The Wolf Of All Streets - Hester Peirce Explains What Crypto Still Needs Before She Leaves the SEC

Episode Date: September 27, 2026

SEC Commissioner Hester Peirce discusses what comes next after the Clarity Act failed and why the SEC can still move crypto regulation forward under its existing authority. She breaks down the new five-year framework for tokenized stocks, the push to bring more financial activity onchain, and why experimentation could help shape a more permanent regulatory framework for crypto. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Discover coffee plus on nispresso.com. So the government ever have the power to tell you that you can't hold your own money, protect your financial privacy, or build software without permission? Today I'm talking with SEC Commissioner Hester Purse as she prepares to leave the agency after years of pushing for a radically different approach to crypto regulation. We get into the collapse of the Clarity Act. I did expect that it would pass. I was surprised with the outcome.

A lot of work has gone into the Clarity Act. It's a big piece of legislation with a lot of moving pieces. Tokenized stocks. I do think a lot of issuers will be very excited to see their securities traded in tokenized fashion. We want the United States to be a place where people can try this. New fundraising rules, privacy, self-custody, developer protections, and why she believes America still has an opportunity to become the best place in the world to build. This is one of Hester's final conversations as an SEC commissioner, and it gets to the heart

of what crypto regulation should actually protect. Let's go. Let's go. Today's video is brought to you by Kalshi. You probably know Kalshi for prediction markets, but now you can also trade crypto perps directly on the same platform. That means Bitcoin and other major crypto assets with leverage on a platform that's U.S. regulated by the CFTC. Cali has some of the lowest fees, and you don't need to be trading millions of dollars to get exclusive benefits. Trade just $100,000 in volume per month, and you unlock a bunch of VIP perks, like one. one basis point taker fees, private invites to Kalshi events, and more.

You can sign up using my link in the description, and you'll get $25 when you trade your first $50. Thank you so much for joining again, Commissioner Perce. So it's been a wild time in the United States government, especially with regards to crypto. Perhaps we should start at the Clarity Act, which was debated, discussed for over a year, and sort of seemingly died with a bit of a whimper last week. Did you expect that the Clarity Act would pass? Were you surprised by the result? Was it in line with what you were thinking? Well, Scott, thanks for having me. It's great to be back. And I should start with my disclaimer, which is that my views are my own views as a commissioner, not necessarily those of the SEC or my fellow commissioners. I did expect that it would pass. So I was surprised with the outcome. A lot of work has gone into the Clarity Act. It's a big piece of legislation.

with a lot of moving pieces. And yeah, just many people had put a lot of thought into it. I think it would be helpful to have a market structure bill for crypto. I think it would be helpful across the board. It would be helpful for regulators. But we can do a lot even without having that in place. And so that is where we're turning our attention. You said that you expected that it would pass.

Why do you think that it didn't? Can you point to any? Oh, I mean, I'm just a regulator. And as I say, there are a lot of moving pieces and a lot of people with different parts of the bill they were interested in. So I don't know what the political cause of its not having passed was. But, you know, what I can say is that we worked with folks in Congress on it. And so I was sitting as an observer watching how hard folks were working on it. And so I don't know whether it will move forward at a later date.

So that's something to watch as well. So in the time leading up to the cloture vote, it seemed that both the CFTC and the SEC signaled that they were willing to move forward with or without the Clarity Act and were making plans to do so. And it did not take very long for that to happen. Right. So obviously we had the innovation exemption proposed by the SEC this week. The CFTC has filed already. We don't know what the language is, but obviously intends do rulemaking as well. So it seems like everybody was well hedged that they were prepared for either outcome. Well, I mean, we have been using our authority to do things related to crypto now for over a year and a half, nearly two years. And so we're just continuing. along doing that using the authorities that Congress already gave us. And I think that's what we should be doing under the authority that we have is using it to try to answer some of the questions that

