All right, everybody. Welcome to the all

in interview program. Today, we are

delighted to have two of the most

important individuals shaping capital

markets over the next couple of years.

SEC Chair Paul Atkins is with us as

well, as CFTC Chair Michael Seelig.

Welcome to the all in interview show,

gentlemen. Glad to be here.

>> much. Great to be here. Yeah. Also with

me, my bestie, Chamath Palihapitiya, who

is known

to participate in capital markets.

I think there's a great structure here

for us to talk, many opportunities,

and then guardrails and things that we

should be concerned about in such a

dynamic time. Chairman Atkins, this is

your third tour of duty since the '90s.

Things have changed dramatically, so

maybe just to start us off here, and you

know, Chamath's got a lot of great

questions ready to go. I'm just curious,

in your time,

let's say the last 40 years or so,

what has what have you noted here about

capital markets and how they've changed,

and what's important for us looking

forward? Well, thanks. It's great to be

here and see both of you all today.

Well, so I started out as a young lawyer

in New York City doing

corporation finance work, you know, new

offerings and that sort of thing in the

mid '80s. And

and it's and there, you know, to to be a

startup company and to to build your

products and do R&D and all that, you

had to go public

in order to so Apple and Microsoft,

Advanced Micro Devices, all of those

companies started off as as you know,

IPOs.

And so, Andreessen Horowitz has a

really, I think, a really good

bar chart where they compare the

companies of the

early and mid

to late '80s to today, where I mean, it

just basically demonstrates through the

ROI that

insiders versus the buyers of the public

stock

you know enjoyed from those early

companies insiders being you know

there's not much private equity or

venture capital back then but the

insiders meaning the officers directors

and whatnot they had a relatively thin

slice of the entire pie I mean everyone

made out well obviously but the public

purchasers of in the IPO you know made

out very well over the years and then

had the lion's share of that. You look

at today the current situation where you

know we have robust private capital

markets and we have fully today half the

number of public companies as we had 30

years ago and it's completely reversed

return on investment is

you know mainly to the insiders private

equity venture capital

corporate officers and employees versus

the the public because it's they're

they're mature companies when they

actually go public. So that's a huge

change the private markets are

very robust and and strong but but

anyway but American capital markets are

are very healthy I think. When you look

at that back then

there was a real requirement for

everybody to do an enormous amount of

work because to your point these

companies were quite young. You'd be a

four or five year old company

and you'd go public because the going

public was not about monetizing

anything. It was actually a fundraising

moment. It was like a series C or or a

series D. I guess the answer is the

reason it changed was probably because

to your point there's all these returns

and so investors said well let's go

capture these in the private markets for

us and our LPs. But what it also does it

then change the nature of how these

markets behave. Can you just comment on

the amount of time companies are staying

private the dearth of the IPO

because it has become a liquidity

defining moment and is much more so than

the financing moment and whether things

should change and if so, how do you want

to change that and why?

>> Yeah, well, it's a free market,

obviously, so, you know, investors we

should allow the market to develop as it

will, but you're exactly right. So, now

it's more of a liquidity event for

insiders and

and so what we are seeing now is

in the private markets, you know,

there's a lot of capital that's where

people are willing to deploy it to

companies at early stages and then to to

stay on, but at the same time, there is

there are inhibitions for

for private companies to go public and

one of them is the the the cost of our

rules to comply with our rules and the

disclosure ones, especially where you

have all the annual report requirements,

proxy statements and all of that. And

so, and then quarterly reporting and and

so forth. So, that is one big inhibition

where things are not necessarily focused

on materiality anymore. Are you allowed

to convene a group of people and start

to line item these rules out or change

them or does it have to go through some

much more robust process where

there's a lot of competing reasons why

some people, some lobbies maybe, may

want these rules?

>> Oh, for sure. I mean, there are vested

interests in everything, but that is

part of my program for this year and

going into next is to go through our

rule rule book. We need a spring

cleaning. We need to clean out the

attic, the basement and the garage and

to really look at things

unlike the agency has ever done before

with a real focus on materiality. So,

that's one. The second to make IPOs

great again is to focus on litigation

and and so that is another thing that is

a key inhibition, I think, for people to

go from the private markets to public,

the threats of uh class action lawsuits

and vexatious uh litigation with every

dip in the um in the stocks. You have uh

issues like mandatory arbitration, fee

shifting, you know, loser pays, that

sort of thing. Both of which Delaware

has recently um outlawed for public

companies, and but there are other

states out there. And then the third is

the weaponization of corporate

governance around shareholder proposals,

that sort of thing. So, it becomes a

pain to deal with the annual general

shareholder meeting and and that sort of

thing. those three are maybe not the

only inhibitions, but they're three key

ones that I've heard over and over and

over again over the last uh 30-some

years from venture capitalists, private

equity folks, investment bankers,

lawyers, and etc. So. Mike, what are

your top priorities for 2026 in the

CFTC? Well, like Paul, I started off uh

working in private practice at a law

firm, and right around 2021, 2022, every

week my clients would get a subpoena

from Gary Gensler or CFTC, uh and were

faced with this onslaught of regulation

by enforcement. They were faced with

regulations that did not work for their

business models, and these were crypto

firms, prediction markets, artificial

intelligence firms, as well as our

traditional financial market

participants. They were just

relentlessly attacked by the the federal

government under the prior

administration. So, I really came into

government to help right the ship, to

help make sure that we have purpose-fit

rules and regulations for new innovative

technologies and financial products. And

so, a big piece of my agenda has been

crypto. Uh our crypto asset markets, as

as you all I'm sure are tracking,

there's some legislation that we're

really hopefully uh working with David

Sachs to get across the finish line in

the president. Um but but that's going

to be a key piece. So, the CFTC would uh

have amount of authority over the spot

markets, and we're getting ready to to

implement those rules should the

legislation get across the finish line,

another key piece of our agenda has also

been modernizing and upgrading our rules

and regulations for on-chain software

systems, blockchain networks, and other

types of digital asset products,

regardless of legislation. It's really

important that we have future-proof

rules and regulations that are ready for

the innovations of both today and

tomorrow, and that's blockchain, but

that's also artificial intelligence and

and other areas of technology

innovations. So, there's a lot of things

we need to change within our regulatory

framework to make sure that we're ready

to accommodate that. Let me ask both of

you guys a question. So, this sits at

the intersection of tokenization,

crypto, and what I would call systemic

risk.

