Hester Peirce: The Next Era Of Digital Assets Is Here (What's New)

Transcript

Do you think there's validity to these pre-IPO markets? This I you know, I think one of them had it pretty with the SpaceX IPO today. The the price discovery was relatively consistent with where the the IPO inevitably launched, but do you think there's validity here? I'm just curious if you if you think that there's a path maybe for these to come and become a a primary vehicle for retail investors to get exposure to these companies pre-IPO. >> I mean, I think what you're describing is there's a real retail appetite to get access to these companies earlier in their growth cycle and and that's why you know, my preference is that we work on figuring out ways to to to encourage companies to um to go public earlier and to say, you know, it this is this is a a

good framework. We we are trying to create a framework that gets investors the information that they need, but also that doesn't burden companies um so that they don't want to go public. There are other alternatives out there. As you say, many of them are available um overseas to get economic exposure to companies. Um you know, if things like that are to trade in the United States, they would have to go through the processes required um in the US if you want to sell a security, it has to either be registered or subject to an exemption.

So, people would have to figure out how to how to uh comply with that. And then in terms of perpetual markets, I mean they're they're they're an interesting that's an interesting market uh an interesting product and I think as as um the CFTC is is looking at them and trying to figure out how to how to bring that market onshore. Um you know, that's that's interesting to watch. Some of those um could potentially be within our remit and so um that's that's an area where I talked about the CFTC SEC harmonization.

One of the things we're trying to do is is make sure that um everyone's on the same page about where product is regulated. >> And And what does the harmonization look like in practice? Maybe using perpetuals as as an example, um given that these things are relatively new, uh maybe they don't fit as cleanly into the regulatory structure of a security or a commodity or a future. Um How do you and the CFTC go about analyzing some of these new technologies, ultimately dissecting it, putting some clear definitions?

How have you been able to find harmony with the CFTC, whereas other regulatory regimes haven't? >> Well, it's a work in progress. I mean, we're doing a lot of joint work to think through these issues, to look at look at different products, and and um and discuss them. But, we're also looking for people to help us do that. Um and so, we're looking for feedback from the public. And um we welcome that feedback, and I think you'll you'll see um that that there are a lot of opportunities to come in and weigh in on that process. So, if folks have a product that they are trying to launch, and they want to know where does it fit? Um we we do welcome specific requests, uh also.

>> Abs- absolutely. Um Commissioner Peirce, I I I think I I'd love to just kind of understand, you know, as maybe a longer-term view on, you know, given that tokenized equities are are progressing, uh tokenization in general is progressing, and you're sort of looking at the horizon, and you know, maybe riding off into the sunset as as we approach your uh you know, your tenure how how how do you think that this space in general is going to What What is your hope for how how you'd like to leave the crypto task force project crypto.

Um, these have been very, very strong initiatives. Um, and as you transition out, what is what are some of the the things that you hope are carried carried about? And and how can we ensure that these are carried through in the coming regulatory regimes? >> Well, I I hope that we'll just keep an open mind about about innovation and about um, the possibility of of improvements in the in the financial world that we regulate. I think um, often regulators can get very comfortable with the status quo because we know how it works. So, we we sort of stick with it the way it is.

So, an open-mindedness I think is important. I'm not concerned about that with Chairman Atkins. He is very open-minded to thinking about um, how new technologies fit within the existing regulatory scheme and he's he's open to the idea of adjusting rules where we're needed. Um, I I think that I'm not too worried about how things will be after I leave because there's real momentum here at the CFTC, in Congress, at the banking regulators to really think about these issues, try to um, come up with rules that are appropriate and make sense. Um, so I think that it's

it's something that I look forward to watching from the outside. You know, I think there are going to be areas that that people debate about and I and I hope that we will um, respect certain basic principles. The ability of people to self-custody is very important. That should not that should not be compromised. Um, the ability of uh, people to protect their privacy and their financial transactions is very important, should be protected. Um, the ability of developers to develop code and put it out there without having to get permission, um, from someone to do so, um, and

so, these kind of principles I think are are really important. We obviously have seen a lot of hacks and bad activity and I think it's in everyone's interest to try to prevent bad actors from, um, taking advantage of the technology for their purposes and and and I I love seeing um industry-led grassroots initiatives to combat some of those kinds of things, um, and that's important, but it really for me, the biggest concern is that we will, as we draft these rules and statutes, will respect those really core principles, um, and I think we will we will find that that will put us in a better place, um, at the end of the day.