SEC Chair Gensler on crypto regulation: Right now investors aren't getting the required disclosures

Joining me now right here in Washington for an exclusive interview is SEC Chair Gary Genson. We get to see each other in person this morning. It’s nice to see you, Andrew. So one of the things I wanted to ask you is when you look at the headlines today around what the SEC is doing and what your priorities are, it’s hard to tell how much of your focus today is on the stock market writ large versus the world of crypto and trying to figure out the future of Ethereum and other things. How do you see it? Well, I I see it this way. We oversee $110 trillion capital market about half of that’s the stock market. Half as you might know is the the bond markets and other markets. Crypto is a small piece of our rural markets and but it’s an outsized piece of the scams and frauds and problems in their markets. Because without prejudging anyone token, much of this field is non compliant with the protections of our securities laws and so thus you end up with like an outsize ratio of journalists questions and crypto journalists to market cap. But is that a function also of the fact that that’s where your attention is to? No, it’s a it’s a function of where your attention is. Think about it. I’ve been on your show what a dozen times and every show you ask about crypto and my guessing is this will be a majority crypto interview while the capital markets are 110 trillion. So it’s also about where the financial media is focused. Well, I I want to ask you actually about a whole bunch of things in in in the classic stock market. I’m looking forward to it but but let me ask you this Vlad Tan of Robin Hood, you you you delivered a Wells notice to them. I know that you’re not going to want to speak directly to them, but I do want to read you because what’s interesting is literally just yesterday he put out his statement effectively attacking you and the SEC. Brian Armstrong from Coinbase said effectively welcome to the club. I mean all this goes on to Twitter so that the listeners, American public can understand we have a really important responsibility as being a cop on the beat and ensuring that people that are asking you to put your money into buy or sell securities are following the law. So you get disclosures that you get certain protections and we have live in court litigation with at least one of those companies, Coinbase, in front of judges. At this point in time what is the state of play though with Robin Hood to the extent that you can discuss it? And for those investors out there who are watching this morning who might have money at Robin Hood, what are they supposed to think about these news reports? I can’t speak to anyone company, but stepping back from it the field of crypto assets without prejudging any one of them, many of those tokens are securities under the law of the land as interpreted by the US Supreme Court. So we follow that law and you the investors are not getting the required or needed disclosures about those assets. And and so like this is earning seasons right now, Andrew, everybody’s asking about what’s the earnings release and how many companies are beating earnings are falling behind and so forth. Where is the disclosures from these crypto tokens similar to these season of earnings releases? Let me ask you this ultimately, and I think this is the big question in crypto land right now. Is Etherium A commodity or is Etherium a security? And therefore, will there one day be an ETF? That’s the fundamental question on the table in crypto land. You agree? Oh, you’re the one that’s out there asking the questions. All I would say is to me the fundamental question is, is how do we ensure that the American investor is protected? And right now, they’re not getting the required or needed disclosures. And the intermediaries in the center of this rather centralized market generally are conflicted and doing things we would never allow the New York Stock Exchange to do. The New York Stock Exchange is not allowed to trade against the. OK, but let me ask you about this. You’ve seen the consensus lawsuit, and I know you have a Wells notice with them as well. This is Patrick Henry saying the following, and I want you to respond to it. Just months after a federal judge sanctioned SEC enforcement lawyers for lying in court, new evidence shows that Chair Gary Gensler himself misled Congress. The testimony to the Financial Services Committee last April, Chair Ganser refused to answer questions about the SE CS classification of ether. A new court filing show this was an intentional attempt to misrepresent the commission’s position. The We speak to Congress directly and hearings like that and also directly to members and we share with them accurately what we’re doing so that the viewers can also understand. We don’t speak about whether we have an investigation or whether we don’t have an investigation and we don’t speak about whether somebody is in our opinion, not following the law unless we actually bring a case. So we stay quiet on many questions that you might ask at this live interview or even but ultimately investors, there’s a lot of folks who bought Ethereum expecting that one day there will be potentially an ETF and that it will be considered a genuine security that’s tradable on these exchanges. Will that happen again that that’s something in front of our Commission right now we’re A5 member Commission and those filings will take up at the appropriate time. Is that something from a timing perspective though? This is an election year, this administration may be the administration come next year and may not be the administration. How does that impact the work you’re doing? I’m just focused on how we can do the most for 330 million Americans, what we can do to drive efficiency, resiliency, competition in the equity markets, the treasury markets, the fixed income markets. And yes, also addressing some of the the activity in the crypto markets where actors are not uniformly following the law. They they they just there’s a lot of a lot of people have lost their hard earned funds in in the field that you seem to be so fascinated. OK. I’m going to go to something else that people are fascinated by. That’s not crypto that I think you can talk about because the case is closed. The auditing firm for Trump Media and we’ve been following Trump Media as a stock now, which of course former President Trump as the majority shareholder was charged with quote, massive fraud. This is the accounting firm, not not the company itself, BF Porchers. Can you explain what the fraud was and to the extent that investors should be thinking about this. Well, so we have a system here in the US where if you want to raise money from the public, you have to get audited by a firm to check the numbers, to make sure that the numbers are accurate. And there’s auditing standards. This small firm, BF Borgers, that had well over 300 public company clients, audit clients was very small and did not follow the standards, didn’t follow the standards of having extra partners reviewing their files. They had times as we put out in this settlement had misled their clients about the actual work they were doing, even taking prior work and this copy and pasting into later work and the like. And so, yes, last week we settled and those public companies, there was about 350 of them, their auditor chose to settle and and not appear in before the SEC. Again, about Trump Media, a lot of folks have watched this stock move in ways that seem to defy at least historical conventions of the kind of metrics that we’re all used to as as the head of the SEC, as somebody who’s responsible for the integrity of the markets, what do you make of something like that? So we’re also paid to be merit neutral. Investors get to decide as long as they get the full, fair and complete and truthful, I would say information. They’re not getting that in crypto right. You think you think they’re not getting any crypto? I I genuinely, think, genuinely think they’re not getting that in crypto. And if they are a crypto security, it’s required and needed. Public companies need to do that as well. But their auditor, the gatekeeper, matters. And this is a case where a gatekeeper failed those 350 companies and the investors on the other side of those companies.