The hearing before the Senate Banking committee is just over two hours. Witnesses are in person. Mr. Gensler, nice to see you. Members have the option to appear in person or virtually. Welcome back, chair gensler, to this committee. Workers and their families do not measure the economy by the stock market. Neither should we. It is why in the senate and in the new Biden Administration we work to create an economy that delivers results for people who get their incomes from a paycheck, not an investment portfolio, raising wages and good paying jobs and lowering costs means fighting the corporate price gouging that so often hurts consumers and the unfair labor practices that so often hurt workers. That means investing in the future of american manufacturers and it means making sure our financial watchdogs keep our economy and our markets stable. At the fcc, that includes going after companies to try to cheat the market. Chair gensler is doing that very well. It means strengthening corporate disclosures to stay ahead of risks like Climate Change. They stretch their tentacles into more and more areas of our economy. It has been an eventful year this summer. The Senate Confirmed president bidens two nominees to the fcc. I know both new commissioners got right to work on the many issues. Dedicated staff have been busy. Republicans in this committee have a bellyache to, and i assume will today, about your ambitious agenda. If wall street and its allies are complaining, it tells me more doing your job. We put americas savings first. The focus on transparency and fairness to, concept critical to making sure our markets work for everyone, not just insiders, not just corporate exacts. The fcc must continue making enforcement a priority. But actors are always coming up with new schemes to separate people from their hard earned money or cheetah the rules to gain a little bit more for themselves. Under your watch, fccs increased prosecution for Insider Trading, which of course, as you know, under the trump administration, and fall into the lowest level in a generation. In april, this committee considered a menendez bill which would outlaw Insider Trading and statute the. House has passed a similar bill. We saw the successful result of bipartisan work of Committee Members to improve transparency and fight fraud. In 2020, senator kennedy, who was sitting to my left, more or less, and senator van holland push for the passage of the foreign count ability built trading of Foreign Companies with chinabased auditors that refused to comply with our oversight. That law jumpstarted negotiations. The Public Company accounting Oversight Board signed an agreement with chinese authorities which would finally allow auditors to in march, the president sign an executive order establishing a whole Government Strategy for Digital Assets while agencies across our government respond to the growth of crypto and best protect american money. We know the fcc continues to enforce the laws, going after crypto tokens that violate security laws, shutting down crypto ponzi scheme,s charging Insider Trading crimes and crypto. Over the last year, we have learned at how cryptoassets are used in scams and frauds and play a role in illicit finance. We heard from a secretary who testified in the president s working overall stablecoin. This morning, the ad committee downstairs in a senators with an eye on this committee on the democratic side sit on both of these committees. They are considering a crypto bill sponsored by sovereign boozman which focus on digital commodities. I appreciate their work. It is critical, though, that we are careful and deliberate in a drawing jurisdictional lines in this kind of regulation. We have to prevent gaps in close loopholes that can be exploited or abused. Its not easy. Its why action by the Agriculture Committee and the chair gensler is very familiar with whether action is welcome. We also know it is not enough. When congress wrote doddfrank, we fixed the video in the over countered derivatives market. We need to remember thinking of the damage that was done when it comes to fire to it comes to crypto. The regulators need to Work Together to make sure investors and consumers and market stability come first. Fccs work on Climate Risk Disclosure is an important example of how to improve the markets understanding of risk and provide transparency incomparability, clarity, and uniformity. If only a subset of companies provides disclosure and they do so however they want, that doesnt serve anyone. Investors outside the u. S. Already benefit from standardized Climate Risk Disclosure. Its time the u. S. Marketed as well. The fcc recent rule proposal to require more disclosure about corporate stock buybacks will also bring muchneeded transparency to the market. Thank you for that. We know that stock buybacks are a big problem. They distort the market and funnel profits to executives at the expense of longterm investments and workers and in innovation. The process allows for these buybacks as only made them more manipulative. Companies have been able to announce buybacks to juice their stock price. They only provide details months later on how and whether they would even complete their plans. Under fccs new proposal, the market went under executives are buying or selling it at the same time. Taken