Chapter 1: What is the main topic discussed in this episode?
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But here to discuss really the regulatory changes affecting the crypto industry after the crackdown of the Biden years is SEC Commissioner Mark Ueda, we welcome you to Radio and TV. And just recently, Project Crypto was launched, and this really sort of endorses the initiative to modernize regulation to make it fit for purpose for current innovations within decentralized finance.
Are we getting enough clarity? How quickly might we know what tokens are securities, for example?
We have a lot of ground to catch up. The last four years in the Biden administration, we saw a lot of efforts to suppress crypto, at least in the United States. That was one of the things that the president did I think it was the third day of this administration, January 23rd, when he issued that executive order with a clear goal.
We need to make the United States one of the global leaders in innovation in crypto and digital assets. That was why one of the things I did immediately upon becoming the acting chairman was to name one of my fellow commissioners, Hester Peirce, who spent an awful lot of time talking to the crypto community. You're going to be in charge of our efforts, leader of our crypto task force.
And that, now under our new chairman, Paul Atkins, has now pivoted into what we call Project Crypto. We are working side by side with our colleagues at the CFTC. They announced what they call Crypto Sprint. So we're really anxious to get some things done.
In terms of getting things done, there is a sort of feverish pitch of innovation going on and a lot of that is to do with perhaps adoption of new ETFs around things. I'm interested in companies, so-called treasury companies, companies that are building up crypto as their assets or indeed new ETFs springing up. Are you comfortable with the pace of innovation as it is?
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Chapter 2: What regulatory changes are affecting the crypto industry?
We took a position which I objected to, I put out many dissents objecting to it with this idea that every crypto, with the exception of Bitcoin, which is what our former chairman, Gary Gensler, testified before Congress, was a security. No, we have this whole framework, we weren't applying it properly. We said, we're going to do this. That was what the Crypto Task Force started doing.
That's where they held a series of roundtables. In fact, that was the very first roundtable was talking about what ought to be in and outside the scope of this.
We're speaking with Mark Ueda, Commissioner for the United States Securities and Exchange Commission. I'm interested in, previously, it was sort of regulation by enforcement, and you said you don't want to put your thumb on the scale in this way. But how many crypto enforcements are ongoing at the moment? Can you tell us in terms of the amount of investigations still going?
I know that, for example, Unicoin is being sued, for example, and that happened in May.
We have a number of ongoing investigations and actions related, that I would say are crypto-related. We have an awful lot of what one might call fake crypto, which is somebody who purports to be involved in crypto, but it is nothing more than the types of Ponzi schemes and other scams that we have seen since probably the creation of currency.
How many staffers are looking at Forceman now compared to the prior four years?
Well, what we've done is we still have a unit, although we've changed it from the cyber and crypto unit to be more broadly focused on technology. We have an enormous number of tips, complaints, and referrals that come into the agency every year. In fact, I think we're on track from nearly 45,000. A number of them relate to crypto, so we deploy staff appropriately.
And you said you're working in lockstep almost with the CFTC. How is that relationship going at the moment?
We've got a great relationship, and it's one of the things that was very important on the financial regulatory front, not only between us and the CFTC, but us with Treasury and the banking regulators about how to address crypto. You saw this with the president's working group on digital assets. They issued the report last month.
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Chapter 3: What is Project Crypto and its significance?
This has been something that has been, I think, really all of the relevant... regulators in the executive branch are all communicating with each other and all coordinating with each other to make sure that we can make this effort successful.
Now, the SEC does more than just look at crypto. And I'm interested in, at the moment, you're currently suing Elon Musk, and that's to do with alleged violation of securities law about when he was taking a significant chunk in Twitter he had owned about 5% in excess of, and he was meant to make that declaration. Many would say he didn't do it quickly enough. He wants that suit dropped.
Should it be dropped?
Well, I'm not going to comment on any particular investigation or enforcement action that we currently have. But what I will say is we have these Schedule 13D and 13G requirements out there. One of the key parts about whether or not you can file on a 13G is whether or not you are a passive investor.
And one of the things that we did take action is there were a large number of very influential activists
asset managers that hold significant chunks uh well above five percent of of a company's stock the question is what sort of relationship should they be having that requires additional disclosure if they're asking or directing the company and says you need to do the following things for instance on climate change you need to hit net zero goals you need to have a plan of how you get to net net zero you're no longer a passive investor that requires additional disclosures uh
of some form because we have concerns whenever they're in or at least you say congress passed laws telling that when you have really large shareholders more than five percent uh which perhaps doesn't sound a lot but in the real world that is quite a bit for a company uh that they need to provide the appropriate levels of transparencies of their discussions with company management
Well, plenty more on your agenda other than just the Elon case and indeed just crypto. It's been wonderful having some time with you. We'll let you get back to the day job. Mark Lueda, of course, Commissioner for the United States Securities and Exchange Commission, the SEC. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute.
Capturing value and fixed income is not easy. Bond markets are massive, murky, and let's be real, lots of firms throw a couple flashy funds your way and call it a day. but not Vanguard. At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients.
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