frankly have been hanging in the air for many, many years now. So perhaps we can get to which questions you can answer. And then later maybe we can talk about the ones that you can't, that you would need, you know, the Clarity Act or something similar for. So we can start at the innovation exemption, which seems like a narrow and reasonable path for certain tokenized stocks to trade in the United States. I've seen a lot of sort of interpretation that I think is wrong, that it's much broader than it is. It seems like it's the first iteration of what's likely to come. Is that a fair assessment? Well, I think what it is is a desire to bring tokenized stock trading on chain and to allow people to experiment with doing that using automated market

makers to do that. It is on-chain trading. It's not defy. And so, you know, it's through permission, people making permissioned access to AMMs available to folks. And what we, what we are trying to get to is a better understanding of what tokenized trading will look like, tokenized trading of NMS securities will look like. And then our goal, it's time limited. It's a five-year time-limited order. And so the goal is then to get information that we need to better understand what these different models will look like and therefore how they will fit within our regulatory

structure, where the points of regulation should be. And so I hope that people will take a. us up on the invitation that we're giving them with the order to experiment in this area. And also will take us up on helping us think through what a permanent regulatory framework should look like. As the chairman said in his statement, this is really a bridge to the permanent regulatory framework. Five years is a lifetime in crypto. It is like dog years. probably 35 years for anything else. The speed at which this is moving, I would imagine that we're going to find out very quickly how well that's working, how much adoption there is, and it probably

won't take that full five years. Yeah, I mean, it is a long time in crypto. The thing that makes me a bit sad is that, so I'm at the end of my tenure as a commissioner. That makes us all sad, by the way. Even at the beginning, well, I mean, there's time. It's time for that to end. But I would have like things to be further along because even at the beginning of my tenure, people were starting to think about these kinds of things. And it really shouldn't have taken us this long to get to the point where we were letting people experiment with on-chain trading. But this is where we are. And so, yeah, I do hope that we see some uptake and see some activity. That's interesting that from your perspective, you think it's taken a long time? Because I think a lot of people

maybe who haven't been around for a long time are seeing it start and move exceptionally fast. They don't know how long it took to get to the starting line. It took a very long time to get to the starting line. And really just seeing the change when the administration and the regulatory agencies said, you know what, we're going to take a different approach here. We're not going to try to use regulation to shut down activity that is being carried out by people who really want to, want to do good things. We're going to shut down the bad activity, but allow the good activity to go forward.

There was such interest in saying, hey, how can we use this technology to make the traditional markets work better? And there are different views on that. And I think that's part of what we want to see is where is the technology useful? How are people thinking about it? and not trying to dictate that from the place of the regulator, but trying to say, we want to accommodate your attempts, you, the market, as you attempt to experiment with it,

see whether the technology makes sense and how it makes sense to apply it. You alluded to the fact that you were hoping that some people would test this or would come in and try, but everybody's trying. Coinbase has an announcement every single day in tokenized talks crack in. OkX, Robin Hood, everyone. But everybody's taken a different approach and there's been pushback to some of them already. Robin Hood, most notably, obviously had the CEO of Vlad in a bit of a spat with the CEO of AMC. And I noticed in the innovation exemption, it very explicitly says that there's effectively

a 30 year, a 30 day, excuse me, period at which the company itself can, I don't know what the correct terminology is, but they can reject the tokenized stock being created by a third party. So they actually do have the power effectively to decide whether that's going to happen or not, which seemingly was at the core of their argument. Part of what we're trying to do is encourage people to try trading in tokenized securities here in the U.S. And so a lot of the activity has been outside the U.S. We want the United States to be a place where people can try this. And in terms of including an issuer consent condition, I do think a lot of issuers will be very excited to see their securities traded in tokenized fashion. I've talked to a lot of issuers, and there is obviously questions, but there's also excitement about what this could mean.

