Because it's actually what I found, it just seems like this is actually easier than raising for something else, a different kind of business.

Yeah, and I think, you know, you're kind of preaching to the choir there in terms of thinking about capital formation more broadly and thinking about ways that we can really look at the rules we have and ask whether they should be updated and liberalized so that more people can take part in raising, in participating in building companies, investing in things other than the public markets.

So I think that there is something to learn.

I mean, I've been arguing for a long time that we need to have a very slimmed down micro offering exemption.

I think that for traditional equity securities, I think there are a lot of different approaches that we can take, but I would like to see to make it much easier for entrepreneurs to raise capital and do so in a way that protects investors, but also doesn't infantilize investors.

Sometimes I think we want to step in and say, well, you're not, you as an American are not allowed to put your money into something that you believe in.

But yeah, feel free to run down to the casino and spend all your money there, but we're not going to let you invest in a company of the neighbor kid who you know is brilliant and who you really want to have a piece of the company that she's building.

How do you distinguish between the legitimate financial privacy and the illicit conduct?

And I'm curious to ask you, what would that like being a dissenter at the time? You know, did you imagine that like your voice as a dissenter would end up becoming more central to the agency's policy? And I guess, do you have any advice for dissenters wherever they are on how to best communicate even when they disagree with the main line?

Well, I think it's important to put in perspective the kind of dissents that I write, which are not of the grand nature of Supreme Court dissents.

But what I was trying to do when I was writing those dissents, I mean, there are several things.

One, I was pretty frustrated with where my own agency was going, and I really needed to give voice to my own frustration.

And I think because I had had those meetings with innovators and people who are trying to build things and I saw their frustration and it really affected me, I wanted to give voice to that.

But really what the commission structure is, it says we've got a bunch of different people to run an agency and those people come from different perspectives.

And part of that is recognizing that these regulatory agencies have a large effect on people's lives.

I'm just curious what are your thoughts about this concept of cross on and off-chain versus the tendency to always talk about on-chain, on-chain when we think about this technology and what it does to financial markets?

Do you think this with the Form TR and the exit there, how do you think about the idea that it could be weaponized versus It can also be used as a defense against regulation by enforcement because now a regulator has to at least follow what's happened prior or at least acknowledge that that has happened.

Yeah.

I mean, again, my hope is that this proposal becomes a rule again as modified by comments that come in and really gets us to a place where it encourages a healthy disclosure environment and People who are opting into that environment, who are opting into a healthy disclosure environment, I would hope would not subsequently become the subject of enforcement actions.

Now, I say that and I understand what some people's reaction is.

the SEC, you know, it established a pretty bad reputation in this area because, again, as we were talking about before, its approach sort of discouraged people from getting out there and making disclosures.

It encouraged people to put their heads down and to say as little as possible.

And so I hope that By establishing a healthy framework and having people take advantage of that framework, enforcement attention in the future will be focused on the bad actors, which is what we've all wanted all along.

And it doesn't necessarily just mean one thing.

What I wanna understand is what can't the commission do alone? Like, what's on the list that only Congress can deliver, and then needs to, you know, you need passage of the bill to carry forward?

Yeah, and I mean, I'm still, I, I'm still, um, optimistic that the bill will get finished.

Um, and it will give, I think, the industry and investors and regulators an easier path forward because there'll be very clear lines about who has authority over the crypto spot market, for example.

Um, but we can do a lot, and I think the chairman is absolutely right, that we will work hard either way.

If the, if the legislation passes, we've got ru- lots of rulemaking to do.

But even if it doesn't pass, we can, we can do a lot.

We can, um, develop a framework for people who are trying to do fundraising using crypto assets, as an example.

So thank you for always being willing to stand by what you believe, uh, even when it has not been easy, and thank you for all you have done to contribute thought and growth to the industry.

Well, um, no, personally, um, excites you about um crypto and digital assets why do you think that this has been important work and there was a time when it could have been questioned whether you know the united states was really going to allow its wonderful entrepreneurial weight to get behind this space which it has recently um but you certainly for for all of that time could see that this was valuable and not everybody would and that's obviously opinion and taste what is it that's so remarkably important about this to you

Well, one thing really just is the procedural point, which is we're a regulator.

We're not supposed to be a merit regulator, so we're not supposed to be picking the winners and the losers.

In fact, we do our job best when we have low barriers to entry so that new technologies can come in, new entities can come in and challenge incumbents.

And, you know, that's how progress happens.

