Cuomo Seeks Clarity, Bitget Hacked, Peirce’s Exit Interview

>> LIVE FROM BLOOMBERG’S WORLD HEADQUARTERS IN NEW YORK. I’M SCARLET FU. TIM: AND I’M TIM STENOVEC. WELCOME TO "BLOOMBERG CRYPTO." SCARLET: MOMENTS FROM NOW, WE’LL SPEAK TO THE FORMER GOVERNOR OF NEW YORK, ANDREW CUOMO, ABOUT THE FAILURE OF THE CLARITY ACT AND WHAT ROLE HE SEES CRYPTO PLAYING IN POLITICS. TIM: AND ANOTHER MAJOR CRYPTO HACK, THIS TIME ON THE EXCHANGE. WE TALKED WITH THE C.E.O. ABOUT HOW HACKERS WERE ABLE TO STEAL HUNDREDS OF MILLIONS OF DOLLARS IN TOKENS AND HOW HER COMPANY IS RESPONDING. SCARLET: AND THE S.E.C. COMMISSIONER IS ENDING HER TENURE THIS WEEK. WE DISCUSS HOW FAR CRYPTO HAS COME DURING HER TIME. TIM: THAT’S ALL AHEAD ON "BLOOMBERG CRYPTO." FIRST UP, A CHECK ON HOW THINGS STAND RIGHT NOW. BITCOIN IS DOWN ABOUT HALF A PERCENTAGE POINT TODAY. A LITTLE BIT OF A RISK-OFF DAY IN EQUITY MARKETS. SO, TOO, IN DIGITAL ASSETS. STILL HOVERING AROUND $83 3,000 PER BITCOIN. ETHER DOWN. SOLANA DOWN TO $118. I WANT TO ZOOM OUT AND LOOK AT THE QUARTER, BECAUSE IT’S BEEN QUITE A QUARTER FOR BITCOIN. THE QUARTER UNDERSTANDS TOMORROW. BITCOIN IS UP CLOSE TO 40% FROM JULY, EXCUSE ME, IT ENDS LATER THIS WEEK, NOT TOMORROW. 40% FROM JULY THROUGH SEPTEMBER SO FAR. IT REVERSES THE 14% LEASE IN THE PREVIOUS QUARTER. IF YOU LOOK AT HOW BITCOIN HAS DONE THUS FAR THIS QUARTER, UP 40%, YOU’VE GOT TO GO ALL THE WAY BACK TO 2024 TO SEE A PERFORMANCE SUCH AS THAT IN A SINGLE QUARTER, AND THAT WAS WHEN BITCOIN WAS UP 48% -- 47%. SCARLET: AND DEMAND FROM INSTITUTIONS CERTAINLY HELPED TO SUPPORT BITCOIN’S RECENT PRICE ACTION. BITCOIN ETF’S ATTRACTED ABOUT $2.4 BILLION. THAT IS THE LARGEST WEEKLY NET INFLOW SINCE EARLY OCTOBER LAST YEAR. AND YOU REMEMBER WHAT HAPPENED LAST OCTOBER. THE COIN SET A RECORD ABOUT $126,000 BEFORE THEN TUMBLING AND ENTERING A CRYPTO WINTER. SO THIS LATEST SURGE IN WEEKLY INFLUENCE WAS ENOUGH TO PUSH THE ETF’S INTO POSITIVE TERRITORY FOR THE YEAR, TIM. TIM: LET’S GET TO ONE OF THE BIGGEST STORY THAT’S ROCKING THE CRYPTO INDUSTRY THIS WEEK, THE EXCHANGE BIT REPORTED MORE THAN $350 MILLION IN UNAUTHORIZED TRANSFERS FROM SOME OF ITS WALLETS, LEADING IT TO TEMPORARILY SUSPEND WITHDRAWALS. THE COMPANY WORKED TO ADDRESS THE HACK. THE C.E.O. APPEARED ON A THREE-HOUR LIVE STREAM TO SHARE DETAILS. SHE ALSO POSTED ON X SAYING, "BECAMED ON I.P. BEHAVIORAL PATTERNS AND SIGNATURES, THIS ATTACK IS CONSISTENT WITH TECHNIQUES USED BY DPRK-LINKED HACKER GROUPS." WE HAVE NOTIFIED RELEVANT AUTHORITIES AND ARE COOPERATING FULLY WITH THEM GLOBALLY. FOR MORE, WE ARE JOINED BY THE C.E.O., GRACY CHEN. GOOD TO HAVE YOU ON THE PROGRAM. I’M REALLY CURIOUS ABOUT WHAT HAPPENED WITH YOUR COMPANY AND HOW YOU’RE RESPONDING RIGHT NOW. HOW ARE YOU MAKING SURE, FIRST, THIS IS NEVER GOING TO HAPPEN AGAIN? >> NICE TO SEE YOU AGAIN, TIM. I’M VERY SAD IS A THIS IS THE OCCASION THAT WE GET TO SPEAK, NOT IN THE MARKET, BUT ON OUR HACK. SO THE BIGGEST LESSON THAT WE KNOW FROM HERE IS THAT THIS HAS BEEN EIGHT YEARS OF OUR OPERATION. THERE ISN’T ANY INCIDENT, AND THIS CAN NEVER BE A REASON TO BECOME JUST COMPLACENT. SECURITY HAS TO EVOLVE AS THE PLATFORM GROWS IN THE ATTACK METHODS INVOLVED. SO FAR, ONE MAJOR LESSON IS MANAGING THE THIRD-PARTY SECURITY RISK. THE ATTACKER THIS TIME THAT THEY EXPLOITED A VULNERABILITY IN ONE OF THE THIRD-PARTY SECURITY PRODUCTS TO OBTAIN HIGH-LEVEL INTERNAL CREDENTIALS HAS INTRODUCED A LOT STRICTER ASSESSMENTS BEFORE ANY THIRD-PARTY PRODUCT HAD DEPLOYED AND STRONGER CONTROLS AROUND THE DEPLOYMENT THEMSELVES. AND THE SYSTEM ACCESS HAS BEEN TIGHTENED, RESTRICTING ACCESS AND REQUIRING MULTIPLE APPROVALS FOR CRITICAL OPERATIONS. WE’RE ALSO STRENGTHENING VERIFICATION AND ANY UNLAWFUL MONITORING. SO THERE ARE A LOT OF THINGS THAT WE’VE BEEN DOING, BUT THE BROADER LESSON IS THAT SECURITY ISN’T ONLY JUST ABOUT MANAGING OR PROTECTING PRIVATE WALLETS, WHICH IS THE CASE THIS TIME. WE HAVE BEEN PROTECTING THOSE THINGS. BUT EVERY SYSTEM, ALSO THIRD-PARTY PRODUCT THAT CAN BE PROVIDED, THAT CAN PROVIDE ACCESS TO CRITICAL INFRASTRUCTURE HAS TO BE TREATED AS PART OF THE SECURITY PERIMETER. SCARLET: DO YOU HAVE ANY INFORMATION ON HOW LONG THE HACKER WAS INSIDE THE PLATFORM GATHERING KEYS? >> SO NO, WE DON’T HAVE PRIVATE KEYS BEING EXPOSED. WE DON’T HAVE OUR WALLETS BEING TOUCHED. SO IT’S NOT ABOUT GATHERING THE KEY, IT’S MORE ABOUT GATHERING THE VULNERABILITY OF THE THIRD-PARTY SERVICE THAT WE HAD, SO THE VULNERABILITY IS THE KEY THING, BUT NO, I DON’T HAVE MORE ABOUT THE UPDATE ABOUT HOW LONG DID THEY BE THERE LIKE BEFORE THIS HAPPENED. TIM: CAN YOU UPDATE ON WHAT YOU’RE SEEING ON THE PLATFORM RIGHT NOW? OUR NEWS TIMEOUTING RECOVERY NIGHT THE HACK HASSED CUSTOMER OUTFLOWS AT BIT GET. IS THAT NUMBER STILL CONSISTENT? >> WHAT IS