So, if all if everything becomes

tokenized and digitized and 24/7,

what do you think needs to happen to

make sure that the systemic risks to the

system are managed? And here's what I

mean. If you go on X,

I've gone down the automated trading

rabbit hole. So, I don't know if you

guys know, but there are these

incredible young, vibrant projects that

are basically replacing a Citadel,

replacing a Millennium, and they're

building these automated, agent-based

hedge funds that are transacting across

all kinds of markets all the time.

And on the one hand, I'm completely

attracted to it. I think it's totally

democratic. It's the free market. It's

like, let's figure out what's going on

there.

And on the other hand, I ask question,

where's the kill switch? Or where's the

circuit breaker, if you will? And I just

want to give you both the chance to talk

about how you see these markets

converge, and both the positives and the

negatives of it.

>> Absolutely. We need to be considering

these risks as we're developing rules,

and and this to me is is the whole

reason we need to have a purpose-fit

regulatory framework for these products

and and autonomous agents and all of

that.

Up until now, I think the approach has

always been let's apply the old rules

and regulations and and that's going to

work out and make sure that nobody can

actually innovate and and create

something new. So, we are embracing

these opportunities in the market. We

need to study them and make sure that we

understand the risks, but we can develop

rules that accommodate that. So, having

a regime in place that says go build,

don't ask us for permission, but we need

to study that, work with the market

participants, understand the risks and

on our end we need to set up guardrails.

So, I do think there are unique risks

when you have the ability for an agent

to go out and deploy capital on

basically an autonomous basis

and and that's going to be something

that our markets we've really really

never seen before as regulators, but

that doesn't mean we have to stand in

the way and block it. I I think we need

to really understand the risks, make

sure that we have the right guardrails,

whether that is us operating nodes on

blockchains or or really having

technologists that are studying the

contracts in the code, but I don't think

there's any reason we can't have this

technology built here in America.

>> I agree with that and from from my point

of view, there's so many benefits to

come from distributed ledger ledger

technology for the financial services

industry where we're right at the cusp

of achieving T0, basically, you know,

immediate delivery versus payment,

receipt versus payment on chain by you

know, digital assets and so that's

pretty exciting. What we may even have

to build in speed bumps, you know, to

prevent fraud and and things like that,

but for many and for some instruments it

might not be possible, but your

discussion there with 24/7 and all that

I think is is really an exciting

prospect, but there are challenges from

you know, the liquidity perspective, you

know, having a you know, the whole

concept of best bid and offer, what does

that mean? So, you know, that's one that

we will we will be wrestling with. But,

ultimately, at least our approach is and

and what Mike and I are striving to do

in harmonizing the approach of our two

agencies is to and hopefully we'll get a

statute out of the whole Clarity Act

discussions going on in the hill right

now. That's really necessary to

future-proof what we're doing so there

is no backsliding in the future. But, we

need to focus on, you know, if it's a

security underneath and it's tokenized,

it's still as a security and it's still

the securities laws still apply. But,

it's up to us to make sure that our

rules are fit for purpose. And as the

whole purpose changes and as the

delivery mechanism changes, we need to

accommodate that. Unfortunately, in the

previous administration, you know, we

said, "Oh, come in and talk to us. You

know, we have a simple form for you to

fill out. It's on our website." Well,

haha, it's called an S-1 and it takes

lots of lawyers and accountants to try

to figure figure out how to do it for an

existing company, much less for a new

digital asset, a crypto sort of asset

that you know, where the form is

completely inapposite. There's no board

of directors, there are no offices

around the country, around the world, or

whatever. It's you know, just the thing

needs to be adjusted so that it is fit

for purpose. So, that's what we're

striving to do, going through our

rulebook to make sure it can accommodate

the new technologies. So, let's build on

Chamath's conversation here and his

points.

One of the key dangers and innovations

opportunities in the market is leverage.

And we see it obviously, hedge funds

have been doing this for a long time.

We're starting to see it in prediction

markets, Mike. And we're seeing it in

crypto.

What is the proper amount of leverage

and who should set those rules.

Obviously, you have Congress making

laws, you're responsible for executing

them, Chairman, in order to make sure

the markets are orderly

and that you protect investors. So, just

walk us through what you think is the

proper amount of leverage and your

framework and you've been at this for a

while as we mentioned. How has that

changed over time? Educate us a bit on

how we got to a world in which Bitcoin

investors might be 100x or 50x and

people might be leveraging their

prediction market and seems like it has

a function but it also seems like almost

every story starts and ends with

leverage. Right. Well, so I think it

depends on the marketplace and and on

the type cuz obviously you have banks

and they're all about fractional

deposits and and all of that and and

lending. Um so, uh you know, so we we've

gone through that back in 2008 and 2009

in the financial crisis and going all

the way back to 1929 and then even in

the 1800s, obviously, all the repeated

problems with um you know, financial

disruption in financial markets. So, we

have to be careful about that. There are

all sorts of rules for broker dealers,

for banks, for in the futures markets,

for margin and all of that to um like

put a lid on some of this and to have

some controls around it and and uh

transparency. You know, in the futures

markets, the the uh the the exchanges

have a lot of power, you know, over

their members and over margin and you

closing things down. We saw that even in

the COVID time and and whatnot. So, when

the markets got hairy there. So, um you

know, those things are constantly looked

at. The Fed plays a role as well, um you

know, with margining in the securities

markets. So, all that uh has to be

adjusted and now we need to look

carefully at these new markets and then

see what's analogous and see what

authority we have and uh and then make

sure that, you know, we're not killing

uh trading but we also have to keep an

eye out for the future to make sure that

we're not allowing things to then blow

up in our face. Here's a question that

may sound dumb, so I apologize if it

does, and this is to both of you.