That's how better, cheaper products and services get out there is if you have open doors to innovators.

And so part of it really is a procedural concern that we hadn't been handling that right.

What's going to happen here? Are we going to see radically changed exchange situations where just over time we'll look back and less companies, which I think is bad, will be in the hands of public?

Is, is the idea that the innovation exam- uh, e- exemption is to hold us down until we get to, until all of the other rules are put in place? Or w- what's the actual purpose here?

Well, first of all, I mean, the, the notion that it's been delayed, I mean, we've been working on the innovation exemption for some time, but I don't know what, what in this context delay means.

Um, you know, there are sometimes people I think have put undue weight on the innovation exemption.

As I've said, and as the chairman has said, we're, we're looking at ways to enable people to experiment with trading tokenized securities, and that is gonna require some experimentation.

You're gonna...

We, you know, we have to understand how the stocks trading in tokenized format will interact with stocks, um, that are not trading in tokenized format.

And so there's some, there's some issues there that I think we all in the market need to work through.

Um, two-part question here, but first, do you agree with that analysis or is that, uh, is that overstating it?

Or the innovation exemption

...

so first, the innovation exemption is, has not yet been, been released.

So, um, you know, I, I know there have been people writing news stories and things like that, but it's not, um, it's not actually out there yet.

So that's, that's one myth that should be dispelled.

The second is that some people have talked about it as if it's gonna be used to support the, the trading of synthetic, um, securities.

So securities... and we put out a tokenization, um, frame- uh, not framework, but sort of a, the staff put out a taxonomy so you can, there are three categories and one of those is synthetic, um, uh, uh, securities where you're getting exposure to a security but you don't actually hold the security.

Um, but, but what are your main priorities, uh, when it comes to the, the crypto task force and ultimately gra- delivering greater regulatory clarity for digital assets?

Like, who is it that's taking all this information in?

So maybe just to give you a picture of what the SEC is, how it's, it's made up.

It's, it's made up of a number of different divisions.

We have our economists in our Division of Economic and Risk Analysis.

They're involved in every rulemaking because they have to do an economic analysis.

We have our Office of General Counsel also involved in every rulemaking because they're checking to make sure we're doing things consistent with the law.

But then you have different divisions.

... and this process?

So I was wondering maybe what you could do is, uh, explain a little bit about, uh, you know, what is crypto and, um, and why is it so important for, uh, continued strength of American capital markets.

Well, I will tell you that it's a lot easier to, to do a good job on crypto, um, in this environment where you're very supportive of us trying to get to a regulatory framework that's understandable, that's fit for purpose, and, um, then we can, we can, I think, better address the problems that come up in crypto, but also really open up opportunities for people to innovate in this area.

And that was really how I was looking at this issue, um, from the get-go.

We need to have financial regulation that is open to innovators because innovation is what makes the financial markets resilient.

It's what, uh, ensures that they serve people's actual needs.

And so I think with respect to, to crypto specifically, crypto solves the double spending problem.

Um, you used to be able to sendData over the internet, but you couldn't send value because I could send you value, and then I could send the same value to someone else and say, "Oh, look, I paid you both." Crypt-cryptography solves that problem.

How, how do you look at the current situation?

yeah commissioner you mentioned disclosure so i thought we could go down for a second you know there's the world view out there which I think many on this call hold that people when given good information can make their own choices right but you know in crypto how that looks can be very very different because the velocity of information is just at a different level but there's also transparency so I guess I would I would love to throw it to you guys on any ideas about like what does good information I have quotes going up look like in crypto? And does it look different than it does in traditional financial markets?

I mean, first of all, I would say the market shouldn't wait for the regulators to tell them what good information is.

Like if there's stuff that you think people need, you know, people should be asking for that information.

I just I find it.

And I think there are some now private sector efforts at sitting down and thinking about what information would you want from a token project if you're buying the token.

And those have been very helpful and informative to us too as we think about these issues.

But I think it is a different set of information than you might want if you're just buying a share of a company.

But one question we had was, what happens if the two agencies disagree about something, like how to classify a token, for example? Have you thought about how you would resolve those sorts of disputes?

So do you think the Howey test gets updated or there's a new test for digital assets?

Well, we're watching in real time as law is being developed.

And what that looks like, we don't know yet.

I have long thought that the Howey test, it serves a very important purpose.

You need to pull in these schemes that would not otherwise fit within the securities definition.

Something where someone is saying to you, give me your money.

I will you don't have to do any work.

And how do you find that balance? Or it's the free market and whoever wins?