applaud chair Gensler and his staff for the forceful actions SEC has taken and dedicated more resources to go after crypto criminals whoa yo

taking away the points she's at zero now oh to mask non-compliance in crypto in fact under chair against her the SEC has nearly doubled the size of the unit responsible for protecting investors in crypto markets and from cyber-related threats since the recent bank failures and the fall of XTX and various crypto platforms with that I'm going to yield back the balance of my time because the chair did not go over his time yeah please do please yield your time notion appeared for me too the chair recognized Mrs Wagner chairwoman

of the subcommittee of on Capital markets for one minute I thank you Mr chairman chair Gensler it's been 18 months since you've appeared before this committee my colleagues and I look forward to discussing your agency's overly aggressive agenda that is in fact rushing through rulemakings at a frenzied Pace the likes of which we haven't seen right in response to the 08 financial crisis however your agenda is neither driven by Congressional mandate and let me underscore Congressional mandate nor a widespread Market Fair failure like Busan 08 in fact it remains to be seen what actual deficiencies the commission seeks to address with its 53 new

regulations even when a very brief or half-baked cast benefit analysis is provided it fails to consider the aggregate regulatory burden on retail investors small business and capital markets oh bread and butter of the United States of America Mrs Wagner proposing will cause death by a Thousand Cuts to U.S capital formation and I yield back well done right solid seven out of ten performance in capital markets Mr Sherman for one minute chairman Gensler thank you for working hard and getting things done well he's just like sitting there he just giving to you by the 33 and 34 Securities acts and bringing them up to

date it for the 21st century thank you enemy of the people investors we want thank you for standing up to the crypto bro billionaires who we're an area where the multi-billion dollar frauds are just the beginning of the societal harm investor protection is not the anti antithesis to Capital formation it is the necessary antecedent if we don't protect investors Capital will go to other markets the private placements cannot swallow the whole idea of companies being public and the idea that 2 000 shareholders should become 2 000 shareholders of record through a phony

math that allows companies to have perhaps ten thousand beneficial shareholders and not consider themselves public is something that needs to change I yield back today we welcome the testimony of Gary Gensler chair of the Securities Exchange commissioner chair Gensler we thank you for taking the time to be here you'll be recognized for five minutes to give an oral presentation your testimony and without objection your written testimony will be made part of the record cheer genzer you're now recognized for five minutes all right here we go good morning thank you chair McHenry ranking member Waters and members of the committee thank you for inviting me to testify as noted in my written testimony My Views are my own uh walking into the Rayburn building I couldn't help but stop by the statue of Sam Rayburn

longest serving speaker of this great house his colleagues used to call him Mr Sam but you see as chair of the house committee on interstate and foreign Commerce he worked closely with President Roosevelt to establish the nation's first Federal Securities laws in 33 and 34. in fact that 34 Act was called the Fletcher Rayburn bill Rayburn and Roosevelt were motivated by the lack of Market integrity and disclosure the markets were ripe with fraud and manipulation and they knew that market integrity and disclosure help protect investors builds trust in our Capital markets and yes lowers cost of capital for issuers this foundational work has been part of our nation's

economic success and Global standing ever since but we can't take it for granted Congress built on rayburn's work in the 70s and again in the 90s to mandate that our agency also consider efficiency and competition as well as capital formation in formulating our rules as amended this led to our often stated three-part Mission around protecting investors promoting Fair orderly and efficient markets and facilitating Capital formation in essence it's about ensuring that our markets serve investors and issuers alike but not the other way around investors and issuers don't serve the markets it's about the issuers and investors and much of our work is

basically focused on the middle the markets driving efficiency integrity and resiliency in the market with regard to efficiency and competition we have multiple projects including as further detailed in my written testimony around Equity markets and private funds as relates to integrity and disclosure we also have multiple initiatives the technology that I'm most I think is most transformative in our time is artificial intelligence it's not crypto as much as we're going to discuss with crypto influencer Gary bringing up AI you've got to have some uh projects in that area around Robo advising and brokerage apps and the conflicts that may be in predictive data analytics but

as to crypto which I know will come up simply put investors in the crypto Market should benefit from the compliance with the same laws that Rayburn and Roosevelt laid out it's the law it's really not a choice as to disclosure the SEC is designed by Rayburn and Roosevelt is Merit neutral but we do have an important role with regard to ensuring for full fair and truthful disclosure about material risk and thus we have disclosure projects including regarding climate risk cyber risk stock BuyBacks and lastly as to financial resiliency lest we forget risk in one corner of the market can spill out and hurt regular folks eight million

Americans lost their jobs millions of families lost their homes and yes small businesses shuttered after the 08 crisis recent Market events are just the most recent reminder of this that's why we have a number of projects around our U.S treasury markets around investment funds and private funds in summary much of our work is about making the markets more efficient more fair more resilient for the benefit of investors and issuers we greatly benefit from public input and use it to make adjustments that staff and ultimately the commission think appropriate coincidentally my dad was also sometimes called Mr Sam

first of his family born in this country and he ran a small business never went to college small business a vending machine business and the bar owners would call him Mr Sam I think my dad he was never a public figure I I can't believe I'm saying in the same word Sam Rayburn and Sam Gensler but uh uh in this system this system of democracy that we have even things that we're going to go through today in this hearing but he was a believer that the American system could help him as a small business owner and as an investor the little bits of money he put to the side so I hope that both Mr Sam's uh would think about the sec's work to

ensure that the markets serve investors and issuers alike but not the other way around it's not that the investors and issuers serve the markets or the market intermediaries in the middle I thank you I yield back my time that was unsatisfying I'll now recognize myself for five minutes um ether is one of the um most popular digital assets and powers of ethereum blockchain Officer back in 2018 then SEC Corporation Finance director Bill Hinman stated they believe ether was not a security uh last month cftc chair uh Benham expressed his view that ether is a

commodity the State Attorney General of New York asserted in a court filing last month that ether is a security clearly an asset cannot be both a commodity and a security do you agree um I I it's actually all Securities are commodity under the commodity and exchange act it's that we are excluded Commodities but I would agree that a security cannot be also an excluded commodity and an included commodity I'm sorry chair just to talk about the commodity exchange act more precisely okay so do you recognize uh how would you categorize either then I think that the general sweep of what Congress did

not just in the 30s but as Amendment I'm asking you you're sitting your chair now to make an assessment under the laws as exists is either a commodity or a security without speaking to anyone I know you've repeatedly said you're not going to speak to one except you've spoken to one Bitcoin so I'm asking to speak to a second one the second largest market cap here and speaking to the tokens there's 10 to 12 000 if there's a group of entrepreneurs I'm asking about one New York is anticipating a profit based on the I'm asking a specific question chair ginsler I said this in private this should be no shock to you I'm asking this question is it an is ether a commodity

or security and again it depends on the facts and the law and if there's a group of I'm asking about the facts and a law sitting in your seat and the Judgment you are making it's not going to give an answer and so uh Mr chair I think you you would not want me to prejudge because you have prejudged on this you've taken you've taken 50 enforcement actions we're finding out as we go as you file suit as people get Wells notices on what is a security in your view and your agency's view I'm asking you a very simple question about the second largest digital asset what is your view and my view is is if there's a group of individuals in the middle middle that the public isn't right so let me just ask a second question do you think it serves the market for an object

to be to be viewed by the Commodities regulator as a commodity and the Securities regulator to be viewed as a security do you think that provides uh safety and soundness for for for the products do you think it provides consumer protection do you see do you think it serves the value of innovation I think no should be a very simple answer for you here I think that uncertainty is bad is it not and I think that Congress has said that there's one agency that's secured as an Exchange Commission under this committee you won't answer my question and you're the head of that agency so give me a break come on oh right I'm answering Mr McHenry Eric because you would not want me to speak about any one set of facts and Circumstance Okay so but you've already spoken have you said

anything about Bitcoin my predecessors and the agency itself has spoken to them okay but you're not willing to do the same about ether okay so let me just step back there's a lack of clarity here in the market yes can you at least agree to that I think that the clarity is there the law is clear that right let me let me let me be explicit about this the market doesn't see it your regulatory actions and the cftc's regulatory actions say that there's a great deal of uncertainty here it is the intention of this committee to fix that uncertainty and actually uh provide a sound legal basis for this so let me get into your rulemaking uh process so you promote you've proposed