I think a lot of people don't

understand, or at least I don't, where

the SEC and the CFTC cooperate most

effectively,

but then as with all things, where does

coordination maybe break down? Could you

just explain that to people so that we

understand and level set about what the

expectations of each organization are

and how you guys actually work together

day-to-day when you have to?

>> Having been around the two agencies now

for 30-some years, um I can really say

that unfortunately the two um and not

necessarily at the commissioner level,

but uh certainly at the staff, there was

a lot of sniping, uh you know, back and

forth. So, I compare it to two uh

fortresses with a no man's land in

between. And so, the no man's land is

littered with a bodies of would-be

products that people were unsure like,

is it CFTC? Is it SEC? crossfire between

the two just killed the products. They

never went to market. Single stock

futures, portfolio margining, which has

so much potential benefits for um

making the financial markets safer and

more efficient. But, Mike and I are

setting out to change that, and I'll let

you uh go forth on that one, Mike.

Absolutely. The the two agencies have

unfortunately rarely worked well

together, and what we're really uh

moving forward in a new direction with

our harmonization efforts. We have a

memorandum of understanding that the two

agencies are working on, hammering out,

and getting in place that will allow us

to share information, coordinate on

specific issues, and make sure that we

don't have this turf battle between the

two agencies going forward. And part of

that starts, of course, at the top.

Chairman Atkinson and I work very

closely together to make sure that we're

coordinated on policy, but also at the

staff level. So, when exchanges and

brokers and market participants are

coming in to register or to offer new

product, we need to make sure that

there's not this fighting over where

they're supposed to be registered and

what they're able to offer. Some of

these products cross jurisdictions. A

great example are some of the prediction

markets products. Some of them involve

uh public companies and securities and

others are related to things like sports

and politics. And that crosses

jurisdictions, so we need to make sure

that we have clear lines and that our

market participants aren't subject to

duplicative regulatory frameworks. And

Chairman Atkins and I have talked about

substituted compliance regimes where you

have a primary regulator at the SEC or

the CFTC, but we work together to figure

out the cross-jurisdictional products so

that you don't get stuck with

duplicative regulation registration.

Another area is crypto where we've got

blockchain networks, we've got smart

contracts, we've got protocols that have

both securities and non-securities

trading on them cross-jurisdictionally.

And and we need to make sure that the

standards are consistent because it

won't work if we've got one blockchain

for securities and another blockchain

for commodities and nothing in between.

So, I think this is really critical that

the agencies bury the hatchet and move

forward with a harmonized and

coordinated approach. As we look towards

the future, I mean to build on you know,

there two separate regimes and and there

are differences in approaches based on

statutes that govern us. But we also and

speaking for the SEC, we have a lot of

flexibility with respect to exemptive

authority and whatnot. So, my dream is

one day that and I hope we can achieve

that here in the next couple years to

have like a super app approach where,

you know, there is okay, blurred lines

between the two, but we've coordinated

our approach, we've coordinated uh, you

know, to reduce the friction between

dually registered companies and and to

make everything work very efficiently. I

want to ask a question

around prediction markets. Let me try to

set this up the way that I think about

it. So, I think that there is this

inexorable tension that's always existed

and will always exist between

the investor protection that has to

happen when you have publicly traded

securities or commodities or

derivatives.

But then the capital formation process

that on behalf of the company or

whatever that wants to get access to

this. And there's always been this kind

of back and forth tension. The best

example of this is Reg FD where we said

at some point, "Hey, let's hold the

trains. If one person knows something,

every person needs to know that thing."

Makes a ton of sense. When you get into

prediction markets, I think that this is

going to stress test this assumption to

the nth degree. And the reason is that

there are just certain things that some

people know.

And we see it now. Every other day

there's an article about some prediction

market that turned out to be right. Or a

bunch of other markets that were almost

manipulated. It seems like it's ripe for

this question to come up all over again.

The corollary to this is Brian Armstrong

tweeted something which I thought was

quite an interesting comment about

prediction markets which is that certain

prediction markets only thrive on

insider information.

Which is to say that they know a secret.

And so that's how the market can exist

and actually conform to an outcome. And

that creates these two sides. I just

want to get your thoughts on prediction

markets. What role do they play? How do

we balance the capital formation that

the market creates versus the investor

protection, the insider trading that may

be happening?

It's a very complicated space. I'm not

going to hold you to any of it. I just

want to think out loud.

>> markets aren't new. We've had them since

the '90s. They started off with the

electronic market in Iowa where folks

were predicting the political outcomes

on elections. We've been surveilling and

monitoring and and policing fraud and

manipulation in these markets for a very

long time.

And to the extent that there are

contracts in certain markets, for

example, what color Gatorade's going to

be, you know, dunked on the the coach at

the Super Bowl. Some of this stuff is

potentially at risk of being manipulated

and there's a risk that somebody on the

team is able to go trade because they

have special information about the

Gatorade they put in the cooler.

