The US Crypto Awakening

I think our baseline in this country needs to be permissionless innovation, right?

You shouldn't have to ask permission to identify a problem and go solve it.

Crypto itself, I think one of the things that makes it interesting is it's a way to transfer

value across the internet the way you used to only be able to transfer data and so that's

a very powerful concept.

The best way you can protect investors is to make sure there's a dynamic marketplace

in which new people with better ideas about how to do things can come in and move the

old products and services.

Hi everyone.

This is the TechSurge Deep Tech Podcast presented by Celesta Capital.

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I am Sri Ram Viswanathan, founding managing partner at Celesta Capital.

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Cryptopolicy in Washington has spent years stuck in a gray area, shaped less by clear rules

than by the threat of enforcement.

What is starting to change?

Commissioner Hester Perse has spent years inside the SEC arguing that policy ambiguity

is not a form of protection.

That it does not keep bad actors out, but actually it keeps good ones from building.

In 2025, she was designated to lead the SEC's first crypto task force.

In this conversation with Commissioner Perse, I dig into this major shift in US Cryptopolicy,

where policy stands today, what it means for startups and institutions working with crypto,

and what it takes to build a stable regulatory framework that lasts beyond any one election

cycle.

Before we start, it's helpful to define a few key ideas or concepts.

Crypto has become a catch-all term, but it actually covers a variety of things that are

fairly well-known cryptocurrencies, including Bitcoin, Solana, or Ethereum.

There are stablecoins, which are a type of cryptocurrency designed to hold a steady

value, usually pegged one-to-one against a federal reserve asset like a US dollar.

Then there are the blockchain networks underneath it all shared decentralized digital ledgers

that record transactions in a digital chain, a way participants can verify without

a middleman.

And now, there is tokenization, which simply means taking a traditional asset like a bond

or a fund share and translating it into a digital token on a blockchain ledger.

With that, let's dive in.

Mr. Pers, thank you so much for joining, and it's a delight to be able to talk to you.

Well, thanks for having me on TechSerg.

It's an honor to be here.

I, of course, have to start with my disclaimer, which is that my views are my own views as

a commissioner, not necessarily those of the SEC or my fellow commissioners.

What do we start at the point where we can discuss how you think about crypto policy itself,

and what are some of the high-level priorities that you think that we should be addressing?

I think about crypto policy not really any differently than I think about other types

of innovation policy.

When new things come into our markets, we need to take a sensible approach to regulating

them, and that means understanding that we probably don't understand what the technology

is going to develop into.

So we're trying to provide a flexible enough regime that the market can kind of figure

out what it wants to do with the technology, but we're also trying to provide enough clarity

so that people feel comfortable stepping into that space and innovating in that space.

And really, if we do that, then the market kind of takes care of the rest.

Right.

As a regulator, what is the starting point?

Is it investor protection, its market structure, efficiency of the market?

Is it innovation policy or financial inclusion, competitiveness?

There are a whole bunch of things.

So give me a sense for how you prioritize these sometimes conflicting objectives.

The SEC has three objectives, investor protection facilitating capital formation and fostering

fair orderly and efficient markets.

So we're always thinking about those three objectives as we look at anything.

Investor protection obviously is central, but I don't think it's in conflict with those

other two objectives.

You're really trying to figure out a way to get investors the information they need to

make decisions for themselves, but not withholding from them opportunities to participate in

markets by stepping in in a paternalistic way.

So that's really what we're trying to achieve is the balanced approach to investor protection

that recognizes opportunity is important, but also recognizes that people should be able

to get the information they need to be able to reliably invest.

You did not mention national competitiveness or national security as one of the objectives.

Is that because it's just lower in the priority or is that not even a consideration?

National security is not the SEC's mandate, so there are other agencies that deal with

that.

You know, we're taking our guide from Congress.

If Congress tells us that we need to pay attention to something we certainly do, and we

work with other agencies that have that mandate to make sure that we're not doing anything

that's inconsistent with what they're trying to do.

In terms of competitiveness, we do have competition as one of the things that we are supposed

to think about, efficiency, competition, we're supposed to think about those kinds of things.

But in my view, the way to develop competition is to have clear rules so that when people

go into a market, they know what the playing field they're operating in looks like.

And then if someone engages in a transaction and there's fraud, they know that there's

someone there to police that fraud, that's really the best thing we can do for a competition.

Keep barriers to entry low so that new dynamic competitors can come in, not try to micro-manage

competition.

Now, I think the financial industry and the markets that we regulate in particular, we've

not always done a good job there because sometimes we have built up regulatory barriers to entry

that have meant that incumbents don't get challenged by people from outside because it's

just too hard to get in.

And so this is a good moment.

Crypto offers us a good moment to kind of reflect on that and make sure that we're not putting

up barriers to entry that are keeping would-be competitors out.