And so we did want to give issuers the option to say, I'm not ready for this. this is not what I want, but I think it will be interesting to see, again, the uptake on that side as well and the interest on that side. I think they're going to be exceptionally interested, and I'd be surprised if AMC isn't also exceptionally interested because you effectively addressed every concern that they had, right? They have the ability to veto, so to speak, but also you've guaranteed, to my understanding, that these will represent actual shares, fully backed, same dividends, and voting rights, they will effectively be the same as owning a share, which was another one of the concerns that was being debated there. Yeah, that is a condition of the order is that the

securities do have to carry the same rights. And I also noticed that there was explicit language about permissionless blockchains, which I found extremely compelling and interesting because this will happen very publicly, very transparently, and likely on the blockchains that we're already passionate about and using. Yeah, I mean, I think permissionless blockchains offer a level of transparency, as you say, and people can understand how they operate. And so that's, that's really helpful in terms of, from the regulatory perspective. If people want to experiment with permission blockchains, then we're happy to talk with them as well. I think as we've stated more generally, we're trying to do things in an iterative manner. And so if you see that we've done something

and you think we should do it slightly differently, or you think that an accommodation is necessary to do what you're trying to do, then come talk to us and we'll think about whether whether that's possible and whether additional conditions are necessary to make that possible or whether I just think that's the message is it's an open door this this particular order is about is about permissionless chains but I'm certainly happy to talk to folks the reason that I smirked is because I remember the language come in and talk to us a very different a few years ago and when I hear you and I know you actually believe it it's very, very different because you obviously, I'll go ahead and say you suffered through the

Gensler era at SEC. And he said, come in and talk to us, and that usually meant you were going to present something and get sued. So it's a little different now. We're really trying to get to the place where we can achieve our regulatory objectives, which Congress gave us. And so we have to achieve those protecting investors and fostering market integrity, as well as capital formation, but we can do that in a way that recognizes there are aspects of this technology that address some of the risks that are existing regulations had to deal with. But there are also aspects of the technology that are new and may require a different regulatory solution than we've seen before. So I think that that's really the way to be tech neutral is to

is to acknowledge that new technologies present a different set of risks that a regulator has to deal with. Circling back to what regulation can or cannot address, I've already seen, you know, some pundits saying that it's likely there will be litigation because of Loper Bright and perhaps regulatory agencies don't have the power that they would have in the past and that rulemaking can be challenged. So are there any concerns that the innovation exemption itself could see litigation or challenges from the courts? Well, I mean, I can't speak to that. But what I can say is that we really are trying to, and the whole way that we've approached crypto has been to say, we want to, so it's the back back to the come talk to us line, but it's not only if you want to build something in this space. If you have concerns in this space, we want to hear what they are. We want to talk to people.

And we really do want to get to a long-term regulatory framework that is efficient, that's effective, and that enables innovation not only by new entrants, but by incumbents. And so I hope that we can all work together toward that productive end. And there's just a lot of creative energy. There are a lot of really excellent ideas that are flowing not only from new entrants, but also from incumbent firms who are looking at the landscape and looking at the technology and saying, how can we use this to do things better than we've done before? And so we're excited to work with everyone.

We're excited to hear from critics as well. That's the beauty of American government is you don't always have to say that you like what we're doing. it can be valuable to hear people saying we don't like what you're doing. I've been very surprised at some of the institutions that have been quick to seemingly start adopting the technology. The DTCC blew my mind when obviously they got the no action letter from the SEC. And a day later we're talking about tokenizing everything and having it on a blockchain within a year or two years. Right? I mean, they've been thinking about it for a long time.

Really? You know, so they, I think that's evident. So it's really kind of different approaches that different institutions would take. For them, that's obviously plumbing, right? I mean, it's just a superior infrastructure. It's really faster, cheaper, and better updating an old computer OS to a new one, very different than a company that's trying to, you know, launch tokenized stocks or make a profit from it. It's really just making their system better.

I mean, is that sort of an accurate way to view how a lot of these people will be approaching it? I think a lot of people are looking at it as, you know, tell me if this is actually going to help us to do things better to improve the plumbing, improve the back end. And I think that that's a good way of framing it because the question is really, it's not to say blockchain is the solution to everything, but it's to say let's think about whether there are areas where applying this new technology would make sense. and let's experiment with it there. And so that's why we don't expect that every experiment that happens will radically change the world, but it might make things more efficient in a back office. It might eliminate problems like fails to deliver that we've seen in the past. So I'm excited to see what the consequences will be of really opening the doors.

to experimentation. How much risk is there with inevitably future regime change to rulemaking now, not even specific to this rulemaking, but for people to understand how far rulemaking can go and how easy it is to reverse. We all very much enjoyed watching you reverse very quickly some of the policies of the last administration. Well, elections obviously do have consequences. So I think that that's certainly something we we all. all recognize. But as I say all the time, the best way to future prove something is to build things that people want and need and actually use. And then you have a lot of people who will argue for keeping rules on the books that enable those things to continue working.