We have standards to make sure that

those contracts should not be listed and

and it's on the exchanges as the first

line of defense as self-regulatory

organizations to evaluate each contract

and certify to us, the regulator, the

CFTC, that those contracts are not

readily susceptible to insider trading,

manipulation, fraud, and the like. And

we saw actually recently Kalshi, one of

the the prediction markets, brought two

enforcement actions against

participants. One involved a contract

related to Mr. Beast's YouTube channel

where one of his employees insider

traded based on information of when a

video was going to launch or what was in

the video. And the same sort of

authority that you have at the SEC

around a duty of of you know, care to

your employer is a prevalent in our

markets. So, to the extent somebody

insider trades on information, we police

that. And and it's really important for

folks to know, it's it's not just

securities insider trading, we've got it

in the commodities world as well. And

the exchanges are policing that, we're

policing that. And to the extent folks

are listing contracts that are

susceptible to manipulation, there's

consequences to that. We can reject

those contracts or we can police fraud

on the back end, but there is a a cop on

the beat there and I do

want to caution that insider trading is

is is not something that's necessarily

allowed in our markets, but we do

believe that markets are truth machines,

that they do create a really powerful

source of information. We've seen the

hoaxes, the fake news, and the

manipulation of the polls. The prior

administration tried to ban these

markets ahead of the 2024 election, and

they really increased turnout. It showed

that they were correct when a bunch of

the fake polls were put out right ahead

of the election. So, we really have to

foster these markets here in the United

States and make sure that they don't uh

flourish in Russia or somewhere else

where they really will turn out to be uh

a source of disinformation. So, we do

believe it's valuable to have that uh

trading and information flowing through

the markets, but insider trading is is

still uh still legal here in the US.

>> us through some examples there, Mike?

Like, it's very obvious and clear to

people who work at Microsoft if some new

version of software's coming out or the

sales are dynamic and the numbers

haven't been released. Obviously, you

can't trade on that. You're going to

jail. It's insider trading.

If I am a reseller of Microsoft software

or a friend of mine works at Microsoft

and says, "Hey, things are going great

with this new product we have." And I

make a thoughtful, you know, uh wager on

a prediction market. Or

if I intentionally do something like I'm

a streaker at the Super Bowl was one

that came up recently. And I actually am

the streaker. Not that I'm planning any

of this. To make the bet.

Where are all those rules? Where do they

live? And who's responsible? Is it the

prediction market? Is it you? Or is it

TBD? Because it does seem that there's a

bit of gray area as Chamath was sort of

alluding to here. And And does this need

to be codified? And does it need to be a

bit more education for the public on it?

A lot of the gray started off with the

prior administration really trying to

ban these markets and not facilitating

proper rule making and guidance in the

markets. Over the past year, you know,

I've been in the the office for a couple

months now. For the past year under the

acting chairman's leadership, a lot of

these products have really exploded in

popularity. And so, now is the time to

put out guidance and make sure that

we're not regulating by enforcement as

the prior administration did, but we are

setting standards. We are making clear

what our statute says, and that is that

these contracts cannot be listed if

they're susceptible to manipulation. And

we take that very seriously.

>> standard. Yeah. Yeah. Yeah. So, the

exchanges are responsible for policing

that and reviewing the contracts, and

they certify to us the regulator that

they are free of the the risk of

manipulation. And if there's

manipulation in the markets, we're

policing that. The exchanges are

policing that. So, there are controls in

place, but a lot of these questions as

to what's susceptible to manipulation

are are up for debate. And I think

there's some wrestlers possibility. You

know, your example of the streaker, if

somebody can just jump out of the stands

and go streak across and collect on the

contract, I mean, that's something that

does seem potentially at risk of

manipulation and and fraud. And so, we

need to be careful about that. The

exchanges need to be on the lookout for

that. And if they're not, you know,

there's consequences with us as the

regulator. The markets should take the

first step and make sure they're

thoughtful about which ones to fire up

to begin with, and we have seen that.

They are not saying, "Hey, this dictator

is

uh executed." They're saying, "This

dictator is deposed or is no longer in

power." That seems to be a very uh

tricky one as well. Yes, Mike. Well,

there's got to be integrity in the

contracts. Our rules require that the

contracts have, for example, certain

fungibility and standardization. They're

derivatives contracts. This isn't simply

just betting at a, you know, with a

bookie and a casino. And so, each

contract that's that's correct. You

would look for is it tied to an election

or is it tied to a very specific event?

Uh is there a risk that that event can

be manipulated or insider traded? And

the And the exchanges are evaluating

that. And there are instances where

something is insider traded, and it

wasn't something they could have

foreseen. It wasn't readily susceptible

to manipulation. And so, they police

that. They bring uh actions against the

traders and KOSHE did just this with

some of its fines in in the past few

weeks. Let me ask a question about

quarterly reporting because maybe where

there was the most manipulation in the

past was around that, right? People

would try to front-run these quarterly

reports. They would try to make guesses.

Invariably you would find some people

that had crossed the bright red line.

But recently Paul President Trump said

maybe we should move to 6-month

reporting or 1-year reporting. And it

was

really well received by a lot of people.

Do you think that quarterly reporting

has sort of also killed the IPO? Meaning

when we think about making an IPO great

again

just the complexity and the burden of

such short-termism, has it made the

markets better or worse do you think?

Yeah, well that's a great point. And I

just wanted to add one uh kind of

a little uh note to the previous

discussion there that, you know, if if

something is a tokenized security, you

know, the federal securities laws apply.

And so that goes for insider trading,

you know, with respect to uh trading

securities uh wherever they may be, you

know, on the online or or on an exchange

floor or wherever. So anyway, but but

then to your point about uh the cadence

of

uh reporting, I think that's an

important one and we are going to come

out with a a proposed rule and and seek

comment on it. And I frankly am a bit

agnostic myself personally because if

you look at things uh we haven't always

had quarterly reporting. In fact, when

the SEC was uh you know, formed back in

1934, it basically codified the New York

Stock Exchange rule book, which at the

time called for annual reports. So

annual reports prevailed until 1955 and

the SEC went to semi-annual reporting.

And by the way, the UK did the same

thing around the same time. And then in

1970 only did things go to quarterly.

And then the UK parted way they did

quarterly as well, but then in 2014 or

so, they

they changed to go back to semi-annual,

but if you wanted to still report

quarterly, you know, God bless you and

go ahead and and do that. So, we're

still at quarterly and and so the

president did send out a you know,

electronic message about that. And so,

but our staff was looking at we're

looking at what we call filer status.

There are all sorts of different

categories of filers with different

rules like large accelerated filers,

accelerated filers, emerging growth

companies, and so forth. So, we're

looking to kind of simplify all of this.

