Bloomberg Audio Studios, podcasts, radio news. We've been watching bitcoin almost as much as stocks lately because it's been so intrinsically tied to the markets. Remember when it was supposed to be its own universe. That was the whole point the decentralized cryptocurrency. It is bouncing back today, up fifty four hundred dollars in approaching ninety two thousand dollars a coin.
So maybe it bottomed unclear as we've had multiple folks including Mike mcglohe at Bloomberg Intelligence predict another crypto winter. Michael Sailor also preparing for one at Strategy. Despite the love, this administration has shown the embrace of the crypto industry as we remember the ways with Donald Trump since he took office.
Listen last year, I promised to make America the bitcoin superpower of the world and the crypto capital of the planet. With the right legal framework, institutions large and swow liberated to invest, innovate, and take part in one of the most exciting technological revolutions in modern history. For years, you were mocked and dismissed and counted out. You accounted out as little as a year and a half ago, But this signing is a massive validation.
A massive validation as we watch the gyrations in the crypto market. Pleasure to spend some time with Gary Gensler as we consider the crypto space regulations and the plumbing in the market. He's with us live now, former Chair of Course of the Securities and Exchange Commission, Professor of the practice at MIT Sloan School of Management. Mister Gensler, Welcome back to Bloomberg TV and radio. Is that you buying the dip in bitcoin?
Joe? It's good to be back and good to be with all of your viewers. But now I'm not participating in that market.
Well, what do you think of this? We've spent a lot of time talking about this when you were in the job at the SEC and the many warnings that you made about this potentially risky asset, and we're witnessing a reckoning in the marketplace right now. What do you think is behind it?
Look, I think it's a risk asset. In the American public and the worldwide public has been fascinated with cryptocurrencies, but it's a highly speculative, volatile asset. And putting aside bitcoin for a minute, all the thousands of other tokens, not the stable coins that are backed by US dollars, but all the thousands of their tokens. You have to
ask yourself, what's the fundamentals, what's underlying it. You don't get a dividend, you don't get usual returns, and so the investing public just needs to be aware of those risks in this highly volatile space.
What do you make of the politicization of crypto? The fact that the Trump administration has become involved to this extent has reportedly turned off some investors as they watched the Trump family enriched themselves with gains, like this, is this a democrat versus Republican thing?
Now?
No, I don't think so. I mean it's about our capital markets. The US have the greatest capital markets and they benefit from common sense rules of the road. And when you buy and sell a stock or a bond, you want to get, you know, various information, and you want to know that you're getting the same treatment as you know, the big investors. That's the fairness in these capital markets that are so important.
For a lot about the impact of ETFs on this space, that's something you know a lot about the initial ETFs that were greenlit to start buying crypto. Did that just change the plumbing in the crypto market here by tying it directly to the stock market.
Well, ever, since antiquity, finance goes towards centralization, So it's not surprised that that which was started as a decentralized ecosystem and that was the vision, has become more integrated and more centralized. Investors can express themselves in gold and silver through exchange traded funds, and as of a couple of years ago, actually all the way back to my first year in the job, they were exchange traded funds on bitcoin futures, just as there is for gold and silver.
Yeah.
Well, mister chairman, I want to ask you about, speaking of plumbing in the markets, what happened at the CME last week and whether you think the CFTC should be investigating this outage. Should the CME be facing additional scrutiny.
Look, it's something really well understood that our major stock exchanges and futures markets, the Chicago Mercantile Exchange trades very consequential parts of our US Treasury market, interst rates markets their critical infrastructure and Thanksgiving evening, they had an outage at a data center. Importantly, it wasn't actually their computers.
It was the chillers, as I understand it, the cooling system in this data center, and they had an outage for about ten hours, and so markets planned for that. The Chicago Mercantile Exchange considered they didn't go to their backup data center. They stayed partly because it was Thanksgiving evening. As I understand it, I'm sure that they at the Chicago Mercantile Exchange and the various regulators will keep looking
at it and look for lessons learned. You always look for lessons learn and how can we do things better in the future.
Well, we've experienced an incredible number of inquiries about this at Bloomberg. Our readers are asking, our viewers and listeners are asking about this. It put a real chill in the markets. To use a terrible pun in this case, mister chairman, you don't sound that worried about this being systemic.
Look, I think that the New York Stock Exchange, CME, the clearing houses are systemically important, no doubt about it, systemically important. But what happened here at this specific moment is the cooling system as I understand how to glitch. By the way, this data center is operated by a third party. It's not operated by CME, so they have a contract for a certain performance levels, and they didn't go to their backup data center, which is I think
located elsewhere in New Jersey. If this would happen at ten am on a Monday, I think the management team would make a different decision and probably would switch over to the backup data center more quickly. The markets probably would have a little less liquidity. Not every high frequency trading shop or principal trading firm has the same connectivity to the backup data center, so that's an interesting business choice.
And for your institutional listeners, if that happened, they'd probably see a little less liquidity until they get back to that primary data center.
Always fascinating to look onto the hood with Gary Gensler, former chair of the SEC, Professor of the Practice MIT Sloan School of Management. Thank you, mister Chairman, for the time