THE NUMBER YOU ARE SEEING? TIM: $463 MILLION IN THE 24 HOURS INTO TUESDAY. >> THAT NUMBER SOUNDS ABOUT RIGHT. BECAUSE WE DO HAVE, THIS IS AN ONGOING WITHDRAWAL FROM OUR PLATFORM, AND WE’RE GOING TO OPEN WITHDRAW FROM TOMORROW, BUT THERE SHOULD BE ABOUT 100 WITHDRAW SO FAR IN TERMS OF THE TOTAL VOLUME. TIM: HOW MUCH MORE DOES THAT VOLUME INCREASE? LIKE, WHAT ARE YOU TALKING ABOUT INTERNALLY TO PREPARE FOR? >> YOU MEAN THE WITHDRAW, RIGHT? TIM: YEAH, WITHDRAWALS. >> YEAH, THE WITHDRAW ACTUALLY STABILIZED A LOT TODAY. I THINK YESTERDAY WEAVE ALREADY HIT MORE THAN -- WE’VE ALREADY HIT MORE THAN 7,000, SORRY, SHOULD BE 9,000 WITHDRAWAL ORDERS, AND THAT INCLUDES 4,000, JUST IN THE VERY FIRST HOUR. SUSPECT THOSE HUNDREDS OF MILLIONS, ACTUALLY MOST OF THEM HAPPEN ON THE FIRST HOUR OF THE WITHDRAW RESTART. SO ACTUALLY RIGHT NOW IT STABILIZED ALREADY, AND GOOD NEWS IS THAT EVEN TODAY, WHEN WE OPEN UP THEETH EAR UPWITHDRAWAL, THE INFLOW IS ACTUALLY LARGER THAN OUTFLOW, WHICH ACTUALLY SURPRISED ME A LITTLE BIT. SCARLET: YOU SAID YOU HAVE A USER PROTECTION FUND OF $464 MILLION FUND. THAT’S KIND OF SERVES AS INSURANCE. HOW IS THIS FUND BEING UTILIZED, AND IS IT BEING DRAWN DOWN? >> YES, SO WE ARE USING THE MONEY FROM THE PROTECTION FUND. BY THE WAY, WE ESTABLISHED THE PROTECTION FUND IN 2022, EVEN BEFORE THE COLLAPSE. SO RIGHT NOW THE PROTECTION FUND HAS ABOUT 3,000 BITCOINS, THAT’S VALUED AT 260 MILLION-ISH IN TERMS OF VALUE, SO IT’S OBVIOUSLY LOWER THAN IT WAS BEFORE THE IT. WE DID USE SOME BITCOINS FROM THE PROTECTION FUND TO MOVE TO THE WALLET IN ORDER TO DEAL WITH THE WITHDRAWAL THAT WE HAVE FROM THE USES. BUT WE ALSO HAVE ANOTHER PROMISE. WE WILL BE PUTTING OUR COMPANY’S CAPITAL BACK TO THE PROTECTION FUND AND KEEP IT ABOVE 300 MILL. SCARLET: I’M GLAD YOU MENTIONED YOU SOLD SOME BITCOIN. DO YOU THINK THAT SELLING THE BITCOIN IN THE FUND IMPACTED THE PRICE OF BITCOIN IN THE BROADER MARKET? DID YOU SEE ANY RIPPLE EFFECT? >> NO, SO WE DID A -- WE DIDN’T REALLY SELL BITCOINS. WE MOVED BITCOINS FROM THAT WALLET TO OUR HOT WALLET. AND BY THE WAY, YOU MAY KNOW THAT BITGET HAS A SPACE WITHDRAW OPENING, SO ON THE FIRST DAY, IT’S ACTUALLY BITCOIN THAT WE ALLOW USERS TO WITHDRAW. I SUSPECT THAT THEY MAY NOT REALLY SELL THEM. SO IN TOTAL, WE’RE NOT HAVING A LOT OF SELL PRESSURE TO THE MARKET. WE JUST SELL IT, AND I DON’T KNOW IF THEY WITHDRAW THEIR BITCOINS AFTERWARDS. TIM: THANK YOU. GRACY CHEN, APPRECIATE YOU SHARING YOUR STORY TODAY AND THE RESPONSE THAT BITGET HAS HAD OVER THE LAST COUPLE OF DAYS. WE APPRECIATE YOUR TIME. I WANT TO NOTE, EVERYBODY SHOULD CHECK OUT THE STORY ON BLOOMBERG TERMINAL WRITTEN BY OUR TEAM ABOUT HOW THIS SPURRED A $463 MILLION CUSTOMER OUTFLOWS. THERE’S MORE INFORMATION IN THERE AS WELL. COMING UP IN JUST A MINUTE, FORMER NEW YORK GOVERNOR ANDREW CUOMO DISCUSSES THE CLARITY ACT FALLOUT AND HOW AMERICA NEEDS TO STAY AHEAD IN DIGITAL FINANCE. AND ALSO, HIS POLITICAL OUTLOOK. SCARLET: TO ACCESS ALL THE LATEST DATA AND NEWS ON CRYPTO, INCLUDING THAT CONVERSATION, MAKE SURE YOU CHECK OUT ALL OUR COVERAGE ON THE TERMINAL AND DO CHECK OUT CRYP GO ON THE TERMINAL. THIS IS BLOOMBERG. SCARLET: WELCOME BACK TO BLOOMBERG TELEVISION. JOINING US NOW FROM WASHINGTON, D.C. IS THE FORMER GOVERNOR OF NEW JOINT VENTURE, ANDREW CUOMO. HE’S IN OUR "BALANCE OF POWER" STUDIO, ALONG WITH JOE MATHIEU, WHO WILL JOIN THE CONVERSATION IN A MOMENT. GOVERNOR, THANK YOU FOR SPEAKING WITH US TODAY. I WANT TO START ON THE CLARITY ACT, BECAUSE YOU HAVE TALKED ABOUT THE NEED TO PASS THE CLARITY ACT, TO HELP THE U.S. LEAD THE FUTURE OF FINANCE. YOU’VE ALSO TOLD BLOOMBERG BACK IN JULY THAT YOU HOPED LAWMAKERS WOULD INCLUDE FULL DISCLOSURE AND CLEAR GUIDELINES TO REASSURE THE PUBLIC, SOMETHING THE REPUBLICANS AND THE WHITE HOUSE RESISTED. SO DID THE CLARITY ACT FAIL FOR THE RIGHT REASONS? >> THE CLARITY ACT, FIRST, THANK YOU FOR HAVING ME TODAY. WE’VE BEEN TALKING ABOUT THIS DIGITAL ASSETS, AND THE FACT THAT DIGITAL ASSETS ARE THE FUTURE OF FINANCE FOR OVER A DECADE. 2014, I PASSED REGULATIONS IN NEW YORK ON DIGITAL ASSETS. THE CLARITY ACT PROBABLY HAS THE BEST NAME OF ANY PIECE OF LEGISLATION IN A LONG TIME, BECAUSE IT WAS ACTUALLY ABOUT CLARITY. AND WHEN CLARITY FAILED, IMBUING OUT WINS, AND UNPREDICTABLE WINS, AND THAT’S THE LAST THING THE INDUSTRY CAN ACTUALLY TOLERATE. AND YOU’RE SEEING JURISDICTIONS ALL AROUND THE WORLD THAT ARE ACTUALLY PUTTING IN REGULATIONS AND COMPLIANCE, SO COMPANIES KNOW THE RULES OF THE GAME. JUST TELL ME THE RULES OF THE GAME, AND IT IS PASSING US BY. I’M A NEW YORKER, IF YOU CAN’T TELL. NEW YORK, FINANCE CAPITAL OF THE WORLD, AND I SEE THIS FINANCIAL FUTURE DEVELOPING OUTSIDE OF THE UNITED STATES, SO THAT’S WHAT GIVES ME CONCERN. DID IT FAIL FOR THE RIGHT REASONS? IT FAILED