Does that mean that the onus is really on the industry to make sure that it's too big to fail or that we've, you know, the technology has spread so far and wide that it's really unstoppable. Basically take the rules now, run with them, and then it's unstoppable anyways. Yeah, I think that's a good way of putting it. I don't know that I would use the term too big to fail in the sense that it's not any particular market participant that's too big to fail, but it's the idea that people are actually, this is actually improving the way things work. And so why would anyone want to take that away?

Yeah, I think it's going to be a very exciting couple of years here at the very least, I would imagine. So you're leaving. What led to the decision to go back to the private side and to finally step down as an SEC commissioner? It seems like very green pastures right now. Well, one thing that made me want to leave is that my term expired. So I have to leave. And so I have to leave by the end of the year. I'll be leaving before that.

But I really have, it's been such an honor to be in this job. People have been so wonderful to work with and so gracious in giving me their time and lending me their expertise, lending an ear to me. And I really feel it's time for someone else to have that honor of being in that position. it's time for some fresh ideas to come in. It is, I think, very healthy for government to have new ideas, new voices, new faces come in. And so I'm very excited to see that transition happen and to see how someone else approaches the job. I think that our government officials should just keep their jobs for 60 straight years until they're in a wheelchair and have to be wheeled in to vote.

personally, but what can I say? No, I think that the idea of fresh blood is probably exceptional. It's interesting that you talk about new ideas because your new ideas are now finally being adopted. You and I talked about safe harbor and you talked about it for years when it was not adopted yet. The idea that there should be some sort of path to decentralization and there should be a definition of what is or is not a security based on that path. And we're seeing that now also come to fruition. So the innovation is. exemption obviously was more recent, but the fundraising and the idea of safe harbor was proposed a couple of months ago. So maybe you could talk us through that because when I read it, I thought,

wow, this was an idea that you had shared ages ago. Well, pieces of it, I think, did draw on on some of the ideas that I and my staff had worked on some years ago. But the red crypto assets or red crypto, as I call it, is it does a few things. First, it has. It has a few things. First, it has a startup exemption, you can raise up to $5 million. And the idea is that if you want to do a token launch and you want to do fundraising in conjunction with that, you can use that startup exemption or you can use the fundraising exemption, which allows you to raise up to $75 million, but with a more intense set of requirements around that. And then there is a safe harbor component in the sense that we have set a path forward by which you can make it clear that your

token is now separate from the investment contract and, you know, it's moving forward as basically a commodity. So that rule is out for comment. We are getting some great comments. And so I hope people will take a look at it and let us know what they think works and what doesn't work. When I first read it, I was happily, I would say I was just happily surprised at the initial one you discussed, which is the $5 million fundraising, because it seemed so reasonable and that we could extrapolate what you're proposing there to other markets where accredited investor laws perhaps get in the way of people being able to raise funds. Because it's actually what I found, it just seems like this is actually easier than raising for something else, a different

kind of business. Yeah, and I think, you know, you're kind of preaching to the choir there in terms of thinking about capital formation more broadly and thinking about ways that we can really look at the rules we have and ask whether they should be updated and liberalized so that more people can take part in raising, in participating in building companies, investing in things other. than the public markets. So I think that there is something to learn. I mean, I've been arguing for a long time that we need to have a very slim down micro-offering exemption. I think that that, you know, for traditional equity securities. I think there are a lot of, a lot of different approaches that we can

take. But I would like to see to make it much easier for entrepreneurs to raise capital and do so in a way that protects investors, but also doesn't infantilize investors. Sometimes I think we want to step in and say, well, you're not, you as an American, are not allowed to put your money into something that you believe in. But yeah, feel free to run down to the casino and spend all your money there, but we're not going to let you invest in a company of the neighbor kid who you know is brilliant and who you, who you really want to want to have a piece of the company that she's building. So I think that's where I would like to see us spend some more time.