And part of that also is perhaps smaller

companies could benefit from, you know,

reduced

you know, cadence of reporting, but

maybe not. They they have trouble

finding analysts to follow their stock.

That's another thing that might be an

inhibition to go public for small

companies. And maybe analysts want

quarterly, maybe they don't, maybe they

would prefer semi-annual, too. So, I

think this is a great debate to have

right now. And you did have Barry Diller

even taking the other side of it where

he's like, "I'm just tired of giving

predictions. I'm tired of playing this

gamesmanship quarterly. I'm just going

to release our accounting numbers every

month and you all can have fun with the

numbers as much as you like."

>> But that's amazing because you can do

that now, right? You can have software

that's so vibrant that it can just Jason

release a stream

and there'll be people that have, you

know, developed agents and developed

these AIs that will just process all of

that and they will then publish out a

dashboard and the whole thing will be

almost real time. It could be real time.

Yeah, and there are services that do

semi-interesting

things already that you can buy that

maybe people with budgets for data

streams can do. Let's talk a little bit,

Chairman Atkins, about the history of

accreditation in this country. I think

when you brought up Microsoft in the

early part of your career watching these

companies go public. I did a little

research while we were here and you were

speaking. Microsoft and Apple went out

with a thousand and 1200 employees each

and about 400 million dollars in revenue

in today's dollars. 120 million in those

dollars. So obviously there was this

incredible opportunity for you to create

and place a bet on these companies as an

individual with a stock trading account

and maybe move from you know one tier in

societal wealth to another and that's a

big part of the American dream.

But as we talk about private markets,

the SEC has ancient rules now going on

close to a century old to protect

investors called accreditation laws.

They apply to 95% of the of the country

apparently

and about 5% of us get to trade in some

way in private companies where the value

is created. The SEC has been challenged

and charged with changing these evolving

these and it never seems to happen. My

perception is which SEC chair is ever

going to take this on because hey, it's

just easier to keep the status quo. But

is there not an argument I know there

are some legislation now to create a

sophisticated investor test. So instead

of you inherited a million dollars

you're qualified to buy stock in Uber

when it's a private company.

Why not a sophisticated test like a

driver's license and you learn uh how to

trade in private companies and you get

to participate in that market.

Instead of just saying to people well

you can only participate in sports

betting or blackjack in Vegas but you

can't if you were an Uber driver or an

Airbnb host or an HR person using

LinkedIn as a private company buy those

stocks. Well you have an insight and you

have an instinct into maybe purchasing.

So So talk about the accreditation test

and sophisticated investor tests and and

your personal view on Yeah, well, great

point. And so, well, I here's one

chairman who is going to tackle that

issue. And so, we intend to do that. The

accredited investor definition. And so,

interestingly, I mean, to your point, in

the statute, in the Investment Advisers

Act of 1940, I believe, or Investment

Companies Act of 1940,

it there's a definition of that and it

includes knowledge, not just,

you know, wherewithal or sort of assets

that you have. It includes it has the

word knowledge in it. So, to your point,

why can't we have, and people have

suggested this over time,

equivalent of a driver's test or

something like that or recognize

somebody who has a CPA or, you know, a

CFA or whatever. But, you know, maybe a

type of a series 7, but, you know, not

so complicated as that that FINRA

administers. So, part of the thing is

like, who's going to make the test,

who's going to administer it, and how do

you get there? But, anyway, but we can

Those are issues that we want to tackle.

And I remember when this

issue came up when I was a commissioner

back in the aughts,

there was one comment letter that came

in that really struck me. And it said,

"Today I am able to

This is the comment letter commenter

speaking. Today I am able to buy a hedge

fund or private asset or whatnot. But,

tomorrow, once you raise the standard

of, you know, I have to have X amount of

money of assets or income or whatever, I

won't be able to. So, what's changed?

Why Why are you going to take that away

from me? So, why does a finance

professor who makes a $100,000 and lives

in an apartment and doesn't have any

other assets, why is he not able, to

your point, to invest in

some of these types of securities,

whereas an heiress who just came into

$10 million or something like that

suddenly is. Now, she can hire people to

advise her, but they could be dummies,

too. I mean, who knows what they are.

But, so anyway, so I think we have to

take a fresh look at all this and we are

going to do that here this year and

with a

proposed rule to address that. I have a

question around the derivatives markets.

Well, actually, before I ask the

question about it, I I want to ask about

the futures markets, which is you have

an enormous number of high-frequency

trading firms that really dominate

futures volume. Can you just tell us

both

the value that these folks are

providing, is it truly liquidity,

or is it, and there's been some

speculation about this, very

sophisticated market arb?

And if it's the latter,

where do you think we need to do

necessarily a better job? I think the

best example is if you look at this, the

volume of futures activities and spot

prices of certain commodities, the basis

is starting to kind of get out of whack.

So, just

tell me about the market participants

part of these derivatives and futures

markets and

what you think about what's going on.

Our markets have three core types of

participants. We've got the hedgers,

we've got uh speculators, and we've got

market makers, and the liquidity is

really the the result of all three. So,

there's going to be market participants

that really rely on whether it's a

cattle contract or a credit default swap

product, they need to to enter into

these agreements to hedge key risks in

their business, and then you've got

folks that are willing to provide

liquidity, whether they're speculating

and taking another position on that for

for their proprietary basis, or they're

doing so to make markets and earn a

spread. And that's right. We we're

regulating these markets, we're making

sure that the trades that are going

through have integrity and that folks

aren't uh you know, wash trading and

trying to manipulate markets. There are

some strategies that raise particular

risk of manipulation or fraud and we

police that. We've taken actions in the

past to make sure that the the exchanges

are not subject to illicit behavior and

and and trading and the exchanges

similar to my point earlier relates

prediction markets are first line of

defense here as well. They surveil their

markets and we're in constant

communication with them as well as the

traders were often times sending

information requests to traders about

their activity. So I do believe that the

these all three participants are very

important to make sure that our markets

are liquid. So on that last point that

you just made which I think is a very

good one.