It's not to say that our markets aren't dynamic, they are, but I think if you could have

even lower barriers to entry, that would be more dynamic.

I obviously don't live in this world from a regulatory policy standpoint.

I'm an investor in companies that create innovative solutions in this area as much as

other areas.

I sort of think about what you do and the commission does in this area as really providing guardrails.

While at the same time ensuring that there's a mechanism to not come up with artificial

friction or breaks that slow innovation, can you talk to that?

Can you talk about how do you balance these two objectives?

You have to protect, but at the same time you cannot be an impediment for innovation.

So how do you think about that?

What we should be trying to do is set out objectives and say if you can meet this objective,

we don't care how you do it, we just want you to meet this regulatory objective.

And something that we've done in the past has been more taking a prescriptive approach

to say, we want you to do it this way, and that sort of cuts down on the imagination

of the people in the industry because if they just have to do what the SEC says, they're

not thinking of creative ways to get to the same place more efficiently.

So we'll get into the specifics of some of those policy objectives, but let's just

ground ourselves, what do you include in crypto?

And obviously, currencies and stable coins and tokens and a whole variety of things, but

just give us a framing of what is included, what is not included.

Yeah, I mean, crypto is a broad term that has been used to mean a lot of things.

You have the commodities like Bitcoin that fit within a particular category.

Then you have digital tools, you have things that people are treating as currencies.

You have assets that are real world assets.

They could be securities and you take them and you tokenize them.

It can mean a lot of different things.

Crypto can also refer to the technology underlying it, the blockchain is underlying it.

So you do have to be a little more specific when you're talking about it.

We often just lump everything into one category and that really isn't the right way to think

about it.

Yeah, I think it's largely because Bitcoin as an asset has become so prominent in the market

as one of the leading commodities as it were.

It drowns out some of the other important aspects of the overall technology itself.

But if you were to give a assessment of where U.S. policy, and by that, I just don't

mean your tenure, but in general, from the time that we started thinking about this,

where do you think U.S. crypto policy stands today?

I mean, if you were to give it that grade on, you know, we have so much more to achieve.

We're halfway through.

How would you think about that?

I mean, we have a lot more to achieve.

And I think the goal is not to say we're done with cryptocurrency because things will change

too.

And so we'll have to keep working on cryptocurrency.

But I think we are in a better place than we were a year ago.

We've made more progress at getting toward regulatory clarity.

There's work being done on the Hill, on the Clarity Act, which is the market structure

legislation for crypto, getting that in place will be helpful in providing a durable framework.

But the SEC and CFTC and the banking regulators are all taking, we're taking our own pieces

and we're working on that.

We have the Genius Act in place which covers stable coins.

So I think we're making progress, but there's still a lot ahead to be done.

So if I were to frame this as, you've got the crypto commodities, if you will, all the

currencies.

And then you have tokenization as a big basket, which is above and beyond, you know, just

the crypto related assets, but it could be other securities as well.

And then you have, you know, CBDC or some of the, you know, stable coin related things

whether they are tied to fiat currencies or not.

So if you were to think about it, where would you say there is a greater degree of uncertainty

and still as perceived by the market where you still have work to do?

What would you say?

I mean, we have a lot of work to do, but one thing we did do is we put out an interpretation

to say, here's how we're thinking about crypto assets and whether or not they fit within

the securities laws.

And I think that was a helpful piece of, of guidance for people to sort of think about

this.

There's been a lot of conversation around the how we test and around, so the how we test

deals with something, we have a broad definition of securities in the US.

One of the categories is investment contract.

It means you give someone money with the expectation of profits based on the efforts of that

other person.

So you just have to provide the money, then you sit back, they do something and create

value for you.

This is the area that has caused a lot of people consternation.

When is something that is actually not itself a security packaged with promises that turn

it into a security and every when that, when that thing moves, it's a securities transaction.

And so we tried to provide some guidance around that in this interpretive document.

I think that was helpful.

But there's still a lot of questions around how do you do capital raising, involving crypto

assets, their questions around what are tokenized securities?

Are they the same thing as the underlying security or is it something separate?

How do you tokenize something and does that affect what it is?

So we're working on also providing clarity there.

We've put out some guidance on it, on a sort of how to think about tokenized securities,

but we have a lot more work to do there.

If you're a startup or a blockchain crypto related company, what is it that you would

say is genuinely better for that startup today from a regulatory policy standpoint relative

to how it was two or three years ago?

What has it changed?

Well, I mean, I think there are a lot of things that have changed, but one is that if you're

trying to do something in the United States, we want you to come in and talk with us.

We want to figure out a way for you to do something that's commercially viable, but also

aligns with our regulatory objectives, right?

So that is a conversation that we want to have with the people actually trying to do the

things.

And before what it was is there wasn't any help in thinking through how the regulations

applied in this area, the only help you got was by looking at enforcement actions.