53 rules in two years Mary Jo White proposed 23 Jay Clayton proposed 26. at the same time your agency is consistently provided less common period than than either of those either of your predecessors just as one example when the SEC made significant changes the U.S Equity markets in in 2005 uh for regulation nms the commission broadly solicited public feedback held numerous round tables issued white papers and concept releases fast forward to today you've proposed four Equity Market structure proposals that would impact millions of retail investors and you provided a mere 60 days of comments on a hundred on one thousand six hundred

pages of regulations so let me ask you this do shorter comment periods and less public interaction improve rulemaking we actually put out the equity Market structure Rose had 105 days of comment from the time we voted it out through March 31st but I think robust public input helps us greatly and we take comments on our rules our average has been about 70 plus days overall but we also get caught and I want to get into the cost benefit analysis but my my time has expired with that I'll recognize the ranking member thank you very much Mr Gensler I'd like to give you time uh to give your answer to Mr Mac Henry and explain to him exactly how you define uh

Securities and Commodities please go right ahead so a security by Congress as well has about 30 plus terms and one of those terms is an investment contract and the Supreme Court has addressed this multiple times over the years and we as a commission have addressed this and in these hundred plus actions that the chair mentioned I think there's 130 or so actions we've taken and it's basically if the public is putting their hard-earned funds with entrepreneurs promoters and anticipating a profit is a four-part test and and it's really uh it's a broad sweep Thurgood Marshall said that Congress painted with a broad

brush to protect the public and the SEC is an agency you all set up years ago is a disclosure-based agency where Merit neutral but we're not neutral to full fare and truthful disclosure in crypto or elsewhere and that's really the core and so it's is there a group of entrepreneurs in the middle that are working on that project promoting that project have a website that the public looks to do they I have Twitter accounts and handles do they upgrade the software and is the public sort of reading about them anticipating a profit based and in fact is there somebody that's even visiting you and they're hiring lawyers and sending them

in to you know to talk to us and so forth is there is there something there that the public is anticipating a profit based upon those efforts thank you very much uh chair again so I'd like to ask you a few questions about crypto you often suggested that we're witnessing Mass non-compliance without Securities laws by crypto firms however crypto firms often suggest that their coins and activities are different and need a new statutory framework do you agree and does the SEC have the authorities it needs to bring crypto issuers and intermediaries into compliance with the investor protection and Market Integrity framework built

over the past 90 years yes I do believe that we have the authorities we need and the loss to protect the investors would you say that one more time yes I do believe that we have the laws and we have the authorities to oversee the crypto intermediaries the crypto exchange are you exercising that Authority now uh yes we are would you describe for this committee how you're doing that I understand that she's just underhanding him engage with a number of Christians she's like the Gary exactly right correct uh we have we talked to the crypto firms some tokens to see how they can register but also these platforms I've been around Finance for over 40 years in one way or the other

I've never seen a field that's so non-compliant with laws Congress you make us non-compliant affirmed over and over by the courts but this is a largely uh unfortunate for the investing public non-compliant field thank you very much I'm going to move on uh to a question about deregulating Capital markets as you know this committee cares about increasing access to Capital particularly for small businesses I for example have worked with chair McHenry to pass legislation on crowdfunding and other innovative ways for startups and small businesses to raise Capital these are targeted approaches to supporting business growth

and creating jobs some on the committee suggest however that deregulation is needed but I don't see how deregulating Capital markets is good for small businesses I'm sure creation Innovation would you please um explain whether or not you believe deregulation is needed I think that we've benefited this country uh by the markets and that and small businesses can raise capital in a well-regulated market that protect against fraud manipulation and what the reason small business benefits is because it lowers the risk in the markets when you can lower the amount of Fraud and manipulation and you promote

good transparency thank you very much my time is almost up but I just want like the video to end her time if you liked the video her time ends faster to do what is necessary in dealing with the crypto markets is you said it twice said a third time please oh my God she's just the show she's the Gary show we have the authorities uh have you indicated what resources you need we we have in um in Congressional testimony to the the House Appropriations Committee and um it's included in this testimony as well thank you very much I yield back the balance of my time well now recognize the gentleman from Arkansas Mr

Hill for five minutes the vice chair thank you Mr chairman and Mr Kinsel thank you for uh coming to be with us she's the one that blew the kiss for SPF she is the one that blew SPF the kiss uh Jim Henry's uh questioning yeah this is this is Maxine Waters blowing SPF a kiss in November 2021 the president's working group on financial markets released its report on stable coins which recommended that Congress enact legislation to accomplish a federal Prudential framework for stable coins you remember that report I I do sir is the SEC a member of the president's working group uh we are sir and do you believe that uh did you support that recommendation of the

president's working group I did and do you think that Congress has been uh inactive on this as best I know Congress has engaged with the administration uh throughout the two years so uh you would call that active yeah we're looking for that framework and you support us drafting a regulatory framework for statement stable coin payments stable coins if I could say when stable coins I think that it's important to ensure that there's safety and soundness there and that at any if this Committee in Congress were to address this through legislation to ensure that we don't undermine our 100

trillion dollar Capital Mark is we don't inadvertently somehow undermine what money market funds operate in this country or how other parts of the financial markets lastly that we don't undermine both the cftcs and sec's authorities to go after fraud manipulation because right now these stable coins are being used in the crypto ecosystem and I think you really do want that cop in the B the SEC on the beat in the crypto ecosystem well I'm glad to hear you say that some support a regulatory framework and I think those issues you raise have to be taken into account by the president's working group and I think they have I mean I think those are addressed in

their reports and I think that's certainly the focus of of hearings and and so I'm glad to hear and I'm not I don't think I'm putting words in your mouth that you do support Congress attempting to create a regulatory framework for payment Stables is that fair I think with the guard rails of not undermining the 100 trillion dollar Capital markets and remember I got I got your checklist we we've got that I was just going to also in the recent uh events in the markets uh one of those stable coins actually had over three billion dollars at Silicon Valley Bank I understand terrible decisions by Silicon Valley Bank we've already had a hearing on that subject and I know

we'll have some more follow-up on it uh let me ask you about the consolidation plague my existence for the eight years I've served in Congress uh I've already on record not a supporter of the cat has the SEC issued the final rule on the Consolidated audit trail to the best of your knowledge the the roles are in place we're still working on uh Parts related to uh filings in front of us on funding and some amendments with regard to data security would it surprise you that some people in The Brokerage Community weren't aware that the cat is actually already being collected as of December 31st and are you aware that that data is

already being collected we're actually as a regulatory agency aware that it's being collected uh transaction data is being collected and we benefit from that do you are you concerned about the encryption of that data that it's inadequate I think as a government agency we should always be focused on data security and and data encryption is one of the pieces of of data security I'd like for you to respond to me about the if you would uh respond in writing about the encryption of that and the protection of anything that would be considered personally identifiable information uh let me turn to a different subject which is the treasury market we have a

time right now where the FED is shrinking its balance sheet and where there's an unprecedented amount of Treasury issue because of the Avalanche and spending by the Biden Administration uh is the SEC a member of the interagency working group on the treasury market uh yes we are sir and yet you have this proposal as I read it that would say that people who are buyers of treasuries could somehow be swept up and become dealers uh why are you proposing that someone who might be a dealer I mean a an investor in treasury suddenly become a dealer it's really under a law Congress passed in the 1980s Okay so we've moved on from from the crypto markets he was originally talking about the bad decision was that it was terrible risk

