Looking back on maybe some of those years where you were kind of not in the driver's seat, is there anything that you would say maybe the thinking at the SEC under the prior chair Gary Gensler, maybe he got right that you would maybe say, 'Hey, that was actually okay.'
Whenever you have anything new, there's going to be a lot of bad activity surrounding it. So, people do get hurt. And when you're a regulator, even if something bad is happening outside of your area that you regulate, your sort of instinct is to say, 'Is there anything we can do to stop this?' You may not be able to, and Congress does not want you to reach outside your jurisdiction to try to grab things and pull them in. Even when there's something bad going on, we have to find the right regulator to deal with that. And I think that's sometimes hard for a regulator to say, 'Yeah, it's a problem, but it's not my problem.'
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All right, back on Coinage with us, SEC Commissioner Hester Peirce, head of the crypto task force. Commissioner, it's good to see you again.
It's great to be back, Zach. How are you?
I'm doing well. I mean, I think this is a very exciting and interesting time certainly for all the work that you've been doing. I was reflecting, it's been like six years, I guess, since we first met and started talking back then about this token safe harbor idea you've been floating around. And just a few weeks ago, we saw Chair Atkins talking about how it's kind of here. It's kind of the moment that DC is waking up to, we got to get this right. And your framework is essentially kind of leading the charge on all this stuff. I wanted to start by asking what it's like for you seeing Clarity Act get discussed, seeing your ideas finally come to fruition like this far along. What's it like?
Well, first of all, I got to give you my disclaimer as you know that my views are my own views as a commissioner, not necessarily those of the SEC or my fellow commissioners. It certainly is a better, we're in a better place than we were when we first started talking because there is real consensus in DC that we need to have a regulatory framework in place and you're seeing that play out in the discussions about the Clarity Act which are moving forward but also in the work that the SEC is doing and the CFTC and other regulators, the banking regulators as well and Treasury. And so I think that's a very exciting place to be. We can finally try to get it right. Now, there are a lot of hard questions to be answered and I think we're working through those and we are grateful that people from the public are helping us to work through those.
Yeah. When it comes to Clarity Act, it's been interesting to kind of hear everyone talk about the window and getting it done now. I'm not sure I would have foreseen capital flight and yield on stable coins kind of being one of the issues being discussed down there right now. And I guess is it surprising for you to kind of see it get snagged here on some of these issues, especially given that Congress passed the Genius Act not too long ago. So, it is kind of interesting. I mean, what's your thoughts about kind of this, if it's fair to call it post-settling-in stretch time to get it done and how are you feeling about the discussions?
Well, it's a broad-ranging bill and so it's not surprising that there are going to be different issues that come up. Would I have predicted what they would have been? No, not necessarily. But I think it's not surprising that there are things to work through. And so we'll see how those discussions come out. But I'm optimistic that they'll get to a final bill.
It seems like too, I mean, even if it doesn't happen, this is what we were just talking before you and I hopped on, what we're talking about is kind of, I guess, setting it up for best case scenario and then your kind of like backup option and what you would want to see done because of course, if you are to believe what we're hearing from even pro crypto senators, it's like basically May is the deadline to get this done, this window. I don't know if you're feeling more optimistic about the odds than maybe a few weeks ago, but certainly even if it doesn't happen, the SEC still has options to put in place a lot of the rules that you had originally kind of talked about in the safe harbor or other exemptions and rulemaking to be made here. Is that a good enough win in your eyes? I mean, what's the strategy look like here?
Well, I think what we're doing is we're using the authority that we already have and we're using that in a number of different ways. One, we have used it to provide guidance over the past year plus. And that guidance is staff level guidance as well as the commission interpretive statement that we did jointly with the CFTC on the token taxonomy a few weeks ago. And so these kinds of things we can do already with our existing authority. We can also work with issuers who are looking at issuing tokenized securities and trading those. So that's something else that we're focused on and more generally helping our regulated entities figure out how they can interact with crypto assets whether they're tokenized securities or non-security crypto assets. And then we're also looking at providing guidance around what does it look like to do fundraising with a crypto asset. And that is where something like the safe harbor can come in. So I don't view this as sort of an alternative. I view it as complementary to what is happening in Congress. And particularly because we're working so closely with the CFTC, I think we can make a lot of headway just sort of in parallel to what's happening in Congress.