Well, you also have the prospect of a potential negative action, which just didn't know whether

it was going to happen or not.

So there's a lot of uncertainty, it's a hammer, you just don't know when that might come

down.

And in your view, that uncertainty has changed.

It's changed.

And it's not to say there's no possibility of enforcement.

If you do bad things, if we have the authority, we're going to come after you if we don't

have the authority, we're going to try to find someone who does have the authority.

So it's not a permission to do anything phase, but it's saying if you are trying to do something

valuable for you're trying to solve a problem, you're trying to make a product or service

that people want, we want to help you figure out how to do that in a way that's consistent

with our law.

You know, this current administration has obviously become far more friendlier to crypto

and ensuring crypto becomes a very key strategic part of the overall asset base of the country

and all of that.

In a way, we can sort of make the argument that whether it's semiconductors or manufacturing

or critical minerals or any of these things, these are national security and supply chain

resilience related technologies.

Would you think of crypto as potentially providing a strategic national advantage relative

to where the markets can be globally and how the U.S. wants to maintain its advantage

and potentially, you know, market leadership globally?

I mean, how does that fit into your rulemaking?

Yeah, I mean, I want the U.S. to be the place where everyone wants to come and build stuff,

whether it's in crypto or something else.

I want this to be a place that people say, you know what?

We can find capital there.

We can find clear rules there.

We can find sensible law enforcement there.

And so we at the SEC have a role to play in that crypto itself, I think one of the things

that makes it interesting is it's a way to transfer value across the internet, the way

used to only be able to transfer data.

And so that's a very powerful concept.

It can be used for a lot of things.

I think it's also we're seeing more and more people all across the world use the U.S.

dollar in the form of stablecoins.

That's also interesting for us.

But I mean, really my job is not to decide whether or not people prefer one technology or

the other.

It's to say, if you want to build something, we want this to be the environment in which

you want to build it.

Tokenization can sound abstract, but the basic idea is quite simple.

You take a traditional financial asset and represent it digitally on a blockchain based

infrastructure.

When people say an asset is on the chain, they usually mean the ownership record and

the transfer process are happening on a digital ledger.

As of early 2026, the total value of tokenized real world assets had reportedly surpassed

25 billion dollars, a small fraction of the 1.9 trillion dollars in daily trading in traditional

U.S. equity markets according to the SEC.

The appeal of this new approach to financial transactions is very practical.

It offers the possibility of faster settlement, more programmable transactions and markets

that operate in more 24 by 7 continuous way than the ones we are all used to today.

It's interesting because as a regulator, you have this unique job and responsibility

to ensure that there is these guardrails, while at the same time, there's enough opportunity

for innovative new technologies that would be disruptive and provide global competitive

leadership and all of that for the U.S.

And you have to thread that needle.

It sounds like from your writings and speeches, it seems like you've pushed back on the idea

that every hard problem in crypto should be solved by simply blocking activity.

But what does a good policy support actually look like in practice?

I'm sure you're bombarded with so many policy directions.

And how do you distinguish, you know, it's not a blocking activity, but it's something

supportive of the objectives of the participants in the ecosystem.

Well, I mean, I think our baseline in this country needs to be permissionless innovation.

You shouldn't have to ask permission to identify a problem and go solve it.

We do need guardrails in the sense of, you know, there are basic rules that people comply

with, I think.

Our capital markets have been successful in the U.S.

It's because you know when you go and pick up a disclosure document that you can rely

on that disclosure document because there's a backstop of people are held to an anti-fraud

regime.

And people know that if they send their, give their money to a broker to buy stocks,

they're going to get that stock or there's going to be a government enforcement backstop

there.

So we have those basic rules, but then within that we really should be striving to be in

a place where people can just innovate and solve problems as they see them.

I think we have to be very careful in the United States now because there's a, we're prosperous

place and people are very excited about how, I mean, they're doing well, right?

And so, so they start being a little less comfortable taking risk and security starts

to be the thing that they get most animated about and most want to have.

And I think in order to have a vibrant dynamic society and a vibrant dynamic economy, you

need to have people who are willing to take risks.

And so, you know, I was talking to someone the other day on a plane and he had started

a business and it was just really interesting to talk to him because he had been, he had

been in a field for a while, it was not, it was healthcare, he had been in that field

for a while.

And he's, he identified a problem and he said, you know what, I can solve that problem.

I have a solution and he just goes off and creates a company to solve that problem.

I want our place, our markets to be a place where someone like that who has a good idea

and the experience and expertise to solve a problem can go and get the funding to do

it.

And I want to make sure that if that problem that someone has identified is in the financial

markets, that person can be an innovator in the financial markets.

I don't want all the innovation to just be happening in the tech world and not to be

happening in our world.

So I think the best investor protection mechanism is competition, new entrance, dynamism.

We have to have guardrails, but we've got to make sure that we're creating that healthy

dynamic environment.