But what we're doing in this space, maybe we'll have some spillover effects elsewhere. It's fair to say, a non-accredited investor would be able to participate in one of these up to $5 million and doesn't require heavy paperwork. It's effectively a white paper and a plan. and that you obviously have to benchmark and up to, I believe, four years, right? I mean, if we saw that for me to invest in my friend's coffee shop, America would be such a better place. So one of the things, too, that I'm hoping,

because I think part of the way this industry has developed over time is really a function of what the regulatory framework was and wasn't. And so I'd like to have a world in which the token and the equity could be more of a unified thing where you're actually getting a stake in the company that's building the project. And I think it hasn't developed that way really because people were concerned about being pulled into the securities world. And what I'm hoping we can get to is having people be comfortable that when it makes sense for the token to be a security, it will be a security. It will comply with securities rules. And then when it when that no longer makes sense,

um, which will be the case for some projects, it will move out of that framework. And for others, they may decide that's where they want to hang out for, um, for the rest of their existence, right? And so we need to make the, the securities rules workable enough that people have different options depending on what they're trying to build. I mean, security was a four letter word for crypto. Exactly. I mean, people were literally do anything to not be called a security. So you're basically talking about a world. world where being a security is a good thing. Yes.

I mean, I think that that was one of the big, sorry for interrupting you. I think that was one of the big, you know, when you portray a very anti-cry crypto regulatory approach as being protective of investors, it really, I think, is the opposite of that because you're creating a world in which people are running so fast to stay from any kind of regulatory framework that you lose the benefits of that framework where it makes sense. And you actually end up making it much harder to distinguish the good actors from the bad. I think we've probably talked about this before. And so we really want to reset that to say, hey, there are going to be times when the securities laws are the right place for you to be. And

we're going to take into account any unique features that require regulatory accommodation, but we're also trying to get to this world where people buying these things are getting the protections they need as well. Yeah, there was this strange moment where I think it actually pushed the popularity of things like meme coins because people were sort of launching them in the face of regulation saying, I'm blatantly saying this has no utility and no purpose, therefore I'm outside the framework and we can gamble on these. Right? And that's certainly not ironic. Yeah. Yeah. I mean, to think that we as regulated.

created the environment in which you were more likely to flourish if you said you had no utility than if you said, hey, we're trying to create real utility, and you really worked toward that earnestly. Yeah, the token equity debate has still been problematic. You bring it up, but there's been a lot of projects that have gotten pushback because they either launched a token first and then did a fundraising inequity or people don't really understand why you would hold a token if there is equity and merging those two would be, I think, extremely powerful for the industry. I think a lot of people just don't really understand

how value accrues to the token for most things. Well, I think you could set up a system in which value would accrue to the token because the token itself is so useful in the network that you've built. But again, I don't think there's a one-size-fits-all answer. I think for some people having the token and the equity be a unified thing makes sense for others. It's going to make sense to have a token be a separate thing. And as long as everyone is clear on what rights accrue to which of them and what benefits accrue to which of them, I think it's fine. I'm someone who doesn't want to want to mandate a single approach. But I think I also have talked to enough people who want to think about how they can can merge the two that it's worth having that conversation.

in your mind, how should regulators now distinguish between the token itself and the investment contract through which that token was originally sold? I mean, is that basically safe harbor, or are there examples when they launch that it needs to be sort of defined at the moment of launch? What we've tried to do with the commission interpretation that came out on this topic and then with red crypto, which flows from that, is to say, let's be clear about what an investment contract is, right? If you're selling a token along with promises that you're going to do X, Y, Z, you've created an investment contract. So let's get people to be as explicit about what those promises are.