management for svb to be a one of the banks that Circle uses to bank with ironically it was svb that went under and circle that was had way more solvency than svb so if you want to account for the risk between these two things even if Circle did f up and choose svb as a bank and they end the FDIC did not step in circle would have still been like orders of magnitude more solvent than svb and and the fact that they oh my God is sorry simultaneously running their Banks into the ground since becoming chair can you briefly explain the actions you have taken to address

executive compensation issues amongst publicly traded institutions I thank you I care about this proud that we were able to complete two mandates from Congress in this area one was with regard to executive compensation needs to be clawed back if it's built upon erroneous financials and number two disclosure about paid for performance and then awesome okay so I've got some other tweets that got pulled up I'm going to let this non-crypto talk progress uh but we are watching Gary Gensler his Hearing in front of the Senate finance committee I believe uh and this has all been about

specifically his unfair treatment right is unfair treatment of uh the crypto industry among other things so there's other things in this agenda here today that they want to talk about that's not just about crypto and then also each one of these people gets their own five minutes or so to talk about what they care about uh and so just a comment from Reuters here having one control of the House of Representatives last year Republicans now have a Pulpit to try and constrain President Joe Biden's administrative oversight of Financial issues some in the finance industry have joined in the criticism saying the SEC is going too far in its reforms and not taking time for industry feedback so this is like a hybrid hearing definitely Arisen by his treatment of the crypto

industry but it's also the Republicans chance to kind of go after Gary and the SEC as both you know what he should be going after from for all the ways that he's created crypto but also as a proxy way to Target the Biden Administration so sometimes we're going to hear very good comments like mchenry's uh questioning of Gary Gensler and ether and security and sometimes we're going to hear just political soapboxing and positioning and influencing uh and so that is that is uh my take on this matter I've got some other tweets that I can pull up but um I don't know how I don't want to keep on talking in case something uh good is said with the five

I'm sorry uh the four bank rate agencies in the one uh fhfa sir it has been publicly reported that Greg Baker the disgraced CEO of Silicon Valley Bank sold 3.5 million of silicon stocks less than two weeks before the banks collapse raising question about whether he ran a fall of insider trading laws what actions has the SEC taken to investigate stock trading by Bank Executives leading up to the bank's collapse no they have not talked about FTX yet right

circumstances say it's against the law to trade or material non-public information that's whether you're at a company whether you're in just a private you guys seen this scary influencer video you guys want to watch this video if you want me to play this video very soon tell me in the chat and I'll play this video it's pretty reaction has the ACC taken under your leadership to address inside it trading generally well over the course of the last two years we've brought over 1500 law enforcement actions and we could get back to you and give you a list of those related to insider trading but uh unfortunately more than one Mr Benson the s20 2155 legislation that

passed in 2018 legislation here we go I can't believe I've had the privilege to be part of the Securities and Exchange Commission for two years two years Gary Gensler year two at the SEC the sophomore agency serve investors building for a better future and issuers raising money while overseeing the hundred trillion dollar Capital markets that allow them that's stock footage it's because investors and companies every day every time you invest in a 401k trade through a brokerage app take out a mortgage or auto loan you place

your trust in our Capital markets for 90 years our Capital markets with the benefits of Securities regulation have been the finest in the world at the SEC we're working for you to keep it that way first we serve as a cop on the beach stamping out misconduct and making markets fair in the last you missed FDX we filed 1500 enforcement actions this is not something to celebrate since against Ponzi schemes and pump and dumps you missed hair alumina you missed that yeah disclosures and yes rampant none you missed glossy until after the fact did they list Spotify in overseeing the markets we engage with over 40 000 registrants

asset managers Brokers dealers exchanges fund companies public companies raising money from you and many more when investors have Fair access to markets and full fair and truthful disclosure from those raising money that builds trust in our financial system we cannot though simply rely on the rules of the past to face the market challenges of today technology and new business models are dramatically Transforming Our markets thus we're working to update rules to best meet our times no that's what he's not doing that's what we want him to do efficient and competitive that means better returns for you and lower costs for issuers we've made proposals to do so in the stock market and the

ever-growing private funds Market further we're working to strengthen Market integrity and transparency we recently adopted rules to guard against insider trading the clawback executive compensation when based on faulty financials we're also striving to make our markets more resilient lest we forget risk in one corner of the market can spill out and hurt regular folks the market events of the last month are just the most recent reminder of this so we're working on multiple projects in the treasury markets in Money Market funds and in cyber security to better protect you from future Financial instabilities I am so honored to be part of the sec's remarkable team here at the

SEC don't like you that we have the investing and issuing Publix back employees at the SEC have called him like a tyrant all right yes every filing that companies make or public filings they already are property is known and once again I say I find you trying to hide behind things for either a lack of willingness to be Candor about it or you're trying to obfuscate your oath of office which was well and Faithfully this committee is not happy with that attitude or performance

I was told by you after we'd had numerous discussions with your staff about a company that had a capital formation issue with millions of dollars at risk at the last minute based upon their public filings no that's not that you would not respond at all or even discuss the matter with the company to try and alleviate a problem for the average number of days that would take your agency to respond in other words the agency had to respond you were simply a placeholder you have no real responsibility you have your own

views not the views of the management of the organization responsible so I would say to you today that there's a corollary you talked about your father I'm going to talk about my father and my father who served as a federal judge for 14 years became director of the FBI for President Reagan he recognized that the agency had a problem [Music] that probably emanated from the Department of Justice I'm not going to blame the FBI I'm not blaming the Department of Justice I'm saying the circumstance was there that they would not give credible information or deal with people who they were indicting and

charging and my father changed that and said if you are or if you have reputable counsel that stands at the behest of a court that a court could punish them for incorrect or unlawful Behavior inappropriate or unethical Behavior if you had a a a a council who was of extreme confidence then the bureau would deal with you even on the most sensitive issues I will tell you that one of the clients that I referred to you has extremely important and valuable confidence in their counsel

and you as an agency have chosen to Stonewall obfuscate and not do your job and I've sent you a letter and I'm asking you to respond back to this committee and me about whether you're going to look at that when confronted by this committee because I strenuously believe that you should have some Authority and responsibility in that effort Mr chairman I yield back my time was he talking about from California Mr Sherman is now recognized for five minutes Mr chairman chair Gensler I am very pleased with your attitude and your performance but my views are my own uh I'd like to speak for the gentleman from

Texas but he hasn't authorized me to do so uh uh I won't um the chair of the committee uh says that we ought to have absolute Clarity in this issue and I agree with him and we can achieve that if the chair will work with me on legislation to say that all intangible investment assets including all crypto are securities that way it would be very clear that investors in crypto get the same protection as investors in stock bonds and other intangible assets acquired for an investment purpose um the definition of accredited investor that we have now uh relates to the

wealth of the investor or their income which may have nothing to do with their sophistication and knowledge and I look forward to working with others on this committee to have a definition of accredited uh that discards the idea of wealth and looks instead at at knowledge but also specifies that if you're going to participate in that kind of private placement you don't put more than five or ten percent of your assets in any one basket the definition of an accredited investor we have now is based on wealth levels said in the 1980s which means they're completely out of date and probably should so here's the coinbase Mr chairman um the public policy page you said to the Banking Committee a

couple years ago to the extent there are securities on these trading platforms under our laws they have to register with the commission so assuming that a particular crypto token is a security if that's true is an exchange where that security is traded the Securities Exchange under the laws if you're uh if you meet the definition of an exchange and you have Securities on that exchange yes you have to come in and comply and register and protect the investing public well I heard you earlier say that no field in finance is so uh rampant with non-compliance

if there are those who are not complying with our Securities laws please shut them down as quickly as you possibly can and I point out that the most famous uh crypto exchange was FTX it is now of course the most infamous Exchange um we don't we Congress expanded from 500 all the way up to 2000. the number of entities that can be beneficial owners and still have the company thought of as a private company I mean that's a lot 2 000 owners but we've got a huge loophole here where you could have dozens or hundreds of beneficial and ownership entities counted as only one if they list the