Right.

Interestingly, we at Celesta, we're involved with a company that actually has been a maker

of technologies for Bitcoin mining as the first and most powerful company for the mining

infrastructure.

And this, I'm sure you know, you know, there are Chinese companies that pretty much control

95% of the supply of the technology that goes into miners.

Because you think about policies specifically related to Bitcoin, if you will.

How do you think about, you know, US domestic players having at least a level playing field

if not strategic advantage relative to China?

What are some of the policies that you can actually put in place, you know, as part of,

you know, your overall rule making inputs that you seek?

What would you, what would you say would need to happen or what you're working on?

Well, I mean, it ties into the sort of the core of the SEC's agenda, which is, as I mentioned,

one one prong is capital formation, having our markets be the place where people can

come and and get money and build things.

That's the best way to give the US strategic advantage, at least as far as we the SEC control,

right?

If semiconductors, for instance, you know, there is obviously, you know, executive

orders or or edicts that can actually require certain percentage of consumption to happen

from domestically manufactured capabilities in the semiconductor area, potentially.

And is that something that could happen?

Well, I mean, I, you know, I, I stay in my lane that Congress set me in and what, what

Congress said to me was not directly to me, but I take this as a directive to me.

Hester is to say, Hester, work on creating capital markets that are very good at funneling

capital to the highest and best use.

And that is what I see as my mission.

And I think by doing that, getting out of the way where we need to get out of the way

and setting the guardrails where we need to set them, we are doing the best thing that

we can do for domestic industry, which is to say, let this be an environment in which

it's not the people you know, it's, it's, it's the ideas you have that get you funded.

It's, I mean, obviously connections always play into it, but I don't want, I don't want

this to be a place where it's government connections that matter or it's who your father was

that matters.

I want this to be a place where someone says that person is really talented and I want

to find out a way to invest in that person's projects.

Right.

Right.

So this, this is a good place to segue into, first of all, it's refreshing to hear you speak

about the need for, you know, greater clarity and certainty around, you know, some of these

policy frameworks, but it sounds like this has not been always the case, at least in

the area of crypto over the last several years, but 2025 seems to have been a turning point.

So my question is, first of all, do you agree with that?

Absolutely.

And, and if you do, so, so what changed?

Well, there was an election, and I mean, you know, part of what happened was there was

a decision that we are not going to do what we did before, which was clearly not working,

which was, as we talked about before, trying to use enforcement as this hammer that arbitrary

falls on people, that is not a good way to solve these problems.

And so the new administration came in and the goal was to say, let's figure out how we

can answer some of these regulatory questions that people have been asking us now for a very

long time.

Let's get the answers out there.

That will not only be helpful to people trying to build stuff in this place, but it will

be helpful to the regulators because it's really hard to know who the actual bad actors

are when you're just painting everyone with the same brush and you're saying anyone building

in this space is bad.

So we need to be able to, if I, if I can just, you know, pause you on that.

So what are the mechanisms by which the regulator is able to make the distinction between who's

likely a potential bad actor in this space versus legitimate, you know, innovative companies

that are really focused on speed and efficiency and transparency and all of that?

Well, I mean, part of it is if you have rules in place and you've got people who are choosing

not to abide by the rules, sometimes that's a good indicator that those people are bad

actors.

Right.

If, if you are able, obviously, to identify people who are just running away with other

people's money, that's, that's a pretty good indicator that someone's a bad actor.

So there are those kinds of things that we can, that we can focus on.

But I mean, that's what we do as a regulator, right?

We're looking through.

We're seeing someone has promised investors X and is actually doing why with the money.

Well, you know, that's, that's a pretty bad sign or someone promises to take care of its

client, its client's money and, and they lose it.

Well, that's a problem.

It could be carelessness, but it also could be someone who's set out to do something bad.

Yeah.

But in some of the things that you just talk about are related to sort of old securities

frameworks.

So for instance, if the biggest issue, as I see it, that seems to have changed in 2025,

is the lack of clear classifications that existed before seems to have reduced.

And I'd have been fully completed, but it seems to have reduced.

The lack of fit, fit for purpose rules has gotten much greater clarity.

The mismatch between the old security framework that as you're referring to and new technologies,

that also is a, you know, applying some of the old frameworks to the new technologies.

That also is, you know, as it's relevant, you know, can be very useful.

I mean, do you see it like that as to what has changed in the, in the policy frameworks

in 2025 that didn't exist before?

Yeah.

I mean, what we did is we came in and we said, first thing we need to do is we need to listen

to people.

So we did a lot of listening to people that was through round tables, also through written

submissions.

And also you have a crypto task force.

We've got the task force, which has been running this, this, and so, and we've been meeting

with lots and lots of people.

And we also said, and let's, let's start by telling people early on where some things

that are in the crypto sphere are not the SEC's issues.

They just don't fit within our issue area.