BECAUSE OF POLITICS. THERE WERE DIFFERENCES. THERE ARE ALWAYS DIFFERENCES IN A BILL. WERE THERE ANY IRRECONCILABLE DIFFERENCES IN MY OPINION? NO. IT WAS POLITICS. WE’RE COMING UP TO AN ELECTION. WHO DIDN’T WANT TO PASS THE LEGISLATION BECAUSE THE OTHER SIDE WOULD LOCALIZE WINNERS? BUT THERE ARE NO RIGHT REASONS FOR THAT BILL TO FAIL. WE DESPERATELY NEEDED IT, AND WE STILL DO, AND I HOPE THE LAME DUCK CONGRESS, WHEN THE POLITICS SUBSIDES, THEY COULD PASS IT. OTHERWISE JANUARY 1, IT SHOULD BE RIGHT ON THE DESKS, BECAUSE IT’S A MAJOR PRIORITY. JOE: THE SAME VERSION OF THIS, GOVERNOR, OR DO CHANGES NEED TO BE MADE TO IT TO GET EVERYBODY ON BOARD? TIM: WE LIVE IN A POLITICAL WORLD, WHETHER MIDTERMS ARE FIVE WEEKS AWAY OR NOT. >> THE DIFFERENCE IS JUST BEFORE THE MIDTERMS, THE POLITICAL TEMPERATURE GOES WAY UP. THAT’S THE DIFFERENCE. POST-MIDTERMS, THE TEMPERATURE COMES DOWN, HOPEFULLY SOME RATIONALITY RETURNS, AND RESPONSIBILITY RETURNS. AND SINCE THE POLITICAL TEMPERATURE IS DOWN, LAW MAKERS WILL DO WHAT’S ACTUALLY RESPONSIBLE AND DO THEIR PUBLIC DUTY AND PASS THE LAW THAT PROVIDES THE FRAMEWORK FOR THE DIGITAL ASSET FUTURE OF THIS COUNTRY, WHICH IS NOW LEADING IN NATIONS AROUND THE GLOBE. SO I THINK THE POLITICS DETAILED IT. I THINK WHEN THE POLITICS RELAXES, YOU CAN SEE THE BILL PASSED, BALLS THE DIFFERENCES WERE NOT IRRECONCILABLE. SHOULD WE HAVE ETHICS REFORM? YES, OBVIOUSLY. AND NOT JUST ON THE EXECUTIVE, BUT ALSO FOR THE LEGISLATURE. SHOULD WE HAVE CONSUMER PROTECTION? OF COURSE WE SHOULD. WE JUST HEARD ABOUT ANOTHER HACK. YES, THIS INDUSTRY HAS TO BE POLICED. THESE ARE NO-BRAINERS THAT THEY HAVE TO BE ADDRESSED. POLITICS IS WHAT GOT IN THE WAY. SCARLET: YOU MENTIONED ABOUT HOW YOU OVERSUE EVERY SAW THE CONSTRUCTION. THAT’S WHEN IT WAS IMPLEMENTED AND YOU’RE HERE NOW TO HELP US LEARN WHAT EUROPE CAN UNDERSTAND FROM NEW YORK’S EXPERIMENT. THE THING IS, IF YOU WERE TO GIVE AN HONEST ASSESSMENT OF LICENSE, IT DROVE MORE THAN A DOZEN CRYPTO COMPANIES OUT OF THE STATE. KRAKEN, BIT FINANCE, SHAPE SHIFT, ALL LEFT RATHER THAN COMPLY. ONLY FIVE COMPANIES GOT LICENSED IN THE FIRST THREE YEARS. I GUESS MY QUESTION IS, WAS BIT LICENSE TOO AGGRESSIVE? IS THAT SOMETHING THAT EUROPEAN REGULATORS SHOULD LEARN FROM? IF SO, WHAT SHOULD THEY LEARN FROM THAT? >> YEAH, WELL, THE NEW YORK BIT LICENSE, YOU’RE RIGHT, FIRST IN THE COUNTRY, AND THERE ARE ONLY A HANDFUL OF STATES THAT HAVE PASSED A LICENSE SINCE AND THE FEDERAL GOVERNMENT STILL DOESN’T HAVE A FRAMEWORK, AS WE DISCUSSED. AND MORE COMPANIES HAVE BEEN LICENSED BY NEW YORK THAN ANY OTHER STATE IN THE UNITED STATES. BUT THE POINT OF THE BIT LICENSE WAS THIS IS THE FUTURE, LET’S RECOGNIZE IT. WE WANT IT HERE, BUT IT HAS TO BE REGULATE. YOU CAN HAVE INNOVATION AND REGULATION. THEY’RE NOT MUTUALLY INCONSISTENT. I THINK THE BIT LICENSE AS IT WAS IMPLEMENTED IN LATER YEARS WAS IN MANY WAYS TOO STRINGENT AND SOME COMPANIES SAID IT’S EASIER TO DO BUSINESS ELSEWHERE. BUT LOOK, THE POINT OF THE LICENSE WAS WE WANTED A TRUE FRAMEWORK. WE WANTED A FRAMEWORK THAT PROTECTED THE CONSUMER. AND THAT WAS THE POINT OF THE LAP IN THE FIRST PLACE. BUT AS IT WAS IMPLEMENTED, AND AT THE TIME, IF YOU RECALL, THIS IS GOING TO THE FTX, ETC., THERE WERE SCANDALS, AND THEY BECAME VERY CAUTIOUS. TIM: YOU MENTIONED BITGET, AND WE JUST CHOKE WITH GRACY CHEN A FEW MOMENTS AGO. THEY’RE LAUNCHING A CUSTOMER PROTECTION PROGRAM PROVIDING UP TO 500,000 EUROS OF COVERAGE AGAINST THIRD-PARTY ATTACKS. THE $3 # 7 MILLION THAT BITGET LOST TO NORTH KOREAN HACKERS, THAT’S BEEN WELL DOCUMENTED. WE JUST SPOKE ABOUT THAT. THE PROTECTION YOU’RE OFFERING COVERS INDIVIDUAL ACCOUNT COMPROMISES, NOT EXCHANGE-LEVEL HACKS. SO IF NORTHERN CAN DRAIN IT FROM THE HOT WALLET, WHAT GOOD ISED E500,000 EUROS OF INDIVIDUAL ACCOUNT PROTECTION? >> YEAH, WELL, OBVIOUSLY I DON’T KNOW THE DETAILS OF WHAT HAPPENED WITH BITGET, BUT OUR POINT IS WE BELIEVE WE HAVE THE BEST TECHNOLOGY. THAT’S STEP ONE. STEP TWO IS CONSUMERS HAVE TO TRUST THAT THEY ARE DEALING WITH THE PLATFORM OF COMPANY AND THAT APP THAT ACTUALLY UNDERSTANDS THE FIDUCIARY OBLIGATION AND HAS THE PROTECTIONS IN PLACE, AND OUR WAY OF REASSURING CONSUMERS, CONSUMER PROTECTION, IS TO SAY WE ARE SO CONFIDENT IN OUR SYSTEM THAT WE WILL PROVIDE INSURANCE IF YOU WERE ATTACKED AND DEFRAUDED, NOT THAT YOU’RE PART OF THE FRAUD OR IT WAS YOUR FAULT, BUT IF YOU HAVE A SECURE ACCOUNT, THEN WE’LL WORK WITH YOU IN THE SECURITY OF THE ACCOUNT, WE’RE SO CONFIDENT IN OUR SYSTEM THAT WE WILL PROVIDE PROTECTION. CONSUMER PROTECTION IS KEY. THIS IS FINANCE. YOU PUT YOUR MONEY IN A COMPANY THAT YOU TRUST. AND CRYPTO HAS HAD QUESTIONS. DO I TRUST CRYPTO? I’VE HEARD A LOT OF DIFFERENT THINGS ABOUT CRYPTO. AND IT’S OKX’S WAY OF SAYING WE’RE GOING PUT OUR MONEY WHERE OUR MOUTH IS, SO TO SPEAK, AND WE WILL PROVIDE PROTECTION IF YOU’RE ATTACKED, YOUR ACCOUNT IS ATTACKED. JOE: LET’S KEEP TALKING ABOUT THE TEMPERATURE RISING. GREAT TO HAVE YOU IN OUR WASHINGTON STUDIOS. 