Oral Testimony Before the Senate Committee on Banking, Housing, and Urban Affairs

Good morning, Chairman Brown, Ranking Member Toomey, and members of the Committee. I’m honored to appear before you today. I’d like to thank this Committee for helping to confirm our two new Commissioners, Mark Uyeda and Jaime Lizárraga.

As is customary, I will note that my views are my own, and I am not speaking on behalf of my fellow Commissioners or the staff.

I’d like to open by discussing two key years in policymaking: 1933 and 1934.

It was the middle of the Great Depression. President Franklin Delano Roosevelt and Congress addressed this crisis through a number of landmark policies.

Amongst them, Congress and FDR came together to craft the first two federal securities laws. Additionally, in 1933, President Roosevelt formally suspended the use of the gold standard.

In other words, in those two key years, one could say we replaced one gold standard with another gold standard: the securities laws.

I believe the core principles of the securities markets have contributed to America’s economic success and geopolitical standing.

As we execute our mission — to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation — we cannot take our leadership for granted.

Even gold medalists — especially gold medalists — constantly train to stay ahead of the competition.

We must remain vigilant to opportunities to drive greater efficiency, integrity, and resiliency across our remit.

First, markets work best when they are efficient. That efficiency is achieved through the tools of transparency and competition. We have projects designed to drive greater efficiency in the Treasury markets, in the equity markets, and in private funds.

For example, we haven’t updated key aspects of our national market system rules since 2005. When you reach into your pocket, you’ll find a phone that did not exist in 2005. How would you fare in your work and life if you still were using a 17-year-old phone?

Issuers and investors alike would benefit from greater competition because it lowers the cost of capital for issuers and increases returns for investors.

Second, our system works best when participants can trust in the integrity of the markets. Hence, we have rule proposals to bring greater integrity to special purpose acquisition companies (SPACs), 10b5-1 insider trading plans, and what stands behind a fund’s name.

Another area is crypto.

Of the nearly 10,000 tokens in the crypto market, I believe the vast majority are securities. Offers and sales of these crypto security tokens are covered by the securities laws.

Given that most crypto tokens are securities, it follows that many crypto intermediaries are transacting in securities and have to register with the SEC in some capacity.

Thus, staff is working with market participants to help ensure investors get time-tested protections in the crypto market. In such work with market participants, or any legislative initiatives Congress might consider, let’s not inadvertently undermine securities laws underlying $100 trillion capital markets.

Third, markets work best when they are resilient, both in normal times and in stress times. We’ve all lived through times of stress — in 2008, in 2020. History tells us that, no doubt, we’ll have stress times again in the future.

Thus, we have a number of projects related to resiliency. This includes shortening the settlement cycle to one day; increasing the amount of central clearing taking place in the Treasury markets; addressing cybersecurity risks in the financial sector; updating our rule sets for money market funds and open-end funds; and modernizing the reporting requirements for advisers in the rapidly growing private funds space.

In all our work, we are anchored by the laws Congress has passed, the courts’ interpretations of those laws, economic analysis, and public input. As a Commission, we benefit greatly from that public input, including from Congress and this Committee’s members.

Our capital markets are the gold standard. Let’s do everything we can to keep them that way.

Thank you and I look forward to answering your questions.