So that everybody can know that they, people who are buying those assets can know they're

not getting SEC protection.

That's really important.

So we've done some of that.

And now we, as I mentioned, we came out with an interpretation that laid out a taxonomy.

That's helpful.

We're working with people who are trying to tokenize securities.

That's helpful.

So little by little, we're working on a rule that will allow people to do capital raising

with crypto assets.

That will provide some needed clarity.

So it's just tackling each one of these issues on its own.

And it's, it's a long, laborious process, but I mean, that's, that's where the difference

is from what was being done several years ago.

So what are the strongest signs that you are holding at this transition or this evolution

in policy making is actually real that are rather than just, you know, election years

cyclical optimism?

Yeah.

I mean, we're, we're trying to build durable things and part of that is what Congress is working

on.

We're working on rule making.

Those will be durable.

You know, the way I see that we've been successful so far is that we have gotten a lot

of really wonderful input from people who are trying to build things.

And we've seen a lot of hard work on their part in engaging with us.

And to me, that suggests success because before the notion of coming in and talking to

the SEC was something people didn't want to do.

This is, this is an important important point as we talk about market integrity, right?

I mean, you, you really are, you know, there's a, there's a central tension between crypto

policy, you know, between supporting innovation and also, you know, ensuring that it doesn't

weaken consumer protection, right?

So these are two, two separate things that you have to deal with.

How do you strike that balance?

I mean, I tend to think they're actually really complimentary because the best way you can

protect investors is to make sure there's a dynamic marketplace in which new people with

better ideas about how to do things can come in and move the old products and services

aside and bring in their new products and services.

We do always have to think about where are the risks?

Are we creating new opportunities for people to do bad things?

We need to be thinking about that.

There are a lot of things that are done in the name of crypto that involve very centralized

entities that look anonymously, right?

Use anonymously, sometimes not anonymously, but we, we want to make sure that the rules

aren't different just because you put a crypto label on the door of your business, right?

And figuring out how, how you provide appropriate, exemptive relief to say you don't have to

comply with this rule, but also not saying you get a pass just because you're crypto because

obviously that's not what we want to do, right?

But, but more specifically, what does strong consumer protection mean?

A strong or stronger consumer protection mean in this digital world, specifically with

crypto. What does that mean?

Well, I mean, one thing is that when you don't have intermediaries, you do take care of

some of those risks that, that regulation has typically protected against.

So you are taking the risk automatically.

And so as a consequence, if you lose money, sell a V, is that what you're saying?

Well, I mean, partly, but I guess when you, if you can do something that is a truly

disintermediated transaction, you don't have to worry about the centralized intermediary

who's either careless or ill intention, has ill intention, right, to, to run away with

your money.

You might have to worry about other things, right?

But in, in, in a world of intermediaries, when you enter into a transaction, you don't

know exactly maybe what that, what the rules of the road are.

If you're entering into a decentralized finance transaction, you know, because you can see

the code and you know what's going to happen.

And actually the terms are the same for you as they would be for anyone else.

So you don't have to worry about sort of discrimination type things that you might have

worried about.

At this point, it helps to separate two ideas that often get conflated.

A stable coin is a privately issued digital token designed to hold the steady value, usually

against a fiat currency like the dollar.

A CBDC or central bank digital currency would be something different.

Digital money issued directly by a central bank of a sovereign government.

One is a private sector instrument.

The other would be public money.

That is why the policy debate around each one tends to be very different.

And this is no longer a niche conversation.

Stable coins now sit at roughly at $300 billion market size and the tokenized US treasuries

alone are about $10 billion.

So this discussion is about real financial activity already happening at a meaningful

scale.

There's this like difference, right?

Correct me if I'm wrong.

In the case of a centralized intermediary, you have mechanisms to ensure that there's

greater disclosures and segregation of assets and custody rules and a fraud enforcement

and all of that.

But once that intermediary is gone, that person that is actually enjoying that service with

the product is practically naked.

And so my question really is about consumer protection.

So it's glass half full or glass half empty, right?

So when I see that, I say, yeah, our rules that we've written have been all around trying

to make sure that centralized intermediaries are dealing in an appropriate way with their

customers.

When you go into a peer to peer world, you don't have to worry about those centralized

intermediaries anymore.

You might have a different set of worries, such as there's no one to go to if something

goes wrong.

There's no way to reverse a transaction once it's done.

Those are real concerns, but they're very different concerns.

So then the question is, can we create a world in which people who want to engage in peer

to peer transactions or peer to protocol transactions probably more accurately can do that?

People who feel more comfortable with a centralized intermediary can use that centralized intermediary

who may then be looking to those decentralized protocols to provide a better product or

service to that customer.

So on the back end, it's using those decentralized protocols, but it's providing a much more

traditional relationships, intermediary relationship to someone.

We should be able to live in a world in which people can choose what they want.