together with unprecedented steps in the Inflation Reduction Act to finally tax these buybacks, i appreciate senator tester and others on this Committee Supporting that. These are the first real steps we have seen in years to rein in the wall street scheme, another example of a new president of the United States who fights for workers and sides with workers. Chair gensler, i look forward to hearing more about other ways the fcc is working to hold that actress accountable and protect american to invest their hard earned money in the markets. Senator toomey. Thank you, mister chairman. Chairman counselor, welcome back to the committee. Good to see you again. The fcc, as we all know, as a Critical Role to play in protecting investors, maintaining fair, orderly and, efficient markets, and facilitating capital formation. Unfortunately, some of the fccs recent actions and inactions raised concern about how well it is carrying out this mission. Take for example the fccs handling of Crypto Lending platforms like celsius and voyager. Celsius and voyager were offering Interest Rates as high as 18 if customers would lend their Digital Assets to them. The firms would then lend that crypto to presumably other larger investors to make short term bets on the Crypto Market. Once the crypto selloff began, many borrowers could not pay their debts. These platforms froze customer accounts. The fcc took enforcement action against block five for similar activities last winter, yet somehow let cell seat and and voyager continue to this spring when both with investors staring at billions in losses. Where was the fcc . Where is the fcc ban and clarifying the rules of the road for Crypto Market participants . Our chairman insists in his written testimony that, i quote, the vast majority, and quote of crist oh tokens our securities. He has acknowledged that bitcoin is not. That is presumably because bitcoin is so thoroughly decentralized. That naturally raises the question, where on the decentralization continual does a token seems to be a security . Most of these togas dont have a financial claim on the issue. Doesnt that make these tokens very different from the vast majority of ordinary securities . The chairman is right most. Tokens should be considered a securities. As he himself stated in his written testimony, and i quote, it follows that many crypto intermediaries are transacting crypto transactions typically could be settled with intermediaries. As a result, crypto intermediaries often serve different they have different risks than traditional securities and intermediaries. All of that raises the question, what is the crypto specific roadmap for these crypto intermediaries to register . Stepping back, i think theres a larger problem here. As bloomberg columnist matt levy and put it, and i quote, chairman again slurs posture is that he should be i just dont see how that can work, and quote. I think mr. Levine has a good point. Given the novel nature of the tokens, we need to revisit the definition of security as part of a larger effort at taylor Regulatory Framework which is calibrated to the unique risks of the Crypto Market. As i have said, crypto tokens have varying degrees of decentralization. They usually dont have a financial claim on the issue. They typically can be settled in realtime without intermediaries. These were very major and important differences from traditional securities. They merit a clearly stated and tailored Regulatory Framework. While the fcc has failed to provide proposed rules in the ordinary Securities Market. The top of that list of the fccs Climate Disclosure rule. Public companies are already required to disclose material Climate Change information. The proposed rule, however, would go much further to require disclosure of exceedingly Extensive Global warming data. The state it would be enormously expensive to collect but almost none of it will be material to a businesss finances. For any reports along, the fcc estimates that aggregate external Compliance Costs for issues would range from 1. 9 billion per year to 5. 2 billion dollars per year. If the fccs proposed Climate Disclosure will be comes affective. The fcc itself again estimates that in the external compliance cost of the Company Going public would increased by more than five times at a time when excessive regulatory costs are already resulting in fewer Companies Going public. The cost of compliance would be more material to the investor than the information itself. Of course, the Climate Disclosure rule is not really about informed Investment Decisions its about equipping climate activists to run pressure campaigns against companies which would often be to the detriment of shareholders. The endgame is to other Traditional Energy industries. We have seen how well that is working out in europe. The fcc is wading into controversial Public Policy debates outside of its mission. They are doing it without the Legal Authority to do so. Politicized agein the process, s politicizing the agency, slowing economic growth, increasing inflection, and possibly undermining natural security. Banking Committee Republicans over into the fcc asking basic questions about how the fcc developed the climates cultural. The fcc has been stonewalling us. The fcc may not want to answer to congress. Ultimately, the fcc will have to