Author: Gary Gensler
Compiled by: Nicky, Foresight News
Two years ago, when I spoke to you here, I quoted President Franklin Roosevelt when he signed the first foundational securities laws in 1933: “This law, and its effective enforcement, is a plan to restore some old-fashioned standards of integrity. One step in.”
This year, I’m going to talk about effective execution. As is customary, I would like to point out that the views below represent my personal views as Chairman of the Securities and Exchange Commission and do not represent the views of other commissioners or staff.
I believe that our securities laws have contributed significantly to our country’s tremendous economic success over the past 90 years. Securities laws benefit investors and issuers when enacted, while helping us build trust in our capital markets. These laws also help reduce costs and reduce risks.
The results are reflected in the size, scope and depth of our capital markets. Today, the scale of our capital market has exceeded US$120 trillion. It is part of the country’s comparative advantage, supporting the dominance of the US dollar and our role in the world. We are the capital market of choice for global issuers and investors, accounting for more than 40% of the global capital market. Although we only account for 24% of the world’s total economy, we have achieved the feat of gaining significant influence with a relatively small size. .
All this is no accident.
President Roosevelt and Congress understood in the 1930s that well-regulated markets build trust and create the conditions for economic success.
Later, Presidents Richard Nixon, Gerald Ford, Ronald Reagan, Bill Clinton, George W. Bush, and Obama, as well as Congress, updated securities laws to best promote our capital This is also recognized many times when markets and economies are successful.
One of the ways I think about this is by comparing it to common sense rules in driving or football.
For years, whenever one of my three daughters borrowed my car keys, I could sleep peacefully knowing that common-sense traffic rules were protecting them. These rules include stop signs, traffic lights, speed limits, and laws against drunk driving. The police patrolling the streets make sure these rules are enforced so that my daughters can drive safely and I have peace of mind.
These traffic rules not only help reduce driving risks but also promote economic prosperity. Just imagine, if there were no traffic lights and speed limit regulations a hundred years ago, American automakers might not have achieved such brilliant achievements, because these regulations allowed American consumers to trust this emerging product.
Likewise, as we enjoy the excitement of football this fall, imagine what it would be like if the NFL didn’t set any rules for the game. If there are no referees on the court to maintain order, the court will inevitably fall into chaos and players will get injured.
These common-sense rules in football not only provide safety for players but also build fans’ confidence in the integrity of the game. Therefore, the existence of rules and referees is an important factor in promoting the continuous development of the game.
The same is true in finance, where common-sense rules reduce risk and build trust among market participants.
When President Roosevelt and Congress enacted securities laws in the 1930s, they lived through the 1920s, when con men, fraudsters, scam artists, and Ponzi schemers exploited investors for personal gain. They learned the lesson of unregulated markets that let themselves run wild. Over the next few decades, subsequent presidents repeatedly saw similar benefits from increased market regulation as technology and business models changed.
They also know that the “rules of the road” should not be limited to preventing fraud. Congress understands the importance of securities information to the public interest and has enacted a series of key provisions regarding information disclosure. At the same time, they have also established important regulations on corporate governance to ensure the standardized operation of enterprises. Congress also attaches great importance to intermediaries and has formulated important provisions related to conflict of interest management, information disclosure transparency, and business conduct standards. These regulations are designed to protect the interests of investors and maintain market fairness and justice. In addition, special attention is paid to the role of gatekeepers, such as investment banks, auditors, etc., and corresponding provisions are formulated for them to ensure that they play an active role in the capital market and maintain market stability and security.
cryptocurrency market
When I joined the SEC in 2021, Commission Chairman Jay Clayton had already launched about 80 lawsuits against participants in the cryptocurrency market who did not follow basic rules, and the Ripple case was one of them.
Chairman Clayton and his committee discuss these emerging markets frequently, and just three months since he took office, the committee released the DAO Report. The SEC remains vigilant to ensure that those entities that issue or sell securities comply with our time-tested securities regulations. As of 2018, this type of enforcement work typically accounts for 5% to 7% of our overall work.
Multiple courts have upheld our actions to protect investors, rejecting all arguments that the SEC is unable to regulate the enforcement of laws across different forms of securities offerings.
It is important to note that not all assets are considered securities. Former Chairman Clayton and I have both made clear that Bitcoin is not a security and the Commission has never considered it to be one. Our focus remains on some of the approximately 10,000 other digital assets, many of which have been determined by courts to be securities. To put this into perspective, outside of Bitcoin, Ethereum, and stablecoins, the rest of the cryptocurrency market is approximately $600 billion, accounting for less than 20% of the entire cryptocurrency market and only 0.25% of the global capital market about.
Here, I would like to emphasize two points:
First, parties offering or selling securities to the public are required to register and fully disclose relevant information to the public. Second, intermediaries—including broker-dealers, exchanges, and clearinghouses—are required to register and submit to appropriate regulations on conflicts of interest, disclosures, and business conduct.
Before I joined the committee, numerous applications for Bitcoin exchange-traded funds (ETFs) and products (ETPs) had been rejected or withdrawn at the request of SEC staff. However, shortly after I joined in 2021, the first Bitcoin futures ETF came into effect in consultation with committee staff. While we initially followed the lead of our predecessors in terms of ETPs holding physical Bitcoin, the committee approved ETPs for physical Bitcoin and Ethereum earlier this year. Compared to the non-compliant cryptocurrency market, investors in these products enjoy transparency of disclosures, regulatory rigor, lower fees, and greater market competitiveness.
This area has done significant harm to investors over the years. Furthermore, apart from speculative investments and possible involvement in illegal activities, the vast majority of crypto-assets have yet to prove their sustainable use.
Everything we do is to ensure compliance with the law. Since the 1930s, we have believed that compliance is critical. It protects investor interests, builds trust in our capital markets and helps issuers successfully enter the market. Ninety years of history have proven that strong securities regulation can both build market trust and drive innovation.
thoughts
My parents, Sam and Jane Gensler, never got into finance and never even finished college. However, as they invested their hard-earned savings in the securities market, our family benefited from those common-sense market rules.
The SEC promotes trust through the effective administration of well-regulated securities markets. That’s why investors and issuers are flooding into the market with the same enthusiasm as fans watching a football match. This also forms the cornerstone of the stable development of the world’s largest capital market. Because of this, our country has achieved tremendous economic success over the past 90 years.
I am extremely proud to serve alongside my colleagues at the SEC. They stick to the financial highway day after day, guarding the property safety of every American family.