35 DAYS TO GO, YOU MUST BE FEELING THAT SENSATION AS YOU CREEP UP ON ANOTHER ELECTION DAY. THE COOK POLITICAL REPORT IS TALKING ABOUT 15 SEATS IN THE HOUSE IS FLIPPING. WE’RE HEARING ABOUT A BLUE WAVE. WHEN WE TALKED TO CHARLIE COOK LAST NIGHT, HE SAID IT’S A RED UNDERTOW. IS THAT HOW YOU SEE IT? >> THAT’S A GREAT TERM. THAT’S WHY COOK IS COOK. WELL, YES, I DON’T THINK THIS IS ABOUT THE DEMOCRATS. IT’S ABOUT THE REPUBLICANS. AND IT’S ALSO ABOUT HISTORY, RIGHT? I SAW THIS MOVIE. I WAS H.U.D.’S SECRETARY TO BILL CLINTON IN 1992. HALLELUJAH, CLINTON-GORE, A NEW ERA, A NEW LEADERSHIP. 1994, WE LOSE THE HOUSE AND THE SENATE. WHY? BECAUSE THAT HAS THE HISTORICAL PAT DETERMINE. I THINK IT’S MORE PRONOUNCED NOW. THERE IS A LOT GOING ON IN THE WORLD. AND THERE’S A LOT OF ANXIETY. WAR IN IRAN, TARIFFS, THE AMERICAN PEOPLE WANT STABILITY. THEY WANT PREDICTABILITY. AND THEY BELIEVE THEY GET THAT WITH THE BALANCE OF POWER. AND THE PAST TWO YEARS, THE PRESIDENT AND REPUBLICANS HAVE BEEN DOMINANT. AND THERE’S A LOT OF DRAMA, AND I THINK WHAT AMERICANS ARE SAYING IS WE WANT TO HAVE A MORE BALANCE IN THE SYSTEM, AND THE WAY WE WILL ACHIEVE MORE BALANCE IS BY ELECTING DEMOCRATS. I DON’T THINK THEY’RE SAYING, WOW, THE DEMOCRATIC AGENDA BLOWS ME AWAY, THESE DEMOCRATS ARE REALLY PHENOMENAL. JOE: SOME ARE SAYING THE DEMOCRATIC SOCIALIST AGENDA IS BLOWING US AWITH A WAY, YOU SAID A LOT OF THINGS ABOUT ZOHRAN MAMDANI DURING THE CAMPAIGN, AND I’M WONDERING NOW THAT YOU’VE SEEN HIM IN ACTION, WHAT WENT THROUGH YOUR MIND WHEN YOU SEE HIM AT THE OVAL OFFICE OR DONALD TRUMP AT GRACIE MANSION? DOES HE HAVE THE PLAYBOOK FOR MAKING THIS WORK ON A MAINSTREAM LEVEL? >> NO, I DON’T BELIEVE THE DEMOCRATIC SOCIALISTS, I DON’T BELIEVE SOCIALISM IS VIABLE NATIONWIDE T. CAN YOU SELL IT IN NEW YORK CITY? CAN YOU SELL IT IN DETROIT, CHICAGO, L.A.? YES. CAN YOU SELL IT NATIONWIDE? NO. THIS IS IN BIG CITIES THAT HAVE A LOT OF NEW IMMIGRANTS, A LOT OF YOUNG PEOPLE, MY ELECTION FOR MAYOR, I WOULD NOT WITH PEOPLE BORN IN NEW YORK CITY. IF YOU WERE BORN IN NEW YORK CITY, I WON WITH THOSE VOTERS. IT WAS THE YOUNG PEOPLE WHO CAME INTO NEW YORK CITY, SO IN THOSE CITIES, I THINK YOU SEE THESE SOCIALIST FACTION. I DON’T BELIEVE IT WORKS NATIONWIDE. AND I DON’T BELIEVE THAT HAS ANYTHING TO DO WITH WHAT’S GOING ON RIGHT NOW. I THINK THE DEMOCRATS ARE WINNING DESPITE THEM, BALLS THE CANDIDATES THEY HAVE PUT FORWARD HAVE TEND BE TO BE HIGHLY PROBLEMATIC CANDIDATES WHO ARE WINNING ANYWHERE. WHY? BECAUSE IT’S NOT ABOUT THEM. IT’S ABOUT JUST RESTORING BALANCE, JUST CHANGING RED TO BLUE. HOW ARE YOU TALKING ABOUT A DEMOCRAT WINNING TEXAS, RIGHT? WINNING ALASKA. THAT DOESN’T HAPPEN. REPUBLICANS CAN LOSE TEXAS. REPUBLICANS CAN LOSE ALASKA, AND I THINK THAT’S WHAT’S HAPPENING. IF YOU SEE THAT SHIFT IN THE HOUSE, AND IF YOU BELIEVE THE PREDICTION MARKETS IN THE SENATE, YOU’RE GOING TO SEE A RADICAL SHIFT IN WHAT’S HAPPENING IN THIS TOWN, THIS TOWN BEING WASHINGTON. TIM: GOVERNOR, I WANT TO END WITH CRYPTO, BECAUSE THE CRYPTO INDUSTRY LOVES TO TALK ABOUT THIS CRYPTO VOTER, BUT YOU KNOW THAT IS NOT TOP OF MIND FOR MANY VOTERS. IT’S THE ECONOMY. IT’S AFFORDABILITY. IT’S GOVERNMENT ETHICS, IMMIGRATION, HEALTHCARE. IS THERE REALLY SUCH A THING AS A MEANINGFUL CRYPTO VOTER BLOC, OR IS THIS SOMETHING THE INDUSTRY IS OVERSTATING? >> THERE SHOULD BE. THERE SHOULD BE. I THINK AS THE CRYPTO INDUSTRY MATURES, POLITICAL MATURITY WILL BE PART OF IT. AND I THINK YOU WILL SEE THEM MOBILIZE THE CRYPTO VOTERS. YOU DO HAVE TENS OF MILLIONS OF AMERICANS WHO USE CRYPTO. WHERE WERE THEY IN THE DEBATE ABOUT THE CLARITY ACT? WHERE ARE THEY AS A POLITICAL FORCE? THEY HAVEN’T REALLY BEEN ORGANIZED. THEY HAVEN’T BEEN HOBBLIZED, WHICH IS IRON, BECAUSE IT’S PROBABLY THE MOST REACHABLE AUDIENCE BY DEFINITION. BUT IN A GENERAL ELECTION, IS CRYPTO ON THE TOP FIVE ISSUES? NO. BUT WHEN IT CAME TO SOMETHING LIKE THE CLARITY ACT, COULD SAY THE INDUSTRY HAVE DONE A BETTER JOB OF MOBILIZING? YES, 100%. AND I THINK WITH THE CRYPTO INDUSTRY REALIZED IS YOU CAN’T JUST GO TO WASHINGTON WITH A BOATLOAD OF MONEY, AND MAKE POLITICAL CONTRIBUTIONS AND THINK THAT THE BILL IS GOING TO PASS. IT DOESN’T WORK THAT WAY. SCARLET: DO YOU THINK THERE SHOULD BE A CRYPTO BLOC, A CRYPTO VOTER BLOC? WHAT DO DEMOCRATS MISUNDERSTAND ABOUT THIS? WHAT CAN THEY DO BETTER? WHAT CAN THEY LEARN FROM THE REPUBLICANS WHEN IT COMES TO CATERING TO CRYPTO VOTERS? >> WELL, I THINK THAT THE DEMOCRATS, IT BECAME POLITICAL QUICKLY. I DON’T BELIEVE DEMOCRATS ARE INHERENTLY AGAINST CRYPTO, RIGHT? AS I SAID, NEW YORK