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Another big story we've been covering is the executive order that President Trump signed last week that could pave the way for one four oh one K accounts to invest in crypto. Bloomberg spoke with SEC Chairman Paul Akins back in July about the possibility of private markets in retirement accounts.
Here's what he had to say.
We've heard a lot of input from both the investors who want access to private the private markets and to those sorts of products, and obviously from the people who are producing the products who are about to meet that demand. So but we have to do it carefully, I think, because of course, the private markets are a lot different than the public markets.
And that was Paul Atkins before President Trump signed that executive order, and now that it has been signed, please to say we're joined now by SEC Commissioner hester person to discuss this topic and much more. Commissioner, great to have you with us. Let's talk a little bit about that EO. So it instructs the Department of Labor and the SEC to adjust their rules and regulations to allow those retirement accounts to invest in private assets, to invest in crypto, or at least to allow it.
How will the SEC approach this? What does that checklist look like, Katie, It's great to be here.
I think we've already started that process of opening the private markets to retail and thinking about ways that we can get them access in a way that's diversified, professionally managed, and consistent with their investing time frames. And so I think we'll just continue with that work.
Appreciate that contact. So as we continue on and as you approach us, talk us through some of the potential risks that you're thinking about, because certainly a lot of folks on Wall Street and elsewhere have been anticipating these rule changes. But there's also a lot of concern too about putting what are risky assets in retirement accounts.
Yes, I mean, I think those are legitimate concerns. What we've seen, of course, is that the public markets are dominated by several large companies, and also companies are waiting longer to go public, and so we're looking for a way for retail to get earlier access to the growth of companies, and so that's really the goal of it. But of course you want to do it in a way that makes sure that we're not just using retail
as dumping ground for bad assets. So I think it's making sure again that there's professional management, that it's done in a way that's careful, and that we're paying attention to the risks associated with it.
A conversation I've been having around this topic is about how this isn't as simple as switching a light switch necessarily, that you're not going to see private assets and to see crypto in retirement accounts. Overnight you said that you've already started this process on your end, you're working through that checklist. What do you see as the timeline here.
Well, I mean, I think even already we have loosened SEC made restrictions that really were not based in law on the percentage of private assets that could be available in retail accounts in funds that are available to retail investors. So I think that process has begun. We have a new head of our division of Investment Management, and he's working closely with the staff and working also with people who have been thinking about how to do this in the private sector. So it's a combination.
Of those things.
All right, Well, appreciate you know the update there. I hope to keep talking about that, but I do want to move on and I want to talk about tokenization. That obviously another big hot topic of the moment. And when we're talking about everyday investors getting involved with tokenization, what are some of the risks in your view that could potentially come about.
Well, I think there has been a lot of interest in tokenizing securities and other real world assets, and that's something that really opened up after the SEC changed its perspective on crypto. So we're seeing a lot of interest from traditional financial firms and native crypto firms, and they're different approaches that are being taken to tokenizing. So we will work with people. We're willing to work with people
who are taking different approaches. But it's really important that people be very careful about disclosing what the nature of the asset is. When you tokenize something, it's still a security. If you're tokenizing a security, it may be a security with different characteristics, and that's something that needs to be
conveyed to investors. And you know, it's also important to be aware of sometimes their trading restrictions or their restrictions on who can access particular types of securities, and so that's something people have to pay attention to.
And that's a point that you've made in the past, that token is securities are still securities. You do have some firms I'm thinking of Robinhood, for example, rolling out token is stock trading. I believe that's taken hold in Europe.
So I mean, do you see that as a potential area where you could run into some of these confrontations over firms trying to really regulate and innovate and introduce measures such as that, but potentially coming up against some of these regulations that you're putting in place.
Well, without talking about any particular firms approach, I think the bottom line is that we encourage firms to come in and talk to us. We expect that there will be some different approaches taken to tokenizing, and we're looking forward to working with folks to try those different models out and see what the market's like and see whether or not tokenization of equity securities takes hold. I mean
that really will ultimately be up to the market. But what our message is is that we're willing to work through different potential models with people.
Well, you said something interesting there.
You know, if tokenized equities take hold and it's a good reminder that this is very nascent, that we're only just seeing the first few attempts at this come about. But should these tokenized real world assets, should tokenize equities really take off? Should we expect a formal pilot program from the SEC for tokenized securities?
I think the pilot program again is more likely to look like multiple pilots, with different people coming in and trying to do this in different ways. And again we're not trying to be the picker of winners and losers, but letting the market decide. So really we expect that there will be multiple options.
I do also want to talk about how you interact with some of the other regulatory bodies in dc A. For a lot of folks, it's kind of like alphabet.
So if you have the.
SEC, you also have the CFTC, And I'm wondering how you work with the CFDC on crypto right now, if at all, what does that relationship look like.
We have a good relationship with the CFTC. We've worked with them. I personally have worked with the CFTC over the years on a number of issues, including security based swaps, and so right now we're both agencies are coming off
the Presidence Working Group report recommendations. We're both trying to implement those recommendations, the ones that we can start already absent market structure regulation legislation, and so we're coordinating with the CFTC on moving forward on those recommendations.
Well. To that point, one of the recommendations was that crypto exchanges and other crypto and entities that are registered with the SEC that they should have to pay transaction fees the same way that traditional brokerages do.
For example. Do you agree with that.
I certainly understand that we need to have the fees fall on the people who are benefiting from the revenue of the fees. So I think that as the markets change, those changes should be reflected in fee revenue and Commissioner.
You also brought up market structure. We know that that crypto market Structure bill is working its way through. This sense seems to be on the street that it faces a much tougher go ahead than the stable coin bill, for example.
I would love to hear your thoughts there.
Well. I don't prognosticate about legislation any more than I do about where the markets might go. In terms of which models of tokenization they might embrace. But I do think that the work has been really on the part of the House and the Senate is now looking at these issues.
It's a very.
Complicated piece of legislation to work out, but I think important and we're happy to work with people in both the House and the Senate on trying to get it to the place where it will help to guide the shaping of the industry.
And just game planning here.
Let's say that Congress doesn't isn't able to finish this market structure bill by November.
What would that.
Mean for the SEC and your approach to regulation.
I think one thing that's important to underscore is that we at the SEC are not waiting for legislation to work. We have a lot of work that we can do under the existing authority that we have, and we think that the President's Working Group report urged us to take those steps, and so we've been working since January on providing guidance about where the securities laws apply and then where they do apply, helping helping firms to navigate those rules.
And so that's something that we are hard at work on. We're working on rulemaking and we think that what we do will be consistent with whatever market structure legislation comes out.
And Commissioner, I do want to talk a little bit about Project Crypto. I know that you know that's put together to help implement the Presidential Working Group's recommendations. How is that project going right now? What does that look like?
I mean, it's going it's going very well.
We're working very collaboratively with staff all across the Crypto Task Force is working collaboratively with staff across the building at the SEC. We are meeting with industry and with other interested parties. We're taking written comments as well, and we're putting that together into a package of reforms. As I said, we've already gotten some guidance out the door, but we are hoping to get some rulemaking, proposed rulemaking out the door.
As well well.
Commissioner, we really appreciate you taking the time to speak with us today. That is SEC Commissioner Hester Purce