stock in street name um do you have the authority and will you move toward a definition of 2000 that reflects two thousand um I think you raise a good point and I've asked staff for recommendations for the commission's uh consideration really to ensure that congresses will about these numbers the 2000 number you reference in the jobs act it really means two thousand and how to look at as you say street name ownership that a broker might hold for I think you'll find companies calling themselves private that have many many thousands of beneficial owners and that is not that's not what the Securities Law calls

for um companies when they file their 10ks every year they list their risk factors one risk factor that's uh increasingly important is the risk of A disruption in the U.S China relationship or economic relationship uh if investors got explicit information about that that would protect investors if companies had to fight for Capital by demonstrating their resiliency their ability to withstand such a uh a breakdown that our entire country would be more resilient and Taiwan would be more secure um can you move forward to be more explicit and clear with companies that

they need to disclose the risks to the company uh and hopefully what they're doing to ameliorate that risk of a possible breakdown in the U.S China relationship under current rules companies need to disclose material risk and if if they have operations and there's material risk related to any geopolitical area not just the one you mentioned they they're obliged to disclose that the gentleman from Oklahoma Mr Lucas is now recognized for five minutes thank you Mr chairman and uh Mr chairman it's good to see you again it's good to see you I could call you Mr chair as well absolutely and as always like to remind our my friends here we

spent a great deal of quality time together at your previous uh posting at the right Ralph cftc When I was a chairman of the committee that said I'd like to begin by focusing on a proposed rule pertaining to security-based swaps there's a consensus for Market participants that the sec's proposed rule to publicly disseminate large security-based swap positions would deeply harm liquidity particularly in the credit Market okay and I'll note standing up a large position reporting this isn't about crypto and just fill it in with more crypto things if you want to go back to the stream let me know in the comments and I'll go back to the stream again there's

an experiment for us I'm actually thoroughly enjoying this um I'm having fun I hope you guys are having fun uh and so just like restreaming Gary gensler's public lashing by half of the house by the Senate finance committee I think is pretty cool um so just to have some context about like what's going on today um Gary Gensler drops this yesterday this cringe influencer video one of his many that uh just does the whole like public propaganda PR thing oddly timed right for today this morning he tweeted out this thing like on my way to testify before the finance Finance Services the GOP Finance Services I stopped by Sam Rayburn statue and this was like in his

uh his opening statements uh and so like this is our SEC commissioner this guy is regulating Securities in our Capital markets and he's doing this whole like influencer campaign I mean we all know that this is what's going on uh but it's just like it's so crazy that it's like this is the timeline this is absolutely nuts uh and so uh some more recent news we haven't talked about algorand I doubt algorand is even going to come up this guy's still talking I'm sure it's not about crypto uh we haven't talked about algorand but this is the big news that dropped as of recently uh uh when was this yesterday yeah yesterday uh the crypto exchanged bittrex fun fact was my first crypto exchange ever because it

was based in Seattle where I'm from uh it was the first time I uh uh traded bought any crypto uh it hasn't been the best of change it hasn't really won out in the market forces it's slowly been declining in volume but they decided to go after bittrex in this like enforcement action that charges bittrex with being an exchange of unregistered securities and so in this com in this complaint uh they listed certain crypto assets that this is like the first time that they actually named as Securities and so this is the first time we actually got some specific uh assets listed as Securities um uh in late 2022 bittrex Global made

available for trading on its platform approximately 148 of the crypto assets that are available on the bittrex platform including crypto assets known as OMG Omi say go Dash which were offered and sold as Securities which is funny because this for me was a real uh throwback in time this was like what year is this OMG Dash these are 2017 tokens uh Dash was like a uh is a Monero hard fork with this whole like uh masternode system I owned both of these so I apparently owned Securities at one point in time uh and bit and like also I'm pretty sure OMG is on coinbase OMG coinbase uh I'm pretty sure this is a a listed on

coinbase and I'm pretty sure Dash is too which implies that coin pace is a Securities Exchange at least according to this ruling uh yeah you can trade OMG on coinbase right now can you what about dash Can you can you do Dash I mean these are super old current uh crypto assets that uh probably had decent volume uh at least in 2017 I'm sure Dash has yeah you can also do Dash Okay so implying that coinbase is also an illegal Securities Exchange let me make sure okay so that guy's still talking uh and so uh this is when when I uh tweeted out let me pull up Twitter if you don't hate me for pulling up my own tweets but this is how I think about

things this is when I tweeted out uh uh something along the lines of like uh Gary gensler's two spineless to go after the major exchanges like uh coinbase who are by extension doing the same thing basically saying all of these decently uh common coins are securities exchanges uh and so like but he's going after bittrex the exchange that is just like been limping along since 2017 but it probably looks pretty good to the outside world because like oh he's going after he's doing the thing that he's saying he's doing he's doing the thing that Brad Sherman is like yeah bring them and Reign them in and yay yay Boomers

this is what happens when Ryan's not on the stream I get unhinged uh so like this is some of the the more recent news let me let me tap back in here to make sure that I'm not missing anything and then in the same breath they criticized the sec's rule-making efforts which I would really arguably would would provide that Clarity that they they desire uh chair Gensler in your testimony today you mentioned that there have been over 130 enforcement actions brought by the SEC against crypto firms that have either engaged in marketing Securities without providing the necessary disclosures or or fail to submit uh audited financials or investor protections that would allow investors

uh to actually make a meaningful and informed decision regarding the crypto products or the underlying business uh chair against based on current law of those 130 cases those 130 enforcement actions how many have you won how many has the SEC prevailed on um many of them are settlements but those that we've taken to court we've won uh on the Howie analyzes these token issues six or eight times we've won on other matters in front of the courts as well um and so we've been quite successful throughout okay am I correct in asserting that in each of those cases uh

each of those cases went through a regulatory or legal process and or maybe even judicial appeal uh and that actually there are decisions written decisions on each of those cases uh either by an administrator or or by a court of law that that do provide explicit guidance based on current law to other crypto and stable coin firms to provide Clarity and that actually lay out some rules of the road that should you would think guide other crypto firms in in their actions you raise a very good point every one of them is a vote

of a five-member commission sometimes run by Jay Clayton sometimes I'm honored to chair but always a five-member commission and always with a written public document and order or or a charging document and there's also a joint statement on uh crypto Asset Risk to the banking organizations that's a January 3rd 2023 which lists eight key risks associated with crypto assets that Banks should be aware of uh so so there's there's a fair amount of guidance out there and Clarity it's just not the clarity that the crypto industry wants absolutely uh We've also

uh been clear and we've been public as a five-member commission as with regard to the custody of crypto assets about the exchange definition in crypto assets we put some of this also out to public comment but I agree with you it's not a matter of lack of clarity I think this is a field that in the main has built up around non-compliance and that's their business model and they have chosen even though it's not the law they've chosen to be non-compliant and not provide investors with confidence protections and it undermines the 100 trillion dollar Capital markets if

there's one field you undermined the future 100 million crypto Capital markets then it's going to undermine the the those small businesses and everybody else raising money in the capital everyone in crypto is a small business we all are startups that's great um one of the things I I worry about in this area is that crypto firms offered an amalgam of services that in the traditional banking system and and securities area are are ring fenced so they do a lot of things like they have uh you know exchange function broker dealer functions custodial and clearing functions and

lending functions and we've seen co-mingling of of investor funds can you talk about the the risks that that arise from that structure we separate these everywhere else the New York Stock Exchange is not running a hedge fund sure he says he's very supportive of crypto people trading on that New York Stock Exchange and here we have a field that commingles this And Trades against their customers and doesn't give the proper disclosures and we've brought a number of cases one settled one uh litigated matter with this regard thank you Mr chairman I yield back the gentleman from Florida Mr Posey is now recognized for five minutes

thank you very much Mr chairman uh speaking of crypto co-mingling of funds while we're on that subject prior to the collapse of of FTX did you have any concerns with the company or question if they were breaking any Securities laws or harming investors I think if I might I have had since I've been in this job a general concern about the field and as expressed here today about the non-compliance of this co-mingling of these various functions and that they should come into compliance by separating exchange from broker dealer from what you might call a hedge fund function and other functions