If decentralized, if disintermediation is more important to them, that's what they can

choose.

If the ability to go to someone when something goes wrong is more important they can choose

to work with an intermediary.

So this draws a parallel to some of the telecom rulemaking that happened a couple of decades

ago.

I'd love to hear your thoughts on how you think about market integrity in this particular

sector where trading, custody, issuance and infrastructure is getting more vertically

integrated in this area.

Now I draw the parallel to telecom because the old telecom reform act, which really resulted

in this explosion of communication infrastructure in the US, is largely because of the unbundling

of the last mile.

And in a way, vertical integration was really not supported, as you might expect, and

it was actually the fragmenting of that integration that led to innovation.

But here, there is natural forces in the market that are driving integration, vertical

integration.

So do you see a contrast between these two and what lessons would be draw from what has

worked in telecom?

And is that happening?

Well, I mean, I'm certainly no telecom expert.

So let me, let me say that.

But what I think is important to realize is that I just gave you the whole spiel about

how disintermediation can be very valuable.

Sure.

When you are creating one centralized intermediary that offers a whole stack of services, that's

not disintermediation.

So then we have to go back to the old days of figuring out how to regulate those intermediaries.

And part of the regulation may be, again, it may be to say you can't provide those two

services, or if you do, you have to be very clear about what those conflicts of interest

are in providing the whole stack as opposed to just one service.

We have rules for those things.

We have disclosure, which is our key rule, but sometimes we have other kinds of rules

that say how things have to be done.

Then we have to just think in our more traditional regulatory terms.

But if it's a world of disintermediation, then there isn't vertical integration, right?

Then you as an individual are choosing, I want to get this service here and this service

here.

And you're putting it together for yourself.

Yeah.

Where would you say the biggest policy gaps exist today?

If you were to sort of take these five things in a market structure, you know, custody,

disclosures, possibly oversight, you know, where would you say there are policy gaps still?

Well, I mean, there's still a lot of work to be done.

So tokenizing of securities and figuring out how those, how tokenized securities live

within the rest of the system, right?

How do they exist side by side with non tokenized securities?

What does it look like to trade those securities?

How do you trade those securities on an automated market maker, for example, thinking of those

kinds of things, custody rules for broker dealers and investment advisors.

We still have work to do there as it relates to crypto as it relates to crypto.

You could argue as it relates to other things too, but certainly as it relates to crypto.

But this is a place where we still don't know whether you have a carrot or a stick.

Yeah.

I think one of the issues with custody of crypto assets is that the old ways of custody

being don't quite match up, but you, you want to protect people from the same concerns

that you're from the same things you were protecting them for with other assets, right?

If you entrust your assets to someone else that that someone else might run away with

those assets or might just be careless with them.

So we need to make sure that the custody rules protect against those risks, but also recognize

that someone who's managing a crypto asset for you might need to be doing something with

that crypto asset, maybe putting it into a defy protocol, maybe, you know, voting it

if it's a security, whatever it is, but they might need to have the ability to do something

with that asset or the traditional custodians may not have the technical expertise to custody

those assets.

So trying to think about those issues, it's important because custody is an area where

people can get hurt.

So we really want to be careful there as an example.

So there are just a lot of areas where, you know, what does it look like to be a transfer

agent when you're dealing with blockchain?

What does it mean to be a clearing agency?

What does settlement look like?

How do we make sure that there's data that gets out there so that people who want arbitrage,

the tokenized world with the non tokenized world are able to do that?

So there are a lot of different interactions between this new world and the traditional

world.

And we want to make sure that, well, as the world transitions, that that's as smooth

as the transition is possible.

It's not unique to crypto.

I mean, I think crypto has brought up some issues that we would have had to deal with eventually,

but they've sort of brought them to the fore.

So thinking about 24-7 trading, you know, our markets had not been 24-7 and now they're

moving in that direction and crypto is pushing that move to make it happen faster.

So there are questions we have to answer there.

There are a lot of things that we, operational things we have to think about and that the

industry has to think about.

I mean, it's not as if we're going to solve these problems, but we want to make sure that

people are thinking about them.

Yeah.

I think that leads me to the most interesting part of the whole crypto story, at least

as the markets perceive it, is Bitcoin.

So I'd love to sort of delve into it a little bit.

Why do you think Bitcoin occupies such a distinct place in the conversation around crypto?

Is it because people see that as an easy hedge to some of the other transactions done

through fiat currencies?

Is it, you know, what is, why is it this important?

I mean, again, I'm a regulator, so you can take what I say with a grain of salt.

But I think what people found interesting about Bitcoin is that for a long time, people

have been thinking about how to solve the double-spend problem.

Yeah.

You know, I can send you $10 in an email and say, I'm sending you $10 and then I can

send it to someone else.

So there's a way to solve that now, Bitcoin, you know, explain how that can be done.

Trace and the idea of all that, right?