Post GFC there was like these central

clearing functions right to make sure

that derivatives contracts were getting

not getting out of control and we had a

good sense of systemic risk but it turns

out that one blind spot everybody has is

to these bilateral swaps. I mean I've

done certain bilateral swaps with

certain counterparties. It's not clear

to me that you know that on the back end

of it. Can you talk about that and how

you think that that should stay the same

change what that is whether that keeps

you up at night whether it should keep

us up at night.

>> Sure well I'm not a huge fan of

Dodd-Frank but in the wake of Dodd-Frank

we got swap data reporting and these

bilateral over-the-counter swaps are now

generally all there are some exceptions

but sent to swap data repositories where

we're getting

information on a daily basis as well as

these third-party repositories that

compile that information. So the markets

are much less opaque. We have

transparency today but my concern about

the swap data reporting regulations is

that they have really been a tool for

our enforcement divisions in the past

where you've got so many different

fields it's really difficult to

characterize each different type of

swap. I'll tell you when I was in

private practice and folks started

entering into Bitcoin swaps and in

crypto swaps, characterizing that as a

type of derivative relative to cattle

and wheat and other commodities, really

was a

whole lot of legal advising and a a lot

of wasted money, frankly. So, we need to

simplify. We need to make sure that our

swap data reporting regime is rational

and coherent and makes sense for the

everyday participant in the markets. You

shouldn't have to go hire a high-priced

law firm just to enter into a risk

management tool. But, these markets

these these developments post

Dodd-Frank. Some of them make sense,

some of them don't. A big priority of

mine is going through

rule by rule to make sure that all of

our regulations are really the minimum

effective dose. I have a question for

both of you. Is there

something that if you could borrow from

the other person's regulatory toolbox?

Mhm.

>> [clears throat]

>> Something that they can do that you

cannot that you would love to also be

able to do? From my perspective, one

thing for new products that the CFTC has

is called self-certification.

So, for repetitive products that you

know, once you go ahead and approve the

general type of

framework for it, then it's

self-certification by the markets and by

the people who are of course coming

forward with the products. We don't

necessarily have that kind of thing. We

do for some things like for ETFs and

whatnot where we've come up with rules

that then you know, then it's up to the

market participants to abide by the

rules and have their product conform.

But, on so many other products, we have

a a much more complex

you know, labor-intensive, let's just

say, approach to it that requires

approval by the staff and the commission

and and that sort of thing. And whereas

it's much more streamlined on the CFTC

side. Well, on our side, there's there's

one regulation that I think's been

really effective on the SEC's

uh

and that's the alternative trading

system. So, on both sides of the house,

we have full-blown uh you know, very

very intensive exchange registrations.

Uh the SEC went ahead with a rulemaking

that allows broker-dealers to then set

up an alternative trading system, and

it's really a an exchange-light

framework, and I'd love to see that on

the CFTC side as well. Chairman Gensler,

I want to talk about fund formation in

the the power of venture capital in the

US economy. 20% of the GDP of this

country comes from venture-backed

companies. It is 40% of the S&P.

Obviously, with the max 7 contributing

heavily, uh comes from venture-backed

companies that we all know and love

their products.

But, fund formation for venture capital

is ancient, and there are massive

limitations on it. There's two ways,

obviously, to address this. One is the

path to accreditation for people to

become sophisticated. We just spoke

about that. But, the other is how many

people are allowed to participate in a

fund. As but one example, when I raised

my last fund, I had well over a hundred

million dollars in accredited investors

who wanted to have a small bite of the

apple and get into venture capital, but

I could only accept a hundred. I could

only accept ten million.

And

doesn't make any logical sense because,

in fact, it would be better if more

people could put in smaller amounts.

Many hands makes for light work, and

more people could participate in this.

This would have a dual impact on the

economy. One, more startups would get

funded, and two, more individual

investors would get to participate in

this very closed ecosystem known as

venture capital. So, I was wondering

your thoughts on venture capital

specifically in formation

of what is the driver of the US economy.

Well, you raise a great point, but a lot

of that that you're talking about with

funds is statutorily

uh mandated. And so, there are two big

exemptions uh in the uh Investment

Company Act of 1940 uh that are, you

know, pertinent here. And so those were

adopted by Congress with a lot of debate

and and whatnot.

And so so that is more difficult to

change and there's certain ways that we

can change them. And so we are going to

look at this and there you have a lot of

different types of accredited investors.

You have qualified purchasers. You have

you know, also qualified institutional

purchasers and and and whatnot or buyers

rather. And so you so all of these

things need to be

you know, I think looked at anew and

where we have the authority through

our exemptive power under the various

statutes will be able to use that. But I

do think that especially now as we talk

about opening up private

funds or or private types of products to

a broader range of people including to

you know, 401K plans and whatnot. We're

we're working with the Department of

Labor and the Treasury Department to

address this and we all feel very

strongly that here you have to have good

guardrails. You just can't open up the

barn door wide open that we have to have

standards for what can go into these

sorts of you know, plans 401K plans,

pension plans. But retail investors are

already exposed to the private markets

through their pension funds, insurance

companies and all that. So all of this

needs to have a you know, fresh look and

you know, come up with good new ideas to

basically provide democratize it. And

just as a quick follow up there, one

that I think would be super easy is just

hey, 10% of whatever your last two years

average

income was or you know, no more than 5

or 10% of your net worth. Michael, there

are some common sense ideas here that

would would increase the the of

participation. Can you think of Michael,

any reason

that we should restrict Americans from

being able to participate in venture

capital? Is there any argument here if

there were some basic level controls as

I've outlined here, sophistication,

taking a test, or a cap, you can only

put 5K in, you make 150K a year, you can

put in 15K per year. What are your

thoughts, Michael? I'm a believer in

free markets and I really think that

allowing more access to our capital

markets is is really a powerful thing

for everyday Americans. We saw the ICOs,

you know, the initial coin offerings

where things just kind of moved into

crypto and you had all sorts of

investments in different projects and

they were attempting to get under the

radar of the securities laws even though

they were capital raises with different

tokens and I think the market's always

find a way. So, allowing for more

access, decreasing some of the

requirements around accreditation, I

think that's a really great thing for

the American people and and really will

just allow for people to have some skin

in the game and maybe they lose

sometimes, but other times they really

hit it big and it's a great thing for

for everyone. So, nature finds a way,

right? Like if Exactly.