IS A BLUE STATE, I PASSED IT IN 2024 WITH AN ALL BLUE LEGISLATURE, IN AN ALL-BLUE TOWN. SO THEY’RE NOT INHERENTLY AGAINST CRYPTO. IT IS A HIGHLY CHARGED POLITICAL ISSUE RIGHT NOW. AND THEY HAVE QUESTIONS ABOUT CRYPTO. THAT’S THE POLITICAL HOT BUTTON. AND THAT’S WHY I THINK IT’S PROBLEMATIC. WE SAW CLARITY PASS. WE NOW SEE THESE AGENCIES PASSING REGULATIONS. IF THE CONGRESS CHANGES, YOU WILL SEE THESE AGENCY REGULATIONS PUT UNDER A MICROSCOPE. AND ALL THESE COMPANIES WHO SAID IT IS GREAT, YOU NOW HAVE REGULATIONS, AND BY THE WAY, I UNDERSTAND IN THE VOID THEY HAD TO DO SOMETHING, AND THE S.E.C. HAS COME ONE NOVEL PROGRAMS. WE’RE PARTICIPATING IN THEM, BUT WHEN THE CONGRESS CHANGES, REGULATION DOES NOT LEGISLATION. I WAS H.U.D. SECRETARY. I WENT THROUGH THIS. AND REGULATIONS CAN EASILY BE CHALLENGED, INVESTIGATED, AND UNDONE. AND THAT’S GOING TO ADD MORE CHAOS TO THE SYSTEM RATHER THAN CLARITY. TIM: GOVERNOR, BEFORE WE LET YOU GO, YOU’RE CHAIRMAN OF THE OKX JOINT VENTURE. IS THIS IS IT FOR YOU FOR POLITICS? ARE YOU GOING TO RUN FOR ANYTHING AGAIN? >> WHO KNOW? A LOT OF OPPORTUNITIES. I MAY BE A BLOOMBERG BROADCASTER WALKING AROUND THE STUDIO. IT LOOKS GREAT. I THINK I WANT JOE’S JOB. TIM: I MEAN, I THINK JOE, YOU’RE GOING TO HAVE TO FIGHT JOE FOR THAT ONE. I THINK JOE DOES A GREAT JOB. GOVERNOR, GREAT TO SEE YOU. THANK YOU SO MUCH FOR JOINING US, FORMER NEW YORK GOVERNOR AND CHAIR NOW OF THE OKX JOINT VENTURE. SCARLET: LET’S GO TO NORAH MULINDA WITH SOME MIDDAY MARKET MOVERS AND AN UPDATE. NORAH? NORAH: LET’S LOOK AT OUR MIDDAY MOVERS. WE ARE SEEING THE LONG-END TREASURY YIELD SURGING WITH THE 30-YEAR HITTING ITS HIGHEST LEVEL SINCE 2002. INVESTORS ARE WORRIED THAT HIGHER ENERGY COSTS COULD KEEP INFLATION ELEVATED AND LEAD TO MORE FED HATE HIKES. SPEAKING OF ENERGY PRICES, BRENT CRUDE FALLING, BUT THE COST OF ENERGY STILL WEIGHING ON BROADER SENTIMENT. TECH REMAINING A BRIGHT SPOT IN THE MARKET. TRADERS ARE ALSO WEIGHING CONSUMER CONFIDENCE, LOWEST LEVEL SINCE 2014. AND TAKING A LOOK UNDER THE HOOD, PERELLA WINEBERG IS IN TALKS TO BE ACQUIRED BY PIPER SANDLER. PIPER MOVING IN THE OTHER DIRECTION THOUGH, FALLING ON THE NEWS. AND FINALLY, A BIG GAINER IN THE MARKET, CARNIVAL CLIMBING AFTER RAISING ITS FULL-YEAR OUTLOOK. NO SIGNS OF TRAVELERS LOSING THEIR APPETITE FOR CRUISES, WITH DEMAND STRONG IN EUROPE. IN 2027, ALREADY WHAT ARE BOOKED. I’M NORAH MULINDA. TIM: LET’S SHIFT OUR FOCUS TO MONEY. THE INCREASING OVERLAP BETWEEN CRYPTO AND TRADITIONALBETWEEN CRYPTO AND TRADITIONAL FINANCE. CITIGROUP HAS PARTNERED WITH COINBASE TO ALLOW CLIENT TO ACCEPT STABLECOIN PAYMENTS. ANNA JOINS US NOW FROM LONDON. IS THIS MORE INCREMENTAL AND THE MELDING OF TRADITIONAL FINANCE AND WHAT WE REFER TO AS DE-FI, OR DIGITAL FINANCE? ANNA: I GUESS IT IS. IT SHOWS DIGITAL MONEY IS BECOMING A METHOD THAT'S AVAILABLE FOR CORPORATIONS AND MERCHANTS TO ACCEPT. IT IS SIGNIFICANT BECAUSE CITI SERVES MANY MERCHANTS AND THEY CAN ACCEPT STABLECOIN PAYMENTS IF THEY WISH. THE TRANSACTION VOLUMES ARE GROWING AND MUCH BIGGER THAN THEY WERE A FEW YEARS AGO BUT THEY ARE TINY. THE FACT THE OPTION IS AVAILABLE IS QUITE A BIG CHANGE FROM A FEW YEARS AGO. THIS IS DUE TO THE FACT IS BEEN REGULATION IN THE U.S. AND THE TRUMP ADMINISTRATION HAS BEEN SUPPORTIVE OF STABLECOINS AND CRYPTO, WHICH CREATED A REGULATORY FRAMEWORK FOR BIG FIRMS TO START EXPANDING AND IT. SCARLET: THE KEY PHRASE IS THE START EXPANDING AND IT. I'M SURE THIS IS THE BEGINNING OF A DEEPER PARTNERSHIP. ANY SENSE OF WHAT OTHER KINDS OF SOLUTIONS THEY WILL BE WORKING ON OR PLAN TO WORK ON TOGETHER? ANNA: THERE'S BEEN AN INTEGRATION THEY MENTIONED WHICH IS THE REVERSE. CITI WAS OFFERING BANK ACCOUNT SERVICES TO CLIENTS SO IT GOES BOTH WAYS, EXCEPT THEY WOULD WORK TOGETHER BUT THEY HAVE NOT SPECIFIED WHICH. CITI IS LOOKING AT TOKENIZED DEPOSITS, ANOTHER FORM OF DIGITAL MONEY. THEY ARE LOOKING AT JOINING A CONSORTIUM OF BANKS THAT WILL CREATE A STABLECOIN. IT IS INCREMENTAL BUT SMALL INCREMENTS THAT PERHAPS CAN MAKE A DIFFERENCE GOING FORWARD. THAT IS WHAT CRYPTO HOPEFULS BELIEVE. SCARLET: THANK YOU SO MUCH AS ALWAYS. ANNA IRRERA JOINING US FROM LONDON. I WANT TO BRING IN BANK OF AMERICA GLOBAL HEAD OF DIGITAL ASSETS PLATFORM SONALI THEISEN. THERE HOLLDING A SUMMIT THIS WEEK WITH A FOCUS ON DIGITAL ASSETS. YOU HAVE SAID THAT TOKENIZATION IS MOVING FROM EXPERIMENTATION TO UTILITY. YOU LOOK AT THE SEC, THEY JUST ISSUED THE INNOVATION EXEMPTION FOR TOKENIZED STOCKS TWO WEEKS AGO. AMC AND ROBIN HOOD HAVING A FOOD FIGHT OVER WHO HAS THE RIGHT TO TOKENIZED AN ISSUER'S SHARES. IS TOKENIZATION READY FOR INSTITUTIONAL SCALE OR WE ARE ARGUING OVER THE RULES OF THE ROAD? SONALI: THAT'S A GREAT QUESTION. IT IS SO BROAD. WE ARE TALKING ABOUT EVERY ASSET. MOVING FROM THE