Well, and just in the fact that you've got this, this ledger, everyone can see it.

Yeah.

And so if I send you the $10, I can't send it to someone else because it's there on

the ledger.

Sure.

And so that is a very powerful concept.

And I think that's why people were really enthusiastic.

And then I think other people were really drawn to the idea of having a non-sovereign form

of value, ability to hold and transfer value that's not tied to any government.

But you know, people think a lot of different things about Bitcoin and it's not really my

role to say, this is how you should think about Bitcoin or you should have exposure to

Bitcoin or not have exposure, that's up to the market.

What I want to make sure is that we treat this commodity the same way we treat other

commodities.

And so that's really what part of the struggle of my tenure at the SEC has been to say,

hey, you know, just because it's digital doesn't mean that we need to treat it differently.

So as the policy matures, the crypto policy matures, do you expect Bitcoin to remain a category

of one or does it become part of a broader, coherent digital asset framework?

I mean, again, there are other other crypto assets that are treating similar, right?

I mean, I don't view it as it's, you know, people can think of it anyway they want.

We just have to treat it and say we as everything else, okay, I get it.

At this point, it helps to separate two ideas that often get conflated.

A stable coin is a privately issued digital token designed to hold the steady value.

Usually against a fiat currency like the dollar, a CBDC or central bank digital currency

would be something different.

Digital money issued directly by a central bank of a sovereign government.

One is a private sector instrument.

The other would be public money.

That is why the policy debate around each one tends to be very different.

And this is no longer a niche conversation.

Digital coins now sit at roughly at $300 billion market size.

And the tokenized US treasuries alone are about $10 billion.

So this discussion is about real financial activity already happening at a meaningful scale.

Okay, so now let's talk about stable coins.

That seems to be one of the cleanest areas where policy can move this from an abstract

conversation or a concept to more concrete set of rulemaking.

So why do you think stable coins have gotten so much of a focal attention as they have?

I mean, I think the ability to transfer dollars is a very powerful, a very powerful proposition.

And frankly, the ability to hold dollars if you're not in the US, you're living somewhere

where the currency is more volatile.

You might very well want to hold US dollars.

And so I think that's the power.

And people are realizing the ability, again, it kind of goes back to what I was saying

about Bitcoin, the ability to transfer value on chain is quite powerful.

And so I think that's why there's been the real interest in stable coins.

And with the passage of the Genius Act and the creation of a federal framework around

it, people got more comfortable thinking about how might we integrate this into our

business?

So your thesis is that the Genius Act is an important milestone.

And that it brought the attention and clarity for the payment through stable coins.

And as a consequence, you don't see it as a security.

And you see it more sort of under the realm of the banking regulator.

So payment stable coins, which are the stable coins, regulated under the Genius Act.

That's what the framework was created for.

Those are outside of the SEC.

That's outside of your remit.

That's in the banking regulators have that.

Yeah.

Is that a bright line?

Or is that a place of stability?

Yeah, I think when we think about what fits within our remit, there are a lot of things

that fit within the bucket of security.

But if you are creating something that has returns, then you have to think about how that

fits within the security's laws.

Yeah.

So the entire payment stable coin is regulated under the banking system?

Well, I mean, there's nothing that's entire, right?

It's always there always.

Because we have so many regulators in Washington.

And so if you have an SEC regulated broker dealer that's trying to serve its clients using

stable coins, then we have something to say about that.

I see.

So it's almost like collaborative.

So in your mind, could a stable, a very clear stable coin policy become one of the fastest

ways for the U.S. to demonstrate credible sort of crypto leadership?

Or do you see this as a tip of the space?

I mean, I think it's part of it.

I think stable coins getting a framework around that gave people more comfort around interacting

with stable coins helped us think about it from our regulatory perspective, too.

Because now we know there's a regulatory framework that backs them, right?

The market structure piece that deals with the broader world of crypto, I think, is the

second piece of that.

But I think people will always look to what the U.S. is doing.

And so I think that, yes, that was a step that helped establish us as a place that people

could look for.

How are they?

How are they dealing with?

So now let's talk about CBDC, the central bank digital coin.

There's obviously a distinction between stable coin and CBDCs.

So CBDCs raise a very different set of policy questions I would assume.

And when you think about CBDC, what are the questions that come up to your mind as opportunities

for greater clarity from a regulatory standpoint?

I mean, CBDCs are really outside of the remit of the SEC.

And there's been a lot of attention on Capitol Hill on CBDCs.

And much of the concern in that area is driven by, I think, really legitimate concerns which

touch more than just on CBDCs about financial surveillance in the United States and how we're

using our financial system to watch what people are doing in their everyday lives.

I think this is a good moment for us to take a look at that more broadly and say, how

can we achieve the important objectives of this financial surveillance system without

compromising people's ability to live lives that are private lives that are not being

watched by government regulators unless there's reason to suspect someone has done something

wrong.