And then they can tick through them as they fulfill those promises. And then once those promises are fulfilled, or you've walked away from them, which may cause you legal problems for doing that. But once you've fulfilled those promises, then the investment contract, falls away from the token. And I think that that some people have been critical of that. And again, we welcome thoughts and ideas. But the benefit of that is that I think it could create a culture in which teams are really encouraged to be very specific about what they're promising to do. And then they can be very specific about when they're fulfilling those promises. That I think will be a very healthy environment in which people buying tokens will understand what efforts of the team they're

going to get along with those tokens. Moving on to stable coins, which I guess no pun intended, have much more clarity because of the Genius Act. Do you think that there's a place for the SEC to step in with anything you're seeing in the Stablecoin world? Or do you think the fact that we have you know, this, the genius bill passed and as law goes far enough? Or is there rulemaking that you need to do? Well, there's some rulemaking around or guidance around how the entities that we regulate treat stable coins, genius stable coins and other stable coins. So that's an area that we're thinking about because their customers and clients are going to want to interact with stable coins. And then there, there, of course, is a lot of work that we're doing around tokenized

money market funds as well. So, yeah, absolutely. And tokenized bank deposits, I think that stable coins is going to split into a lot of very different things. I spoke with Caitlin Long recently about that. And she's obviously very passionate on defining the differences and believes that, you know, those tokenized bank deposits are actually going to be more powerful than stable coins in the future. But I guess we can let the market decide those things. Let's let the market decide. So a few other major points of clarity that seem to be under contention, self-custody, developer protections, are, can any of those be addressed by the SEC in a sufficient manner where we're not, where we kind of have that whole firm clarity? Well, I mean, self-custody is really

a very fundamental American right. You have the right to hold your own assets. And I don't know that you should need a regulator to tell you that you're allowed to hold your own assets, whether you decide you want to have someone else do that for you because you want the protection that comes with having someone else do it for you is really up to you. But I think this is one of the features of this asset class that has attracted a lot of people to it, that they can actually hold their own assets. So with respect to that, I think we just need to recognize. that that's a reality that some people are going to want to self-custody. Then with respect to developer protections, you know, I think that we need to be very careful in this country, what we do

with respect to protecting developers. We want to encourage the best and the brightest to come here and build things. We want to give them protection to build things that other people want to use. And the sad reality is that when you build something that's useful, some bad people are going to use it. And so we just really need to make sure that we're protecting developers and saying just because someone bad has used your product doesn't mean that you are responsible for what they do with it. Yeah, I always joke that I'm pretty sure drug dealers probably use iPhones, but I haven't seen anyone go after Apple. I mean, and that's why I always find it interesting. When we start talking about software, people seem to forget that principle which we apply in so many other

areas. Well, you talked about self-custody being a basic American right. Privacy, I would argue, is another basic American right. And there seems to be a massive push in the crypto industry towards privacy, but that maybe is not something that governments have decided they're comfortable with. Well, again, a government that's looking out for its citizens, which is what governments should be doing, should be very concerned about protecting the right for citizens to protect their own privacy.

We, you know, obviously, we don't typically require people to show all their financial transactions to the rest of the world, right? We allow them to protect their privacy there, and we think it's good if they do because it's less likely that they'll get victimized if they're protecting their privacy. And so in this area as well, we ought to be very concerned about it. The technology has the benefit of being very open and allowing folks to see what's going on.

But that also means that folks see what's going on. And so it's natural that you would want to build in privacy protection. We need to make sure that law enforcement can do its job. That goes without saying. But it's really important to build in the ability for people. to in their everyday lives to protect themselves and to have privacy. We should be viewing it as the default, right, that people are going to want to have privacy protected. And we shouldn't view it as a signal that someone is doing something nefarious. I think to the contrary, it should be,

it should be expected that people will protect their privacy. How do you distinguish between the legitimate financial privacy and the illicit conduct? I mean, you know, this is a balance that we as a society have to come to. And I don't think that we've gotten it right in the traditional world necessarily either. And I think we've been asking financial institutions to do an awful lot of watching what their customers do and sort of we're deputizing them to do the government's work. And what I would say is it's a good moment for us to do a reset and think about how we can get that balance right, how we can respect the constitutional rights of citizens, but also give