so with those concerns the G director staff to look into FDX I I want to stay at a little bit higher level but I directed the staff to look I bet you do to the crypto intermediaries uh and and a wide range of crypto intermediaries yes sir okay so what do they find well we we filed an action late last year a number of actions which are public actions with regard to uh Sam bankman freed and FTX um that are on our website but uh what we found in those actions as they show is we allege a number of violations of the Securities

laws yeah when did you think FTX was problematic at what point well again we followed these actions in December and I think we've filed follow-up actions in January because it takes time to develop an investigative file and we follow the facts and the law where they come but I've given speeches and I've been clear with uh many members of this industry that right now they need to come into compliance we have one goal is to bring them into compliance and to stop co-mingling all these functions stop using customer funds as if they're their own it's like somebody who's got their hand in the cash

register because they say I want to take some money out of the cash register for the weekend I'll put it back later um and that's just not proper how long after you met with FTX and investigated into you notify the public and investors that again as we've chatted earlier today we protect anything we do in our examination function our investigative function we protect that information and hold it confidential because it's important for the Integrity of any investigation but also for people's privacy and often we find that we close investigations without bringing action so there's a there's a time-tested

reason that you of course would want us to keep things confidential so we only we only make them public when and if we uh either settle or bring charges sad to hear that the inspector General found that the uh your SEC is facing the highest attrition rate in 10 years you know how's the attrition rate affected your agency's ability to regulate digital assets no it's a it's a it's a very dedicated Workforce we've moved up to about six or seven percent attrition that's consistent with other Financial uh Regulators across the U.S government I'm I'm really pleased to say that last week we had partnership for private

partnership for public service we went up in the overall rankings we're now in employee surveys these are employee surveys done by Outsiders I think we're now third out of 27 midside agencies but in terms of digital assets we could certainly use more resources I mean it is definitely uh uh there are more there are more things to look at and investigate than we have people uh on the staff to do yeah because you're a megalomaniac the children from Missouri Mr Cleaver is now recognized for five minutes thank you Mr chairman um Mr chairman uh thank you for your April uh letter which I interpret to be a

gentle reminder to to Congress uh that we needed to raise the debt ceiling and I appreciate the fact that you clearly understand and recognize the the importance of this I mean we we've raised the debt ceiling uh 78 coinbase has him again and and both parties of 49 times under Republicans and 29 times under uh Democrats it is something we we have to do um my first question is do you think that the mere

suggestion that we're not going to uh deal with the debt ceiling create a problem for for us economically and one of your responsibilities maintain some level of of order in the markets so what do you think just a mere suggestion just the mere threat what does that do it puts a dose of uncertainty into markets but it becomes particularly problematic the closer one might get to whatever deadline that is and that's not our jurisdiction that's others but

um and then if we were to go do we care about this chat let me know if you care about this otherwise it's really undermine the other half of the business it would be one heck of a mess in capital markets that's for sure but it would undermine the base of our Capital markets U.S treasuries or you know the the risk-free uh part of our Capital markets that everything else is built on top of that uh I was here in um in 2011 when uh there was a stalemate we're not going to do anything and and so we we ended up uh of course averting the the cataclysma but we still did damage to the economy

uh quiet him down a little bit and we'll come back as soon as they start to talk about crypto again um if you don't if you don't like that choice yell at me in the chat and we will return okay so where we left off here is that bittrex and all of these uh assets that were on other exchanges were listed as Securities uh and uh in particular this one very interesting uh crypto asset called algorand I'll go I'll go uh I don't know too much about Al Grande I think it's like a stable coin layer one I can't remember um but like people immediately found these very old uh Gary Gensler videos uh about uh Gary promoting you could create

Uber or Lyft on top of a blockchain technology today uh well maybe in five years you could it would be have the performance uh Sylvia mccallie's algorand who's a touring Award winner at MIT that I work with um Sylvia's got a great technology that has a performance you could create so he's not like he's like promoting it like a crypto influencer but he like talked about it a number of times he's like MIT like talks hypothetically the Bitcoin or some crypto uh Elaine would tell us it would be some other crypto that's maybe it's algorand or maybe it's algorand uh what's up Brian okay so here's what I've been

doing Ryan is we've been like restreaming this but every once in a while uh a Republican or a Democrat comes in and makes it political and not about crypto so I've just been putting it on mute in that time and just to talk about uh what else is going on just to fill in the game small bits sometimes they just like throw proof at each other how's he doing household Gary dewish he's being Gary man he's like but if we were to they only have five minutes to pressure him X date you're perverted I don't think he's talking about crypto in the very moment but okay um McHenry uh who is like leading this whole thing what's mchenry's name yeah too many voices in my head I

already have enough voices in my head okay so if you type in like uh the congressman's name uh and then type in type in their name and then crypto into Google who Patrick McHenry yeah and so anyone this is what I've been doing so I've been to whoever's talking I've been going and typing their name into Google and then pulling this up do you see this window right of me over yeah yeah yeah yeah yeah so like coinbase their their whole public policy program tells you exactly how positive they are so like we can like coinbase lets us see that's what they are as they're talking and then we go back to it so let's see Patrick McHenry as an example hang on oop I just needed it we uh certainly appreciate it oh he just

passed it on let's see what what they have to say oh gosh EPA director and we both chuckled about that but it makes the point it just seems as though your agency has taken on a different mission that you seem to be pushing an ESG agenda which is in my mind something is not in the in the in the best interest or under your purview of the of the SEC so I'll let my other colleagues get into that a little bit deeper but I want to put something on record with regards to that my first question deals with mortgage insurance linked notes according to the National Association of Realtors the average first time home buyers down payment is six percent okay in an environment of elevated interest rates and home price uh let's see so yeah uh way so I'm gonna

drag so I have this one window open I'm gonna drag it in front of the stream and you so you see this Patrick McHenry from coinbase thing right I mean I do but I'm looking at your Zoom chat I'm not looking at the Stream uh I don't think uh the stream people can see it I think the stream should see it I think that's right Dave's saying he can't see it oh cannot see it oh that's a shame I've been doing that a lot okay well here's what I'm gonna do I'm gonna do this okay now you can see it right so here's Patrick mahenry yeah he's very supportive very supportive right and so I've been pulling these up one by one as like oh that's cool yeah yeah um this person is how about this guy he's not talking about crypto uh this

guy Luca Meyer uh Luke Meyer it's probably if he's not talking about crypto he's probably like a neutral or unknown right yes uh let's see Blaine lukemeyer crypto he might not uh is unclear is unclear but it's nice that we can just like look this up really really quickly yeah it's unclear towards crypto yeah so that that just plays in in like he's not asking about there's no questions related to crypto because he just doesn't care yeah so like so far this whole thing has been like 50 crypto 50 political other things singing and adjacent things uh like Maxine Waters like both Brad Sherman came in and Maxine Waters came in and just like

softballed Gary Gensler so he could just hit home runs uh and then tell us all the great things you are doing to protect us against scary crypto Gensler Brad Sherman was like uh I just support everything you do in bringing all the non-compliance I'm your biggest fan crypto bro billionaires all the non-compliant crypto bro billionaires is like non-compliant crypto bro billionaires you didn't say and that's specific like string of words but he didn't say crypto bro billionaires I think it's a an instructive moment for the standpoint of things that we've maybe weren't thinking about before we saw with this crisis where somebody got on social media characters now

we're talking about the background the banking crisis yeah oh a social media it's social media I think it's such thing uh uh the CEO for Charles Schwab ball bettinger voiced the same concern that I've been talking about the last several days which is about short selling it would seem to me that if we have a situation where we have a lot of banks that are that are not very liquid right now that there's some concerns about that somebody could play some funny games with uh our not just the banking industry but our economy as a whole it could be somebody trying to make money it could be a foreign actor who wants to do something different to our economy so the question becomes uh if you want to