CENTER OUT -- WE TALKED ABOUT THIS. THINKING ABOUT TOKENIZATION OF CASH AND COLLATERAL SEEMS LIKE A GOOD IDEA BEFORE HE MOVED EN MASSE TO TOKENIZED THE ASSETS. IT'S IMPORTANT TO RECOGNIZE HERE IN THE U.S. THE DIGITAL CASH LEG THAT WOULD PAY FOR ANY OF THESE ASSETS, WHETHER IT IS EQUITIES OR REAL ESTATE OR ANYTHING ELSE, WE ARE WORKING OUT WHAT THAT COULD BE AND IS NOT A MUTUALLY EXCLUSIVE ANSWER. I THINK THERE IS A SEQUENCING IN TERMS OF INSTITUTIONAL ADOPTION. IT DOES NOT MEAN WE SHOULD NOT BE WORKING ON MANY DIFFERENT INITIATIVES AT ONCE. I THINK WHEN IT COMES TO MASS ADOPTION OF TOKENIZED ASSETS WE NEED TO MAKE SURE THE CASH AND COLLATERAL LEG CAN MOVE WITH THEM TO PAY FOR THEM. TIM: WHO DO YOU STILL HAVE TO SELL THIS TO? DO INSTITUTIONS FULLY UNDERSTAND THIS? IS IT RETAIL THAT NEEDS TO UNDERSTAND WHY THERE'S A LARGE COHORT OF PEOPLE WHO THINK THIS IS THE WAY THINGS SHOULD GO WHEN IT COMES TO MARKET STRUCTURE? SONALI: I THINK OF IT LESS AS SELLING IT TO PEOPLE AND WE ARE CLIENT-THAT IN TERMS OF WHAT SOLUTIONS THEY ARE LOOKING FOR FROM US. I WOULD NOT SAY CLIENTS SAY CAN WE HAVE A TOKENIZED FORM OF X, Y, Z, THEY JUST WANT TO MAKE THEIR FINANCIAL LIVES MORE EFFICIENT. IF THE TECHNOLOGY CAN REMOVE FRICTION AND CREATE EFFICIENCIES AND MAKE SETTLEMENT TIMES FASTER, REMOVE COSTS FROM ORIGINATION, THERE ARE MANY WAYS THE TECHNOLOGY COULD IMPROVE FINANCIAL LIVES. THOSE ARE THE SOLUTIONS CLIENTS ARE LOOKING FOR. IT'S LESS ABOUT CLIENT SAYING CAN YOU PLEASE TELL US A TOKENIZED STOCK TODAY AND MORE ABOUT, CAN WE IMPROVE THE ECOSYSTEM WITH ALL TYPES OF TECHNOLOGY. WE ARE HAVING OUR INNOVATION SUMMIT TODAY IN NEW YORK. WE TALK ABOUT AI AND DIGITAL ASSETS. IT'S ABOUT HOW THE TECHNOLOGIES MOVE FROM EXPERIMENTATION TO IMPLEMENTATION IN A WAY THAT IS SCALE THAT WE CAN HAVE TRUST IN THE SYSTEM. I DON'T THINK THERE'S ANY QUESTION THE TECHNOLOGY HAS BENEFITED. IT IS, HOW DO WE APPLY IT INTO A HIGHLY REGULATED, HIGHLY EFFICIENT, HIGH VOLUME MARKET? HOW DOES THAT WORK? WE NEED TO MAKE SURE WE ARE MOVING IN THE RIGHT SEQUENCE OF THINGS. SCARLET: YOU ARE RUNNING BUT THE DIGITAL ASSETS PLATFORM AND THE ELECTRONIC TRADITIONAL TRADING. WE KNOW THEY ARE ALL BUILDING A TOKENIZED NETWORK. BRIAN MOYNIHAN WARNS 6 BILLION -- $6 TRILLION IN ASSETS CAN CHANGE. DIGITAL APHID INFRASTRUCTURE TO COULD IN A NEW MARKET. WHICH OF THESE KEEPS YOU UP AT NIGHT? SONALI: ALL OF THEM KEEP US BUSY, 24/7. TOKENIZED DEPOSITS, STABLECOINS, COLLATERAL MOBILITY, EQUITIES. WE HAVE TO FOCUS ON ALL OF THESE AT ONCE. YOU MENTIONED TOKENIZED DEPOSITS. IT'S AN IMPORTANT INITIATIVE TO SEE HOW WE COULD DIGITIZE THESE. IT IS SOMETHING WE ARE WORKING ON AS AN INDUSTRY. OVER 20 BANKS ARE WORKING ON SOMETHING THAT WILL HOPEFULLY THE DELIVERABLE NEXT YEAR. IT IS NOT A MUTUALLY EXCLUSIVE ANSWER. WE ARE REMAINING OPEN MINDED. GOING BACK TO WHAT I MENTIONED, IT IS FOUNDATIONAL TO FIGURE OUT WHAT THE CASH LEG WILL BE BEFORE WE TALK ABOUT TOKEN ICING EVERY ASSET UNDER THE SUN. TIM: THE INNOVATION EXEMPTION ALLOWS TO TOKENIZED STOCKS TO TRADE THROUGH AUTOMATED MARKET MAKERS ON PUBLIC BLOCKCHAIN'S. IT IS NOT MAKING EXISTING SYMPTOMS MORE EFFICIENT. WHERE DO YOU THINK THAT THE LINE OF BANK OF AMERICA BETWEEN ADOPTING BLOCKCHAIN TECHNOLOGY BUT ALSO POTENTIALLY BEING DISRUPTED BY IT? SONALI: WE ARE ALWAYS INNOVATING. WE ARE NOT AFRAID OF INNOVATION OR COMPETITION. WHEN IT COMES TO WHAT IS PERMISSIBLE, YOU MENTIONED THE INNOVATION EXEMPTIONS. IT IS HELPFUL TO HAVE THOSE. WE NEED TO THINK ABOUT DURABILITY OF RULES. INNOVATION EXEMPTIONS VERSUS REGULATIONS VERSUS LEGISLATION. WE HAVE TO MAKE NO REGRET DECISIONS THAT CAN WITHSTAND SCRUTINY IN ANY ENVIRONMENT. WE CARE ABOUT SCALE. HE MENTIONED DIFFERENT PATHS. WE NEED TO MAKE SURE THINGS WILL WORK IN ALL ENVIRONMENTS AND WOULD NEVER GO DOWN. IT IS MAINTAINING THE REALLY HIGH BAR. CLIENTS DEPEND ON US FOR THE QUIDDITY IN ALL CIRCUMSTANCES. WE NEED TO MAKE SURE THERE'S NEVER A SITUATION WHERE THERE'S NOT THE ABILITY OR WE CANNOT MOVE BETWEEN TRADITIONAL ASSETS AND DIGITAL ASSETS BEFORE WE CAN GET INVOLVED IN A MORE MEANINGFUL WAY. TIM: GOOD TO SEE YOU. THANK YOU FOR JOINING US. THAT IS GLOBAL HEAD OF DIGITAL ASSETS AT LENGTH AMERICA -- AT BANK OF AMERICA SONALI THEISEN. UP NEXT, SEC COMMISSIONER HESTER PEIRCE, ALSO KNOWN AS THE CRYPTO BALL. SHE IS ENDING HER TENURE THIS WEEK. SHE WILL JOIN US NEXT. THIS IS BLOOMBERG. HESTER PEIRCE IS ONE OF THE MOST VOCAL VOICES IN THE SEC ADVOCATING FOR CRYPTO REGULATION. SHE LEADS THE SEC'S CRYPTO TASK FORCE BUT IS CONCLUDING HER TENURE ON FRIDAY AFTER A THREE -- NEARLY A DECADE AT THE AGENCY UNDER THREE DIFFERENT CHAIRS. I'M PLEASED TO SAY SHE JOINS US NOW. IT IS GOOD TO HAVE YOU ON AND WE APPRECIATE THE OPPORTUNITY FOR THIS EXIT INTERVIEW. UNDER CHAIRS YOU WERE DISSENTING