>> allow people to participate, they start

doing ICOs and when I looked at them, I

looked at 100, Chamath,

I said, "Wow, 99% of these are white

papers with spelling errors in them.

These are not the real companies that

you and I look at in our daily lives in

venture capital." So, it's reminds me of

what happened with crypto, which is,

"Hey, it went offshore. It went to

another stream." I want to talk about

just the capital markets globally. We're

in this very unique moment where there

just seems to be this separation where

the American capital markets and you two

are tips of the spear have enormous

credibility. And then when you look at

some of these other capital markets,

Paul, you mentioned the UK, but I hate

to say it so bluntly, but the UK's a

disaster. It is impossible to raise

money there. It's impossible to raise

money or innovate in a European

exchange. It's a little bit easier in

Asia, but it's complicated. But then you

do see some of these upstart exchanges

that are trying to push and innovate in

Abu Dhabi and KSA etc. If you just take

a step back for a second, I just love

your perspective on what's going to

happen to capital formation and

specifically

what does America need to do to get this

next couple of trillion dollars to be

brought on shore?

Well, first of all, I think, you know,

our our capital markets are the envy of

the world. I mean, it really is amazing

when I travel through Europe or Japan

and uh and the UK and and and Middle

East and whatnot. People really envy our

huge capital markets and how robust they

are, how fair they are, and it goes back

to our rule of law and enforceability of

contract, and that's the essence of what

is the foundation

of you know, our freedom and our ability

to uh you know, do

innovate and and have all these new

products. So, they would love to have

that plus the um

you know, the I guess what they also

really envy is our

our risk appetite here in the United

States, where people

are have an equity investment culture,

and that is really largely

absent in Japan

and in Europe. And the in a lot of ways

they can't get out of their way because

out of their own way because through

their regulatory system and whatnot. I

mean, ours is bad enough, but they in

many ways take it to a different extreme

with a very narrowly constructed code

that really hamstrings them and is is

not very flexible in the future. So,

that's where as far as if we can

open up our markets as far as you know,

some of the things that we've been

talking about here as far as new

products, allow innovation to take place

here on on shore, and then also to fix

some of the things like the accredited

investor investor standard and that sort

of thing. I think we, you know, can then

to your point, you know,

turbocharge it to continue our growth.

Crypto's been a bit of the wild west and

we have things NFTs, ICOs, meme coins.

They feel

>> [laughter]

>> they look like stocks to people, whether

it's dollar sign Trump or dollar sign

Doge, whatever it is. But they have a

ticker symbol, they have a chart, they

trade like a stock. What do we need to

do in regards to crypto? What what

should and where is the line between

launching a a crypto token and the

public being protected there, Chairman

Akers, versus hey, it's a publicly

traded stock. Because for a lot of them

they get into it and they're the suckers

at the table. It feels, it looks, it

quacks like a duck, it looks like a

duck, and so they buy it like it's a

duck, but it's not a duck, obviously. So

What do And And this was Gensler's, I

think, you know, maybe a logical point,

although his execution was poor.

There was a logical point to hey, we

have rules. We can't let you break these

rules for your dollar sign whatever if

everybody else is doing their company

properly, you know, and following this

set of rules. So So how do we evolve

that to protect, which is the top

mandate, the consumer? Well, that's a

great question. I think the real problem

has been definitionally and so the the

kind of the very vague lines and so

people weren't sure they were and as

Mike was talking about, you know, people

play paid lawyers a lot of money to try

to do it. Some lawyers just gave happy

talk and then people got in trouble with

the SEC and other lawyers just said

forget it, go offshore, you know, you

there's no use to even trying here in

the United States. So that's part of

what, you know, Mike and I are trying to

do as far as harmonize. So we're if it's

a tokenized security, then that's one

thing under the SEC's rule book, but if

it's things like uh tokenized also

digital coin a digital token sorry or

digital tools or digital collectibles,

then those sorts of things uh fall under

the CFTC's

oversight and their rule book is is

really more apposite for these sorts of

things than ours is, but you have to

have a logical oversight over things

like that to prevent fraud because the

one thing that really

you know attracts people to our markets

from overseas is that they perceive that

there is you know that fraudsters do get

caught and you know we have protections

around as we've been talking about

inside trading and then as things like

that trading on material non-public

information by insiders. That is you

know so we have a robust So thing for

that. Mike, unpack that for us and maybe

you could add to it the role of

sometimes we see celebrities promoting

these things and

it just feels like it's a bit of it was

a bit out of control there for a bit and

and your job is to make it controlled.

So so what should the crypto community

that wants to release utility tokens and

participate here? What do they need to

know going forward? We have to separate

the capital raising activity and selling

something for the purpose of raising

capital to form a business when you're

going out there and giving folks the

white papers and the business plans and

making promises to them

from the actual thing that people are

buying. The tokens themselves in many of

these cases are just goods. As Chairman

Akon said they could be a digital

commodity something that's an input for

a network like Ethereum or Solana or

anything else where you're using it for

a function within the network.

But the capital raise is something

separate and they could be collectibles

like an NFT or tool that you're using to

run a

command on a network, that sort of

stuff. I mean, they're they're they're

commodities or they're goods or or

things that potentially neither of us

regulate. We don't go out and regulate

widgets that are sold as part of a

capital raising. The The SEC has brought

many cases over the years related to

fundraising with chinchillas and whiskey

barrels and all sorts of things, but

we've not had those traded as securities

in our markets and and we don't want

that for the digital world, either. As

we start to wrap here, I have a final

question, which is

both of you sit on top, again, as I

said,

the most,

in my opinion, important capital market

in the world. You guys are responsible

for the well-functioning

and the pass-through of literally tens

and tens of trillions of dollars. You

are responsible for enabling

and not slowing down just the great

vibrancy of the American economy as

reflected in these markets.