so I guess what my question really is is two parts number one do you have the ability to stop a short sale problem that arises within the banking industry for instance uh based on its threat to the entire industry um both buying a security going long it's called and shorting a security and important parts of our Capital was he talking about reports of the influence of social media and illegal security prices long and to go short it's a way to express and help Capital markets work and so we facilitate that what we guard against what we Gord against is people treading on material non-public information and we gourd against people

uh doing uh manipulative acts in the market so it's it's really uh well my question is very simple you have the authority to keep this this abuse from happening this manipulation from happening for the wrong reasons understand that as part of the market structure it's part of Market investing but if people are doing this to try and cause a run on the banks to undermine our economy undermine the assist the industry for their own profit or as a foreign actor to do something do you have the ability to stop that that's my question we most definitely have the majority of I've run on the banks I mean if the banks are the bed you gotta press that sell button and right against manipulation and Capital Market my questions

across the board ban on Short Selling so you can stop this from happening that's not a good idea I I don't I don't believe that Congress has given us that Authority sir we've given authority to deal with individual acts of manipulation and chasing after fraud do not give Gary that Authority please someone from Connecticut Mr heims to recognized for five minutes thank you how about this guy David chairman look him up and uh welcome chairman Gensler I don't have Blazing Saddles today but I've got uh Lionel trilling Lionel trolling was a uh American critic uh an intellectual who in a book in 1950 called the liberal imagination said that American conservatism is not so much about ideas it is quote a series of irritable mental gestures which seek to

resemble ideas that was true in 1950 it's certainly true here today and to illustrate that the head-spinning irony of where you're sitting right now is that less than three weeks ago the Federal Reserve the FDIC and the treasury were sitting in precise in a hearing about crumbling of Silicon Valley bank and to hear the majority at the time it was all their fault they had done too little and they'd done it too slowly something you might remember as you get accused of doing too much too quickly I promise you that when something goes wrong under your jurisdiction you'll be sitting back and that's it having done too little too slowly now never mind that Silicon Valley he had one Banker on their board of directors and zero Bankers on their risk management committee never mind

that the vast majority of their deposits were unguaranteed never mind any of that stuff it was their fault and I promise you when something goes wrong under your jurisdiction you will have done too little too slowly have been now in the majority for 100 days you were here on day 100 did you receive an invitation from the Republican majority prior to the invitation that brought you here today we work with the chair to come when he wanted me to be here have you said no to uh to uh to a majority invitation to testify we'll work and whenever the chair wants me here I'll be here okay all right having gotten that off my chest um I do have a serious question

um I've long been concerned by the fact that an awful lot of our Capital my markets are migrating to private markets you mentioned it in your testimony you point out that the amount of liquidity in the in the private markets now exceed actually the banking system it's a valid concern um if you look at public versus private Market offering since 2009 registered offerings are more or less flat since 2010 anyway and exempt offerings are really skyrocketing the challenge there of course is that individual retail investors by and large can't invest in private offerings I worry that profitability and good deals will migrate to those private offerings that

accredited investors and institutional investors that's a term of art for people with substantial amounts of money you can invest in and Retail investors will be left with an increasing at least small um set of opportunities to invest in the American people markets so with my two minutes remaining Mr chair um I think it's fair to consider the possibility that the regulatory structure which I have long supported around public offerings creates some Arbitrage for issuers versus the exempt market so I just want to give you two minutes to reflect both on the proposals that you've made with respect to Market structure but also overall big picture are there things

that we can be doing along the lines of the jobs act or anything else that would hopefully reduce some of this Arbitrage between the public and private Equity markets good question this guy's neutral on crypto right am I right about that I think that the American economy has benefited by slightly supported by vibrant robust let's see that too public markets and private Capital markets my dad never had to tap the private Capital markets of like today but he talked about his dad like a handful around a small business with 30 or 40 employees and he didn't tap the public markets I was at Goldman Sachs for many years before it was a public company and we were I was a big company that tapped only private market so I think both have

a role to play in terms of our regulatory agenda what we're trying to bring is greater efficiency and competition in the asset management of private Capital these this 20 25 trillion dollars of assets under management by hedge funds and private equity and the like and through greater transparency of their fees their performance and their side letters where they might be you know having different deals and this is really going to help the retirees in all of your States because most of your states are invested in private equity and in hedge funds as the limited partners it helps the state treasurers

it helps the endowments it helps the people behind that if we can bring greater competition in a field that probably has just two percent it would be half a trillion dollars a year in revenues to the to the asset managers this is what I meant earlier it's important that our Capital markets work for investors and issuers not the middle Maybe but I was that an answer I'm just expecting thank you Mr chairman well now there's a gentleman from Michigan Mr heisinger for five minutes uh thank you Mr chair and uh I'm glad to see you here chair ginsler um and I do want to congratulate you on finally appointing a permanent Inspector

General yesterday a little late coming in my opinion but uh in late February I'm going to jump right in late February chairman McHenry Senator Scott and I sent you a request of documents and information on your climate disclosure rule uh the fact is uh private you have produced only publicly available documents in response to that request I'm going to highlight a couple of those you sent us this is probably not any crypto questions here then this is probably there's probably nothing nothing about crypto okay so at the the very first question Ryan the thing that started this whole thing off Patrick McHenry which which is the guy like doing the traffic bullish crypto people yeah came in so hot about uh hey Gary uh

is ether security and that was no way that was the first question and he and Gary Gary would like start to talk and and then he would cut him off and be like no no don't talk just say is ether a security and he did that like first serious time most of his time to have ass who is so uh Patrick McHenry can we get him on bankless I hey Dave can we get Patrick okay so Patrick McHenry and he came out and he's I'm sure a coinbase under coinbase I'm sure he's uh in favor right I'm sure I can't I can't imagine he's very supportive of crypto supportive yeah remember he's a member of the blockchain caucus

oh yeah okay great yeah that's like as supportive as it gets and so like grilled him on it and then and then he that he got Gary in a little bit of a trap but then he ran out of time yeah yeah there's no overtime huh there's no over five minutes you're done no uh and then like and then it went to Brad Sherman and Maxine Waters uh and so I I'm not realizing that like I pulled up the magazine Waters uh window in front of the window I'm screen sharing so it didn't actually make it to the stream but like I was pulling up the Maxine Waters um video of her blowing SPF a kiss wow giving Gary Gensler like t-balls to just like slam out of the park oh my God

so but like it it's cool but like do you think it'll get anything like anything will get done as a result of this I mean what is the um I don't know if what there's no needles because like lines are being drawn though right lines lines are being drawn some people are coming in hot and asking very good questions that like rile up the crypto people and make me excited and then it's like 10 minutes of just like political like circle jerking and nothing really moves because this is not that this whole set this is not a session on uh crypto specifically it's just oversight of the SEC it's like all of the things that we're upset at the SEC for doing we're just going to you know talk about them in

this format yes it's not it's not explicitly about crypto although this is he was summoned to testify for uh the actions of the SEC and so he is here because the Senate finance committee thinks the SEC is like off on the wrong track largely because of uh crypto there's some other things as well there's some like climate environmental concerns that have been brought to the table but like crypto is a main theme here okay so who is the guy who called for I you know I was out yesterday David I had uh jury duty you know civic duty there I'm done see what you're talking about I think somebody called I I believe uh Congressman called Warren Davidson here you go yeah yeah this is

what I saw so he said this yup to correct a long series of abuses I'm introducing legislation that removes the chairman of the secretaries and Exchange Commission and replaces the role with an executive director that reports to the board where Authority resides former chairs of the SEC are ineligible and he is quoting a uh tweet from I think Paul um yeah yeah from coinbase from coinbase who is quoting a another dissent I dissent post from Hester purse who who should be the SEC Chair by the way um but basically what this lawmaker is doing and so go back to the lawmaker tweet for a second who's this guy Warren Davidson Warren Davidson okay Warren Davidson former Army Ranger Ohio's 8th