VOICE. YOU WERE FIGHTING FOR CRYPTO WHILE THE AGENCY PURSUED ENFORCEMENT ACTION. NOW YOU GOT TO BUILD A CRYPTO TASK FORCE AND SHAPE THE AGENDA. IT'S A CURIOUS TIME TO BE LEAVING. WE SAW THE CLARITY ACT BASICALLY DIE FOR NOW. YOU HAVE SAID THERE IS NO GOOD TIME TO LEAVE BUT IT FEELS LIKE IT'S A FRAUD TIME NOW. WHY LEAVE NOW? COMM. PEIRCE: THANK YOU FOR HAVING ME IN IT'S A GREAT TIME TO LEAVE. MY TERM IS OVER. WE ARE ALLOWED TO HANG ON FOR SOME AMOUNT OF TIME AFTER OUR TERMS EXPIRE BUT I DO HAVE TO LEAVE BY THE END OF THE YEAR. I AM VERY PLEASED WITH WHERE THE COMMISSION IS IN TERMS OF CRYPTO POLICY. WE HAVE TURNED THE CORNER. WE HAVE TURNED FROM A POSTURE THAT WAS QUITE NEGATIVE AND CREATED FERTILE GROUND FOR FRAUDSTERS TO ONE MOVING TOWARDS CLARITY IN WHICH GOOD ACTORS CAN REALLY PROSPER AND THRIVE. TIM: EVEN THOUGH YOU WANT TO SEE GOOD ACTORS -- WE ALL WANT TO SEE GOOD ACTORS THRIVE AND TAKE PART IN IT, THERE IS STILL POTENTIAL FOR BAD ACTORS. AS THE U.S. OPENS UP THE CRYPTO MARKET, WHO IS POLICING THE MARKET FOR THESE BAD ACTORS? COMM. PEIRCE: IT DEPENDS ON WHAT THE ASSET IS. CRYPTO ASSETS THAT ARE SECURITIES ARE WITHIN OUR REMIT. OTHER CRYPTO ASSETS MAYBE WITHIN THE CFTC'S REMIT. DEPENDING ON WHERE THE UNDERLYING NATURE OF THE ASSET IS, IT DEPENDS WHO IS THEN RESPONSIBLE FOR POLICING THE MARKETS. THERE'S ALWAYS DOJ. SCARLET: YOUR DEPARTURE LEAVES THE SEC WITH TWO COMMISSIONERS OUT OF FIVE. I DON'T BELIEVE A SUCCESSOR HAS BEEN NOMINATED AND THE TASK FORCE THAT YOU CREATED NO LONGER HAS ITS ARCHITECT. THE INNOVATION EXEMPTION IS A FIVE-YOUR CONDITIONAL ORDER THAT A FUTURE COMMISSION CAN MODIFY OR REVOKE. YOU HAVE SPENT YEARS ARGUING CRYPTO NEEDS DURABLE WRITTEN RULES. NOW THAT YOU ARE LEAVING THE FRAMEWORK YOU HAVE BUILT RESTS ENTIRELY ON AGENCY DISCRETION AND A 2% COMMISSION -- TWO-PERSON COMMISSION. HOW CONFIDENT ARE YOU THAT THIS WILL HOLD? COMM. PEIRCE: THE BEAUTY OF AMERICAN GOVERNMENT IS THAT IT'S ABOUT THE PRINCIPLES OF WHAT YOU ARE DOING. WHAT WE HAVE LAID OUT WILL BE EXCITING TO SEE FOLKS EXPERIMENTING WITH THE INNOVATION EXEMPTION. THERE ARE A LOT OF WONDERFUL PEOPLE THAT THE COMMISSION ON THE STAFF LEVEL AND MY FELLOW COMMISSIONERS, CHAIRMAN ATKINSON COMMISSIONER UA ARE COMMITTED TO GETTING CRYPTO REGULATION RIGHT. I AM REALLY EXCITED TO BE WATCHING IT FROM THE OUTSIDE AND I THINK MY DEPARTURE WILL HAVE ABSOLUTELY NO EFFECT ON THE ABILITY TO MOVE FORWARD AND DO SO EFFECTIVELY. TIM: WE COVERED PREDICTION MARKETS. I'M CURIOUS BECAUSE THE SEC HAS NOT ADDRESSED WHERE ITS JURISDICTION OVER PREDICTION MARKETS FALL, EVEN WITH SOME PRODUCT I WOULD LIKE SECURITY-BASED SWAPS OR OPTIONS, LIKE KPI PREDICTIONS. WHERE YOU FALL ON THE OPINION THAT IT NEEDS MORE CLARITY IN TERMS OF REGISTRATION EXPECTATIONS OR OTHER MATTERS, OR DOES THIS GO TO THE CFTC? COMM. PEIRCE: IT IS A DEVELOPING MARKET I THINK IS PEOPLE CONSIDER BUILDING NEW PRODUCTS AND LAUNCHING NEW PRODUCTS THEY SHOULD BE THINKING ABOUT WHETHER THEY FALL WITHIN THE SECURITIES SPACE. ONE OF THE GOOD THINGS ABOUT THE CURRENT ENVIRONMENT IS THAT WE ARE WORKING QUITE CLOSELY WITH THE CFTC. I THINK THAT IS HELPFUL FOR MARKET PARTICIPANTS THAT THEY KNOW THEY CAN FIGURE OUT WHERE THEIR PARTICULAR PRODUCT FALLS. IT IS A FACTS AND CIRCUMSTANCES QUESTION. YOU CAN. -- DESIGN OF PRODUCT THAT WOULD FALL WITHIN THE REMIT AND WE STAND READY TO PROVIDE THE REGULATORY FRAMEWORK FOR THOSE. SCARLET: I'M CURIOUS ABOUT THE TOKENIZED STOCK PROPOSAL THE SEC ISSUED RECENTLY. ARE YOU HAPPY WITH WHERE IT LANDED OR TO WHICH THE SEC HAD GONE FURTHER WITH FEWER RESTRICTIONS ON TOKEN ISSUERS? COMM. PEIRCE: WE DID PUT OUT THE SO-CALLED INNOVATION EXEMPTION TO ALLOW FOR ON CHANGE RATING OF TOKENIZED SECURITIES. THAT'S A REALLY HELPFUL STEP FOR FOLKS WHO ARE LOOKING AT TOKEN ICING SECURITIES AND TRYING TO UNDERSTAND HOW THEY ACTUALLY WOULD TRADE. THIS GIVES A PICTURE OF WHAT THAT MIGHT LOOK LIKE. WE WELCOME OTHER ITERATIONS OF THAT. IF PEOPLE HAVE OTHER IDEAS OF HOW TO DO IT, THEY SHOULD TALK TO US. I THINK THE INNOVATION EXEMPTION IS A GREAT START. THE CONDITIONS ARE DESIGNED TO PROVIDE A FRAMEWORK WITHIN WHICH PEOPLE CAN BE COMFORTABLE AT THE TOKENIZED SECURITIES WILL MESH MORE GENERALLY WITH THE REST OF THE EQUITY MARKETS. IT IS IMPORTANT TO HAVE THOSE CONDITIONS FOR THAT REASON. TIM: LET'S TALK ABOUT WHAT'S NEXT. YOU ARE SAID TO TEACH AT REGENT UNIVERSITY. I'M CURIOUS ABOUT WHETHER OR NOT YOU CAN TALK ABOUT IT NOW. YOU WILL JOIN THE BOARDS OF ANY COMPANIES OR ADVISE ANY COMPANIES IN THE SPACE GIVEN YOUR EXPERIENCE AT THE SEC? COMM. PEIRCE: I HOPE I WILL BE AN ADVISOR TO LAW STUDENTS WHO ARE ASPIRING TO GO AND DO GREAT THINGS. LOOKING FORWARD TO TEACHING AND MAYBE WRITING SOME LAW REVIEW ARTICLES. PARTICULARLY LOOKING FORWARD TO THE TEACHING