That's the upside. The downside is that

that also comes with a lot of pressure

when you're in the bowels of the job.

And I obviously I don't know what that's

like every day, but what are the couple

of things that the two of you think

about at night? What are the critical

risks to this experiment that you just

know you have to get right or the

critical issues that in the next year or

two you must get right for all of this

to continue.

Maybe Michael, start with you and then

Paul. Two big things concern me. The

first has been this push of innovation

offshore. We've got to get it back here

in the United States. That's really

what's built this country over the

years. Thomas Edison didn't have to go

ask for permission to go innovate. We

need to make sure that our builders, our

visionaries, our entrepreneurs have the

courage and and the confidence to come

and and develop new things and build

here in our financial markets. And that

means blockchain, that means artificial

intelligence, that means prediction

markets. We'll set the rules for it,

make sure that it's possible to do it,

but we don't want everyone fleeing to

the Cayman Islands and the Bahamas and

and Russia to go do this stuff. So,

that's really concerning to me. I want

to make sure that the folks are back

here in the US. The second piece, of

course, is the the risk to our system.

If we've got too much of manipulation

and insider trading fraud, I mean, why

not trade, you know, elsewhere? And and

there's real risk to our investors. And

so, making sure that we have the right

controls, customer protections, we can't

have another FTX in the United States

where funds are lost and and there's an

absolute fraud on on our American

people. So, so that's a really critical

concern. Balancing innovation with our

financial system, the integrity of our

markets, and we're going to do it, but

it's it's definitely hard work ahead of

us. And for me, so I mean, I I agree

completely with the innovation point

that, you know, we need to make sure

that we are allowing people to innovate

here on shore. And FTX one is a great

point where

there was one part of FTX that didn't

implode with the rest of it, and that

was their investment in

a swaps trading platform called LedgerX,

which which was supervised by the CFTC

and examined, and they had

they they had their

accounts segregated and all that. So, no

customers

lost any money through that, and and it

still lives on, you know, today. So, so

my worry is that we're fighting always

the last battle. You know, the French

built the Maginot Line, and that didn't

work very well. And then, so we had the

same thing coming out of the financial

crisis. So, we have to think ahead.

We're confronting a lot of new

challenges. So, artificial intelligence,

of course, you know, is, you know,

developing very quickly. And

but we're also seeing it on the fraud

side. I mean, the

horrible stories I hear about people

whose

who've lost their entire retirement

nest egg through fraud where there are

confidence people who

you know through all sorts of

manipulative types of communications

then

draw people in and get them to

you know send off their their money

elsewhere or even their their Coinbase

account or things like that where they

give passwords away with you know these

confidence artists out there. So, we

have to be attuned to that. We have to

be the cop on the beat because that's

the real threat that will

lead people not to necessarily

you know invest their money here but but

I think you know we are a cop on the

beat and we're you know out to make sure

that we can find the bad guys but we

can't then put too much overwhelming

you know restrictions on the good guys

so that they can't innovate and can't

come out with new products. Those are

great answers. I think both opportunity

and policing. I just want to end with a

final thought. As these markets open up

wagering, stocks, crypto,

we do have a an issue a second order

effect that's happening. Young men 18 to

30, 45% report that they've had a

problem with wagering gambling and 10%

meet the addiction criteria. A third

have placed a bet. The upside to this in

my mind is we have a generation,

generation bet, that understands

[clears throat]

capital formation markets and how to

participate in them but we do have a

downside. Outcomes, yeah. Outcomes, yes.

And to really think about that there's

obviously a downside here which is a

very young developing brain might not be

ready for that. So, so Mike and then and

then Chairman Atkins, what are your

thoughts on how to protect these young

men

who you know they're they're excited

about participating in these markets but

maybe their brains aren't fully formed

and ready to take on that

responsibility. I think education's

critical here. We need to make sure that

our market participants are providing

information to participants and we don't

regulate the casinos and the gambling

and all of that and and I but I do

believe that that is a bit a key piece

of their initiative as well to make sure

that folks are informed when they're

coming into to the casinos. We should do

the same at the federal level, make sure

that our participants voluntarily, of

course, this isn't necessarily something

that that we mandate on our derivatives

exchanges, but I do think it's an

important thing to be informing them

public. Of course, we've got really

robust standards on brokers and on our

exchanges and they're making sure that

there's

the persons that are participating in

the markets have the ability to

participate, that they're suitable to

invest and and participate in our

markets and I think those controls

combined with some education are really

going to be important here.

Chairman Ekins I agree with that and but

it's not just education of the many

cases children or and

you know adult young men and and women

too, but it's also their parents you

know, especially for the children where

I think there is a large ignorance on

the parents part as to you know, what

their kids are doing and with their

phones or elsewhere and you know,

getting involved in these things. So you

know, I hear that from a lot of my

friends so just

you know, apocryphally there but so

that's we we shouldn't forget that. The

schools are important as well, but the

signs of you know, that sort of

addiction, you know, are really you

know, important to to recognize that and

then take action. But we have the same

thing with other sorts of gambling,

lotto or lotteries and and that sort of

thing. So it's not just in the

securities markets or crypto markets or

elsewhere, but it's also on everyday

things that we have to really watch out

for.

>> I love your suggestion Mike because

I I noticed Robinhood now if you want to

go trade something complex, puts, calls,

you know, spreads, everything, it forces

you to go through a little wizard to

make sure you understand it and and to

teach you what exactly you're doing. So,

I think education so critical and it can

exist at the

platform level. This has been an

incredible hour plus. Uh I want to thank

you two gentlemen for joining us here on

the All-in interview.

And we'll see you all next time.

Bye-bye. Thanks, gentlemen. I'm going

all in.

I'm going all [music] in.