District in Congress working towards the government uh small enough to fit within the Constitution okay that sounds very uh right-leaning Republican right yeah um it also follows Bank list by the way follows the bank follows Bank list but he's basically saying I don't want Gary Gensler or any other SEC chair to be Emperor King right yeah it should actually report to this board like one individual chair shouldn't get to make all of the decisions in this regulatory body I don't know what the chair would would actually uh would actually mean like would the chair be all of the commissioner the chat saying that they're talking about SPF let's talk investigative matters confidential don't hold on a second don't hide behind the doj because then it sounds like I need

to send letters to the doj and not to the SEC about the SEC charges so we'll be following up with this after uh after this my time has expired yeah I think we might miss something sorry it responds to our questions would be appropriate uh well yeah yeah McHenry was really of Ohio for five minutes thank you Mr chairman thank you ranking member and thank you to our witness today Mr Gensler um thank you for also responding to us and taking the time to talk to me about the SEC and and meet with our team and being here today um kind of staying in this uh same uh questioning with the climate rule uh as

you know and many may know business owner myself so I think I know as well if not better than most of the unique challenges small business what were we talking about we were talking about uh Warren Davidson you're muted yeah so he's just saying remove the chair yeah and put the power back in the board and I believe that the board is that all of the collective Commissioners is that where the what the board is that reports to the board I don't know what he means by the board yeah I don't know exactly what this entails but it does seem to entail like um get rid of Gary that's for sure yeah and make sure that a chair doesn't have

this much power moving forward it's a bit more distributed because like my whole take is like what's the point of all the other SEC Commissioners if it's just Gary's way or the highway like what what's it what's what's Hester purse's job what's she doing posts yeah other than badass descent posts which has to be the most frustrating thing uh yeah um anyways that we've gone through all of like the recent Gary Gary tweets um all right about all this stuff uh and so now it's kind of like we're more or less I'm assuming we're more or less into the long tail of this hearing like maybe somebody comes in with some crypto conversations from crypto takes there's not too many people here there's like 20 people in this hearing and have they talked about SPF

uh fgx and SPF yeah um so there was a moment in which uh Gary had to like say without really being too specific that like yeah we totally filed charges against SBF and FTX and then that's when I pull up the fact that he he did it in December not November and then and then also pulled up the fact that he met with SBF like six months prior But like everyone already knows all this stuff I mean they should be taking them to a task on that though right yeah and like so some people are I I know like there's other interests and other senate members want to talk about other things and crypto's not the center of the world but like I'm feeling a little blue balled about what could be said to Mr Gensler

here in the setting of uh your mission and I want to take a moment to highlight some of the investors because we can go back in time oh I can show you McHenry Oh you want to see McHenry Houston firefighter well okay um we expect uh to get through a lot leadership set their official assets offered as part of an investment contractor subject to Securities laws and more importantly how these firms should comply with those laws you're punishing digital asset firms for allegedly not adhering to the law when they don't know it will apply to them it's nonsensical

the administration said it the FED has said it and I'll say it again Congress must provide clear rules of the road for the digital asset ecosystem because The Regulators cannot agree regulation by enforcement is not sufficient nor sustainable your approach is driving Innovation overseas and endangering American competitiveness nice the ranking member and I have worked for more than a year on this issue and I'll continue to work uh we'll continue to work this Congress but let me be clear our goal is to make law we expect you to play a constructive role in that process uh

now next up we'll discuss your overly aggressive and very expensive rulemaking agenda in the past two years the commission has proposed 53 new rules at a Breakneck Pace that's twice as many rules as your predecessor Mary Jo White and Jay Clayton in the same amount of time this raises serious concerns that the rulemaking process is being rushed undermining the quality of our Securities laws and risking negative unintended consequences these concerns have been echoed by senior Personnel at your own agency and there are similar concerns raised while you are at the cftc time and time again you've cut public the public out of the rulemaking process

with unreasonably short comment periods even for major rules like your disastrous climate disclosure proposal and Equity Market structure overhaul you fail to justify these significant rules with thorough with thorough evidence careful studies and even cost benefit analysis I look forward to hearing why the commission is rushing to make such dramatic changes in our public markets based on poultry economic analysis and limited public input finally it appears you've been so busy weaponizing the security Exchange Commission to push your agenda that you've forgotten a key pillar of the commission's statutory Mission Capital formation

unlike you this committee is working to strengthen public markets help small businesses and entrepreneurs and increase Market access for all investors to ensure the long-term growth and prosperity of this country I'll close with this chair Gensler your response is to Congressional inquiries have been unacceptable you have a constitutional duty to conduct your business and your in your agency but we too have a constitutional duty to conduct oversight of your agency under our jurisdiction we intend to do that and we'll continue to do so aggressively but as your duty to respond and comply with Congressional inquiries if you continue toward this institution

By ignoring our our requests and providing incomplete responses we will be left with no choice but to pursue all avenues to compel the information or documents we need compelling and the American people need and deserve to see themselves accountability so with that I yield back okay so that was his opening statements that wasn't sure we represent these uh let me Zoom backwards a little bit four proposals thank you thank you narrative as well okay here we go uh I have about 35 seconds is there anything you'd like to share with us to if I yield my last 30 seconds to you

let's see what he says well if I could just note something about you you mentioned your hearing about the recent events in the markets and I would note there were three banks that failed uh and there was a handful a day so this last those four or five days and two of those Banks the first and the third that failed silvergate and uh signature he's about to blame crypto engaged in the crypto business I mean some would say they were you know crypto Banks wow third the biggest Silicon Valley Bank actually when it failed you saw this countries the world's second leading stable coin uh had three billion dollars involved there d-pag so it's interesting just how this was all you thank you

that's what he used to say 35 seconds in a wrong fashion thank you Mr chairman wow sure ginsler you've publicly stated that and I quote our markets are the Fisk are the finest in the world and that quote retail investors have greater access to markets than at any time in the past yet despite these statements which I wholeheartedly agree with you still released four proposals last December order competition best regulation best acts tick size rules 605 that completely upend those markets and remake them from top to bottom there is a strong possibility that these four

proposals could make Equity markets more costly less efficient and overall worse for retail investors throughout these proposals I or quotes uncertainty represent these people in our Equity markets are not poses before okay you want to go back to you yes or no answer just a security thing for the SEC to amend or change yeah finra's rules which would include its current best execution rule yes or no uh yes I'm aware we have that Authority yes or no do you believe finra is incapable of maintaining and enforcing an adequate best execution rule I think this is an important rule that

we should have at the commission level yes or no are they uh thank you chair gunzer I'll now recognize myself for five minutes um ether is one of the um most popular digital assets and powers of ethereum blockchain uh back in 2018 then SEC Corporation Finance director Bill Hinman uh stated that you believe ether was not a security uh last month cftc chair uh Benham expressed his view that ether is a commodity uh the State Attorney General of New York asserted in a court filing last month that ether is a security clearly an asset cannot be both a commodity and a security degree

um I it actually all Securities are commodity under the commodity and exchange act it's that we are excluded Commodities but I would agree that a security cannot actually also an excluded commodity in an included commodity I'm sorry chair just uh talk about the commodity exchange act more precisely okay so do you recognize uh how would you categorize ether then I think that the general sweep of what Congress did not just in the 30s but as Amendment I'm asking you you're setting your chair now to make an assessment under the laws as exists is either a commodity or a security without speaking to anyone I know you've

repeatedly said you're not going to speak to one except you've spoken to one Bitcoin so I'm asking you to speak to a second one the second largest market cap here and speaking to the tokens there's 10 to 12 000 if there's a group of entrepreneurs I'm asking about one public is anticipating a profit based on the I'm asking a specific question chair ginsler I said this in private this should be no shock to you I'm asking this question is ether a commodity or security and again it depends on the facts and the law and if there's a group of I'm asking about the facts in a law sitting in your seat and the Judgment you are making and so uh Mr chair I think you you would not want me to