So if the US wants to demonstrate and signal sort of global crypto leadership, what do

you think that leadership would actually look like?

I mean, I think it's to write clear rules and to enforce them in a way that is not arbitrary

in a way that applies no matter who you are, applies the same way.

That's the best thing that we can do, I think.

And really step back then and allow the markets to identify where is crypto useful, what

is it useful for and stand ready to work with people who are trying to build real things

to figure out a way they can build those consistent with the regulation and where necessary,

we can make adjustments to those regulation.

But again, we have to do that in a way that's consistent with the level playing field.

So what aspect of the crypto leadership in your mind would you say has to balance sort

of the preservation of the dollar influence also?

I mean, again, I'm going to use the same line that's really, that's not my issue, it's

the issue for treasury.

I think stablecoins have shown there's wide, there's interest across across the whole

world in dollars.

But again, that's a little outside my territory.

Okay, so let's keep back, come back to your territory in SEC.

If you are a market player and I want to request you play a role playing for me, if you're

a market player looking at the regulator, what do you think they would say where you're

doing a overreach on regulation where the market has to decide?

I mean, I think that part of what people worry about is they like the fact that they can

come in and talk to us, but they don't want to have to come in and talk to us when they

have looked at the law and they have figured out a way to do what they're doing consistent

with the law and they just want to move forward.

And so that's an area that I'm quite sensitive to and I want to make sure that people can

feel free to innovate where they have thought about the legal consequences and they've thought

about the statute and the rules.

And they have with good legal advice figured out how they can do what they want to do in

a way that is legal.

They should be able to move forward.

And so I would say within such a complicated regulatory climate that can sometimes be

difficult and it's something that we strive to do better.

We do want to be informed of what's going on in the world because that helps us to be

a better regulator, but we shouldn't live in a world where people always have to come

to us for a promotion.

Yeah.

So you made the point that 2025 marked a turning point and I agree as an industry participant

I would say that the policies that the current administrations have as put forward and thanks

to SEC has really made the market far more reliable and all of that.

But this is an election year and what would make some of this progress durable rather

than temporary?

Do you worry about any aspect of the regulation that might come up for debate further changes

to rulemaking and all of that?

I mean, if so, what is there?

Sure.

Of course.

I mean, one thing is getting legislation in place is always a helpful basis.

So I'm looking forward to that.

But the second piece is that we really need to make sure that people can focus on building

things that solve people's problems, right?

The best way to have a durable regulatory framework is to have people building things within

that framework that other people want and need and use because then if someone new comes

in, they look at it and they say, well, we don't want to take away things that people want

and need and use.

And so that leads to real durability.

We have had such a bad approach to cryptocurrency in the past that it actually had the perverse

effect of rewarding people almost who were building things that were ephemeral and punishing

people who were trying to solve actual problems and build durable things that would last because

those were the people that was easy to peg and say, haul them in and bring in enforcement

action.

And so we really need to get to a place where people can just focus on building useful

things.

Yes.

That's a great place to end this.

But I do have a set of rapid fire questions for you, short answers.

What is the most misunderstood issue in US crypto policy from regulators can solve every

problem?

And the regulators are not prepared to change, perhaps.

One policy area where clarity could unlock more progress.

I mean, I think we talked about a lot of them.

I would say tokenization of securities.

What worries you the most in the next phase of this evolution of this technology and regulation?

You know, if handled, you know, not so properly.

I think the thing that worries me the most is that people will be so focused on the

regulators that they won't be thinking about what their customers want.

Yeah.

Yeah.

And one stablecoin rule you think policymakers have to get right.

I think we need to be thinking about both the benefits and the risks when we integrate

stablecoins into the rest of the financial system.

I think that there are real benefits, but we need to be eyes wide open.

And one last thing, regulators should remember when they talk about protecting investors.

Part of protecting investors is protecting their opportunity to invest as they choose.

Yeah.

You don't want to kill the goose as it were.

Yeah.

A commission and purse.

Thank you so much.

I mean, you've just been enlightening talking about all these various issues that we don't

get a chance to really understand as industry participants and we have really dealt into

so many topics.

We're going to try to link the SEC profile in the episode description with some of the

major, you know, policy activities that you've been leading.

So thank you so much.

Great.

Well, thank you for having me.

This has been a wonderful conversation.

Thank you.

Thank you.

That commissioner purse keeps coming back to is a simple idea.

Regulators should not start from the assumption that every new technology is a threat.

Their job is to set clear rules and force them fairly and leave room for people to test

new ideas or innovation in the market.

What often makes that difficult is not the technology, but the politics.

Frameworks built in one administration can be dismantled in the next.

The only real protection against that in her view is use people building real products

solving real problems inside clear rules and once those products become widely used

and woven into the fabric of the real economy, creating real value, they will be difficult

to displace regardless of which administration is at the top.