law enforcement the mechanisms they need, when they do need to get access to information, to get that using the proper channels for doing that. And that really, some of these questions are quite difficult. And we really have to be willing to have a conversation that recognizes everything at stake. But I think too often people have been scared to even have those conversations. And that's a shame because we spend a lot of time, money, energy, and loss of privacy with the existing system we have. while we could be spending our time, money, and energy on building a more effective system that does a better job at protecting people's privacy. So I'm optimistic that some of the new

technologies actually could be helpful in enabling us to better protect people, but also to give law enforcement a mechanism when appropriate with the appropriate protections for getting the information they need. As an American, I'm very committed. to the idea that people should generally be allowed to go about their lives without having other people watch what they're doing. When there's a suspicion of illegal activity, that's when you have to figure out a way for government to see whether there's a there there. Yeah, crypto should be really no different than any other.

Exactly. Although I will say that even with the other financial system, I complain about this a lot. in the non-crypto area as well. I think we as Americans have given up a lot of the right to protect our financial privacy sort of because we've assumed that that's just the way it must be. And we've assumed that when it comes to financial markets, it's okay if the government follows us around and watches everything we do. So I think it's really a moment for a reset, a reset that honestly acknowledges the tradeoffs and tries to come to a good result. No one wants to see the financial system used for bad purposes.

So we need to work carefully, but we also need to really have a fundamental rethink. It's such a slippery slope. And generally when a government takes away privacy, it doesn't give it back. So I agree with you. this is amplified by AI and how are regulators and law enforcement preparing for a world where, you know, AI is being used for illicit purposes, especially in regard to crypto, because we're seeing a lot. Well, I think AI is being used already for illicit purposes. And it, you know, I've seen it as a securities regulator where investors have gotten defrauded. And, you know, that happened before AI, but AI just

magnifies the ability of fraudsters to take advantage of people. And so one piece of course is better investor education, but another piece of it is better investigation where we can use AI to amplify our own efforts to go after bad actors. And then I think a third piece of it is just building in AI, which the financial institutions are already doing, to protect their their customers and clients. And I think this is going to be a continuing struggle for everyone. AI, as we discussed before, as with any effective tool, you're going to see it being used for good or bad, for good and bad. And so we want to just make sure that we can stay ahead of the folks who are using it for bad. I think part of that does require us to work with the entities that we regulate to,

you know, this is an area where we really need to work together for the protection of investors in the markets. You could establish one permanent principle governing digital assets before your time at the SEC ends. What would it be? Well, I think it really would go back to this idea that people have the right to hold their own assets to transact using decentralized. tools and that we should think about that differently than we think about intermediated transactions of which there will be many, right? I think a lot of people are going to decide they want to do things through intermediated channels.

And those intermediate channels raise the same kind of issues that we've been regulating for all along, and so will require a regulatory response. But if people choose to self-custody and to transact in the decentralized manner, then it's just a different picture. And then the other thing I think we talked about already is that I think is important is developer protection. I don't want us to turn into a developer approval agency where people have to come to us before they write software. I'm in and talk. Fine. I know we're coming up on time here. So just a kind of a final question about clarity in the regulatory framework. Do you think that the regulatory framework will be compelling enough that people

will be confident to either build in the United States or those who left will be willing to come back and feel that they'll still be safe here in a few years? I firmly believe this is the greatest nation, and it's one that really has been a place where people who want to build things have come for for now many, many years. And I would like it to continue to be that kind of place. I hope that we can do our little part by working on rules around crypto and frankly on broader issues in capital markets regulation. The SEC has a lot of stuff going on now. Chairman Atkins has a very full agenda that we're working on. And I think those rules should create an environment that that makes it more attractive for people to be in

the United States and doing things in the United States. And then we'll see what happens with clarity and other refinements to the statutory framework, but we will continue to work as hard as we can to get the, and I say we, I won't be here. But I know that my colleagues will continue to work very hard and and I hope that will continue to make this the kind of place where people from all over the world want to come to lend their talents and their capital and build great things. I can sincerely say that you'll be deeply missed that we appreciate everything that you've done over the years. It will be remembered. So thank you so much. Well, thank you. Thanks for having me for your time for the conversation today. Thank you.

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