I guess on that front too as this makes its way through Congress and of course that would be more I guess permanent than any SEC rulemaking that could be undone under a new kind of line of thinking but as it takes longer it's been interesting to see kind of other jurisdictions, UAE and Dubai kind of putting in place a new crypto asset framework. As that kind of happens I guess how big of a disadvantage would the US capital markets be if something doesn't get done you think?
Well again we will continue working on the regulatory side with the authority we have and we can do a lot with that. And you know even when legislation gets passed there'll be a rulemaking phase so these things do take some time. I'm confident that the United States is really the place where a lot of people want to come and build things and I want to make sure that the regulatory framework reflects that well. But as more people come here and build things within this space, I'm hopeful that it will, as I've said, make things more durable because people will not want to lose the innovation. And so that's really the best thing we can do is build things that people want to keep.
Yeah. And I think it's been interesting to think about that staying power, too. And maybe I was going to ask you to reflect on this. As you said, it's been now more than a year in terms of some of the initial time for you to be in the driver's seat with the crypto task force and make new rules. One of the first ones, I mean, I guess it's been a year, a little bit over a year since you put out the meme coins aren't securities, or at least these don't fall under SEC jurisdiction. It's been kind of interesting to see activity on the memecoin front dry up since then. I mean, I guess you could look at like pump.fun trading volumes as just a proxy and thinking about kind of meme coins. It got me thinking around like what we discussed when it comes to, you know, these ideas of liberty, letting people do what they want with their money and I guess kind of also proof that maybe the market can at times regulate itself. I don't know if that was the intent around memecoins, but maybe a pause for reflection on that.
Well, I think you captured well how I look at these issues. We need to be clear with the market what kind of regulatory protection they're getting. And I hope that people in the market who are buying things will take a look at what they're buying and have a reason for why they want to buy it. That reason might be this is just fun and I want to have some fun and this is entertainment for me. It may be that you have a long-term value proposition for what you're buying, whether it's a memecoin or something else. And that's fine, but I want people to really know the SEC is not there to protect you if someone takes your money, lies to you. Now, there are ways that you can take even a non-security and package it in something that's a securities transaction. So, you know, there are facts and circumstances issues, but I want people to be on the alert because our regulatory regime is not standing behind them.
And then I think another thing that has happened in the past year is that people have really spent a lot more time thinking about tokenizing real world assets including securities. And so I think that that has been an interesting development to watch just the amount of interest there is and trying to think about where does tokenization make sense and a lot of the efforts really are squarely within the space that we do regulate.
Well, it's interesting just to kind of think about the knock on Chair Gensler when he was in charge from the pro crypto community was that like hey memecoins are the only thing that can flourish here because everyone understands they're not securities because they're just jokes or whatever. The other flip side to it could be that oh maybe volumes are drying up because the market or quote unquote investors if you want to call it that are kind of losing confidence in the idea of these markets being fair which I guess was maybe always Chair Gensler's points around why he wanted to keep traditional markets and crypto separate. I don't know if you would kind of extrapolate that as well to maybe why people aren't as excited.
I mean, I always fall back on the fact that I'm a regulator, so I'm not going to try to get into the minds of what market participants are thinking and you know, people come at this from very many different perspectives. So, I think the best thing we can do is just say, let's define where our regulatory borders lie and then for stuff that's within those regulatory borders, let's work on doing as good a job as possible and providing clear rules.
Fair enough. That makes sense to me. I mean I guess maybe also in the line of reflection, is there one thing looking back now because I think when you first assume the role of head of crypto task force, you were very excited because now you finally got to put your ideas to work, but obviously it sounds kind of exhausting to kind of always be the one who has to answer these tough questions. But looking back on maybe some of those years where you were kind of I guess not in the driver's seat, is there anything that you would say maybe the thinking at the SEC under the prior chair, Gary Gensler, maybe he got right that you would maybe say, 'Hey, that was actually okay.'
Well, I think we went about it the wrong way. I think sometimes the intentions were on point, but the way we went about it was just not right. And I think we really lost time because of that. So, you know, I think it has been a lot of work as you mentioned in the last year plus. And part of what would have been nice is if we had been able to do the listening tours before, you know, before so that we could jump right in and start issuing proposals and things like that. And so it does take a long time and I think that's just kind of the nature of the work. But the intention of trying to identify areas where you're selling something that's not a security but that's being sold in conjunction with promises that make that a security. So this is the investment contract Howey analysis. You know, had we been able at the time to sort of put a framework around that we could have made progress and moved forward I think more productively.