pre-judge because you have prejudged on this you've taken you've taken 50 enforcement actions we're finding out as we go as you file suit as people get Wells notices on what is a security in your view and your agency's view I'm asking you a very simple question about the second largest digital asset simple question my view is if there's a group of individuals in the middle middle that the public is all right so let me just ask a second question do you think it serves the market for an object to be to be viewed by the Commodities regulator as a commodity and this jury is regulator to be viewed as a security do you think that provides uh safety and soundness for for for the product do you think it provides consumer protection do you see do you think it serves the value

of innovation I think no should be a very simple answer for you here I think that uncertainty is bad is it not and I think that Congress has said that there's one agency that's secured as an Exchange Commission under this committee you won't answer my question and you're the head of that agency so give me a break come on I'm answering it in the generic because you would not want me to speak about any one set of facts and services we would okay so but you've already spoken have you said anything about Bitcoin my predecessors and the agency itself has spoken to them okay but you're not willing to do the same about ether okay so let me just step back there's a lack of clarity here in the marketplace

can you at least agree to that I think that the clarity is there the law is clear all right let me let me be explicit about this the market doesn't see it your regulatory actions and the cftc's regulatory actions say that there's a great deal of uncertainty here it is the intention of this committee to fix that uncertainty and actually uh provide a sound legal basis for this so let me get into your rulemaking uh process so you promote you've proposed 53 rules in two years Mary Jo White proposed 23 Jay Clayton proposed 26. at the same time your agency is consistently provided less common period than than either of those either of your predecessors just as one example when

the SEC made significant changes the U.S Equity markets in in 2005 uh for regulation nms the commission broadly solicited public feedback held numerous round tables issued white papers and concept releases fast forward to today you've proposed four Equity Market structure proposals that would impact millions of retail investors and you provided a mere 60 days of comments on a hundred on one thousand six hundred pages of Regulation we're on equities now let me ask you this do shorter comment periods and less public interaction improve rulemaking we actually put out the equity march to take common law has expired with that I'll recognize the ranking member wow

more than a third in West Virginia okay we're talking about real estate now yeah so that was like the hobby that was awesome it was awesome yeah and we haven't really had any moment like that since I don't know what we just missed but the comments didn't say that we missed anything so uh I mean that was that that was worth the live stream just that yeah Patrick McHenry grilling him on the question that all of us have asked about is ether a security and you're not answering the question yet you say there's Clarity how can there possibly be you like stumble and stutter and then your next answer is like oh yeah there's Clarity there's complete Clarity and it's this Clarity yeah if there's Clarity tell us what the second largest market cap crypto asset

actually is and by the way he said I love his comments like this should not come as a surprise to you I told you I was going to ask you this privately before we got in the public stand and now I'm asking you this and you're just waffling you have no answer absolutely he started to say when there's like a group of coordinated actors implying that there's a group of coordinated actors around ethereum like he wants to say ethers are security he totally does yeah this it could not be more clear as if all of his actions weren't clear I mean when he got 30 seconds that right other member of Congress asked him a question what's on your mind Gary what do you want to talk about I just want to remind

everyone that uh signature and silvergate were crypto Banks and they almost let a major stable coin you know fail and it's their fault that for the banking run that's what he uses 35 seconds for incredible it tells you a lot tells you a lot David I've uh are you gonna continue monitoring this I've kind of seen what I need to go to that starts in two minutes yeah um bank with nation uh how badly do you want this stream to continue I've been I've been thoroughly enjoying because like you just like add commentary when it's time and you can like fill in the gaps wait is that McHenry again anytime well he's just passing it from person to person is what he is the chair of this committee then

it seems like yes yeah yeah Chief accountant this is this is not crypto related this one for Mr Barr yeah I I gotta go though David so uh shift uh as uh chairman Powell recently noted historical practice as custody assets have always been treated as off-balance sheet Sab 121 changed that and I'm concerned about the consequences because banks have Capital liquidity and other Prudential requirements that non-bank custodians do not have meaning that Banks cannot offer digital asset custody services at scale without significant balance sheet implications if banks cannot provide digital asset custody services at scale they simply

will not offer those Services which could lead to Market participants not having Bank grade custody solutions to pick from and will turn to Offshore solutions back in the Bahamas diminishing American competitiveness and compromising investor protection chairman Gensler has it occurred to you the irony that at the same time you pursued Sab 121 which is effectively precluded highly regulated Banks from offering customers the Safety and Security of segregated digital asset custody services not a single one of the four thousand five hundred employees under your supervision at the SEC noticed that FTX was allowed to co-mingle customer

funds allowed FTX to trade settle custody lend and borrow digital assets without institutional grade custody I'm actually quite proud of the staff that put out that uh staff Academy bullets in because what they said is that public companies not just Banks but they're public companies needed to put on their balance sheet if they had their customer crypto and it's what we subsequently found in in bankruptcy court Celsius bankruptcy and others that in bankruptcy investors just stand in line well reclaiming my time reclaim my time did you or your staff consult with Prudential Bank Regulators was there any

interagency interaction on Sab 121 before after this was issued in March of 2022 given the ramifications that this effectively prevents well-regulated Banks from providing digital asset custody Services thank you yeah there is a significant dialogue beforehand with accounting professions at the big four and others because this question kept coming up but there has been consultation about this with the bank Regulators subsequently well I again I I find it very interesting that that that nobody at the SEC under your supervision noticed that FTX a one-time 32 billion dollar company was run on QuickBooks uh private funds rulemaking uh you have repeatedly stated that increasing

competition in the private fund Market is one of the primary objectives of your proposal but last week the committee on Capital markets regulation issued a competitive analysis of U.S private private Equity Fund Market its key findings concentration is very low and four times lower than the concentration of the public mutual fund industry the number of fund advisors and funds is steadily growing the range of investment strategies available to investors is increasing at a significant rate barriers to entry are low effective management fees have been declining performance net net of fees and portfolio diversification benefits outmatch that of public markets demand from investors is growing this analysis directly refutes the entire so I missed part of that David of your rulemaking Equity why why can't we have Banks

custody crypto right and what did Gary have an answer I heard the question by this is the first part of his answer I don't really I don't really trust Gary's answer anyways um but like and this is actually like something that is weird about the crypto industry is that we have exchanges that are also custodians you deposit the coinbase so you can trade on coinbase right you deposit the Kraken so you can trade on Kraken in normal Trad world you have custodians and then you have exchanges and those are actually separate entities right we haven't had that ability to have segregated checks and balances in the system that we've had which we've determined as good because Banks can't custody crypto or they don't want to because of either compliance or fear of Regulation or extra scrutiny and so we don't have that

and so that's that's what that line of questioning was about this is interesting from Andy Barr Congressman Andy Barr who is unclear on crypto according I didn't get that could you try again no Siri just triggered was that Siri sorry I see here is he listening to this series hanging out with us yeah okay yeah so like that guy was is actually unclear on crypto okay I found this on the web for type series check it out stop stop shut up Siri oh did I just was I just mean to a robot yeah Brooke David's rule all right well okay I'm sure there's a few more things but uh I do have to go

for real this time I just wanted to get that okay all right say everybody say about around everyone bye guys enjoy uh okay I'm really sorry banquet station but I'm gonna have to also go because there is a talk I need to go whoa wow holy sh you know wow look at that outfit whoa oh I was not expecting that Mrs Presley uh okay I'm gonna drop the YouTube uh Link in the chat I'm also going to put it in the description of the video uh I'm really sorry guys there's a polygon ZK evm talk that I gotta go to uh but I promise that talk is ultimately gonna become bankless content uh so that's why I hope you can forgive me for ending this I really enjoy all of you guys being here this has been a ton of fun

anytime Gary Gensler gets into the hot seat I think we will totally do that uh do this once again uh if you enjoyed this live stream please like the video uh also subscribe to bankless uh we are not fans of Gary Gensler and if that's your deal you should definitely subscribe to bankless uh because we talk about that all the time uh so thank you everyone for tuning in uh again I will put a link to the actual uh stream coming out of the GOP Financial Services YouTube account uh in uh in busted comments and then also the YouTube description uh like And subscribe thanks everyone peace