ASPECT. TIM: WHAT IS THE SINGLE MOST IMPORTANT THING THE SEC GOT WRONG ABOUT CRYPTO THAT YOU WOULD TELL YOUR STUDENTS ON DAY ONE? COMM. PEIRCE: I THINK IT WAS AN UNWILLINGNESS TO GRAPPLE WITH THE NEW TECHNOLOGY AND I HOPE THAT BY NOT GRAPPLING WITH IT PRODUCTIVELY BUT BY DOING SO THROUGH ENFORCEMENT WE COULD SIMPLY KILL THE WHOLE ASSET CLASS. THE RESULT OF THAT WAS REALLY HARMFUL FOR INVESTORS AND REALLY HARMFUL FOR MARKETS AND REALLY HARMFUL FOR INNOVATORS. I THINK I WOULD COUNSEL MY STUDENTS AND WILL COUNSEL THEM THAT AN OPEN MIND IS REALLY IMPORTANT IF YOU'RE GOING TO BE WORKING IN GOVERNMENT. IT'S IMPORTANT MORE GENERALLY BUT IF YOU ARE IN GOVERNMENT, YOU NEED TO BE WILLING TO DEAL WITH THE CHANGING WORLD AS IT COMES BEFORE YOU. TIM: WE APPRECIATE ALL THE TIMES YOU HAVE JOY TO SOME BLOOMBERG AND BLOOMBERG CRYPTO. WHEN YOU JOIN US WHEN YOU ARE A PROFESSOR AS WELL? COMM. PEIRCE: I HAVE ENJOYED OUR CONVERSATIONS AND I HOPE IT CONTINUES, SO THANK YOU. TIM: WE WILL SAY THAT IS A YES. THANK YOU SO MUCH THAT SEC COMMISSIONER HESTER PEIRCE. BLOOMBERG INTELLIGENCE HOSTING THE DERIVATIVES MARKET STRUCTURE CONFERENCE HERE IN NEW YORK TOMORROW. WE WILL GET A SNEAK PEEK AT WHAT YOU CAN EXPECT FROM THAT. THAT IS NEXT. THIS IS BLOOMBERG. TIM: THE CONFERENCE FOCUSED ON INNOVATIONS ACROSS THE DIGITAL ASSET MARKET. JOINING US THIS YEAR'S SENIOR CRYPTO A DIGITAL ASSET STRATEGIST THE CHARLOTTE. GIVE US A PREVIEW OF THE BIG THINGS YOU GUYS ARE TALKING ABOUT. >> HAPPY TO. LET ME TELL YOU WHY WE ARE HOLDING THIS DERIVATIVES CONFERENCE THIS YEAR. THIS YEAR THE BIG STORY IS THAT YOU BASICALLY HAVE GOT THE TRADITIONAL GUYS AND THE UPSTARTS THAT ARE EMERGING AND THEY ARE COMING FROM TWO DIFFERENT DIRECTIONS. THEY ARE COMPETING FOR A FIST FIGHT FOR ALL THESE NEW PRODUCTS WE HAVE SEEN COMING OUT. FUTURES, COMPUTE FUTURES, SINGLE STOCK VERBS, THAT IS WHAT WE ARE TALKING ABOUT TOMORROW. WE HAVE TRADITIONAL EXCHANGES IN THE UPSTARTS IN THEIR OWN KICKING IT OFF. IT WILL BE A FANTASTIC EVENING. SCARLET: YESTERDAY YOU POSTED 300 BLOOMBERG KINDS ANALYZING THE INNOVATION EXEMPTION. BUT WE TALK ABOUT THE FALLOUT FROM THE CLARITY ACT NOT PASSING, WHAT IS THE ACTUAL FALLOUT FROM THE LOSS OF THAT? WHERE DOES THE INNOVATION EXEMPTION TAKE US FROM HERE? DUSHYANT: 350 PEOPLE ON A MONDAY MORNING SHOWING UP TO AN EXEMPTION WEBINAR SAYS SOMETHING OF THE INTEREST IN THE SPACE. MANY GUESTS HAVE TALKED ABOUT IT. CLARITY IS BEHIND US. THE PROBLEM WAS THAT WE DON'T HAVE THE DURABILITY CONGRESSIONAL STATUTE WOULD HAVE GIVEN US. ANYTHING WE DO WITH THE SEC OR FTC WILL BE A STOPGAP MEASURE. AT LEAST THERE IS A RELIEF USING THE RELIEF RALLY IN CRYPTO PRICES. STOCKS ARE UP. PEOPLE ARE LIKE, THIS IS BEHIND US, IT MAY NOT BE AS DURABLE AS WE ARE EXPECTING BUT WHAT YOU WILL SEE THE NEXT 12 MONTHS IS GOING TO BE THE FUTURE OF THE U.S. EQUITIES MARKET WHEN IT COMES TO TOKENIZED STOCKS. TIM: I WANT TO TALK ABOUT THE FUTURE OF RETAIL TREATING AND BROKERAGES. YOU TALKED ABOUT FUTURE MARKETS TAKING THESE NEW PRODUCTS, THE UPSTARTS CHALLENGING THE INCUMBENTS. ROBINHOOD IS DOING PREDICTION MARKETS. YOU HAVE THE SCHWAB CEO TELLING US THEY ARE THINKING ABOUT PREDICTION MARKETS IN A DIFFERENT WAY. ROBINHOOD -- COINBASE ANNOUNCED ALLOCATIONS. ROBINHOOD ALREADY HAS A SIMILAR THING. WHAT IS HAPPENING WITH RETAIL BROKERAGES RIGHT NOW? DUSHYANT: THE IMPORTANCE IS THE INVESTOR THE RETAIL MARKET. WHAT'S HAPPENING IS THE TRADITIONALS ARE BASICALLY GOING AGAINST NOW COINBASE AND ROBINHOOD. LOOK AT COINBASE. THEY HAVE PRODUCT NOW THAT WAS IP ALLOCATIONS WHICH WAS A CLASSIC WALL STREET PRODUCT FOR RETAIL INVESTORS. NOW COINBASE IS OFFERING THAT FOR RETAIL INVESTORS. THIS IS COINBASE I'M TALKING ABOUT IS A CASE STUDY. ACROSS THE LINE PRODUCTS THAT WERE TRADITIONALLY OFFERED BY FIDELITY OR SCHWAB OR E*TRADE, IS AN EXAMPLE OF ROBINHOOD, COINBASE, MANY OTHER PLAYERS IN THE SPACE AGAINST SCHWAB AND FIDELITY AND THE QUESTION IS TO WHAT EXTENT ARE SCHWAB AND ALL THESE GUYS PREPARED FOR THE FUTURE WHERE IT'S GOING TO BE A SINGLE SUPER APP CRYPTO, FUTURES, WHICH IN MARKETS ALL WITHIN A DIGITAL WALLET. THE DIGITAL WALLET MIGHT NOT BE ON TELEGRAM CHAT OR WECHAT OR WHAT'S UP. SCARLET: BEFORE WE LET YOU GO, WHAT ARE YOU MOST EXCITED TO LEARN FROM THE PARTICIPANTS AT THIS EVENT? DUSHYANT: I WANT TO HEAR ABOUT -- THE TOPIC OF THE DAY IS COMPUTER FUTURES. THAT IS THE PRODUCT TO WATCH FOR THE NEXT SIX MONTHS. I AM KEEN TO HEAR HOW THE MARKET IS COMING TOGETHER AND PROJECTING THE FUTURES MARKET. SCARLET: THANK YOU SO MUCH AS ALWAYS. THE BLOOMBERG THREAD IS MARKET STRUCTURE CONFERENCE. IT IS TYPICALLY IN AUSTIN. TIM: THAT WILL DO IT FOR "BLOOMBERG CRYPTO." CHECK OUT SOME OF THE INTERVIEWS THAT BLOOMBERG.COM AND ON THE BLOOMBERG TERMINAL. JOIN US NEXT WEEK. THIS IS BLOOMBERG.