answer to the courts which should make it nervous. The Supreme Court has repeatedly held, and i quote, congress does not alter the fundamental details of a regulatory scheme invade terms or insularity provisions. It does not, one might say, hide elephants in mouse holes, and quote. The summer, the Supreme Court applied the sensible principle in the West Virginia versus epa case. There, it ruled that the executive branch and its agencies cannot use novel interpretations of existing law to pretend they have a Legal Authority to support sweeping policy changes, including on Climate Change. That is what the fcc should consider it on notice by the court. The separation of power still exists and will be upheld. Thank you, mister chair. Thank you senator toomey. Today we will hear from a Securities ExchangeCommission Chair gensler. This is his annual trip here. Sometimes, he doesnt more often. We thank him for that. Gary gensler, you are particularly welcome because we have a very good well above average turnout today. Enjoy that. Thank you for joining us. Chair brown, Ranking Member to lee, and members of the committee, im honored to appear here before you today. I want to start by thanking you, this committee and all of congress, for confirming our two new commissioners, [inaudible] terrific commissioners. Its welcome that we have a full complement. I want to say that i am speaking on myself. I dont speak on behalf of the new commissioners in this hearing. I would like to start by discussing two key years in policy making awhile back. 1933, 1934, i think that is when chair fletcher sat in the seat and chair brown if, i recall my history right. It was in the middle of the great depression. President roosevelt and congress addressed the crisis through a number of landmark reforms. Among them, congress and fdr came together to cry after the first two federal Securities Laws. In 1933, president roosevelt also suspended the use of the Gold Standard. In other words, in those two critical years, one could say that we were placed one Gold Standard with i would like to say another, the security laws. I do believe the court principles have contributed to americas economic success and geopolitical there is a basic bargain then investors get to decide what risk they want to take but there is a Securities Law where there was full fair and truthful facilitate capital formation. We cannot take the leadership for granted, though. Even gold medalists, especially gold medalists, constantly train to stay ahead of the competition. I do think that senator kennedy and van haaland helped us a little bit with this issue with china. We must remain vigilant to opportunities to drive greater efficiencies, integrity, resiliency across our area. First, markets work best when they are efficient. What does that mean . That means that there is competition. There is transparency in the middle of the market when we lower the cost in the middle. Issuers have lower cost to raise money and investors get better returns. We have done a lot but have not updated our equity system in 17 years. Imagine if you have a more than 17 years old phone in your pocket. You would think, oh my god, maybe i should update that phone. Technology moves fast. Our system works best when there is integrity in the market. We have proposals to bring better integrity into the market around a special purpose acquisition companies, the insiders, trading plans, and so forth. Another area is crypto, as member to meet raised. Of the nearly 10,000 tokens in the the vast majority are securities. Offers and sales of the security tokens are covered by the Securities Laws. Given that, ask the Ranking Member quoted me, saying, it follows that many crypto intermediaries are transacting insecurities and have to register with the fcc in some capacity. I would note that when chair fletcher was in that seat, there was not a Central Electronic clearing. You could Exchange Security person to person in a paper format. Staff is working with Market Participants 100 trillion dollar Capital Market. That is the sort of motherlode. That is our Capital Market. Crypto is one 100th size. Markets work best when they are resilient, both in normal times of stress. We have seen those in 2008 and 2020 this includes selling the that straw work we are anchored by the laws that in all our work, we are anchored by the Laws Congress passed, the courts interpretation of those laws, Economic Analysis, and public input. As the commission, we benefit greatly from public input, including from congress and this Committee Member that i stand ready to meet with one on one, nearly anytime you want. We benefit from that feed that. Our Capital Markets are the Gold Standard, lets do everything we can to keep them that way. I look forward to questions. Thank you, chair gensler. I think that what you said, and ive heard you say this before in smaller groups publicly, bigger groups that we cant allow the war that is fundamentally our job here. Fundamentally, that is our job in the banking and urban affairs committee. You have made improving transparency a priority in addition to the climate risks, disclosures, enhanced stock buyback that i mentioned earlier. The commission is addressing cybersecurity risks, improving visibility, if you will, and to concentrate ownership of stocks. Discuss why