The GENIUS Act: A New Era for Cryptocurrency Regulation in the U.S.

Welcome to FinTech TV.

I'm Remy Blair.

President Trump signing the Genius Act into law, the first major piece of cryptocurrency legislation in US history.

The new law creates a national framework for stable coins, digital tokens backed 1 to 1 by US dollars, or treasuries, and under the Genius Act, only licensed banks and FinTechs can issue these tokens, which will be regulated like traditional.

Financial institutions and two other bills are still moving through Congress.

The Clarity Act would shift crypto oversight from the SEC to the CFTC, while the anti-CBDC Act would block the Fed from launching a US digital dollar.

Well, joining me to weigh in on how these bills could shape the future of digital money in America is Caroline Pham, acting chairman of the CFTC.

Well, Caroline, thank you so much for joining me today.

Thank you.

Thanks so much for having me here.

It's a really exciting time in Washington.

Absolutely.

So it's great to have you here on Wall Street at the New York Stock Exchange.

Crypto Week just wrapped up.

So first and foremost, if that's your initial takeaway.

So you can see that genius is here and clarity is coming.

It was a tremendous US crypto week.

I really think that under the president's strong leadership, you saw everybody come together to do just what he said he would do at the White House digital assets summit earlier this year, which was to have the legislation on his desk and signed before August.

Now we turn to the work of implementation, and it's going to be something that's going to take a little bit of time, but we want to make sure we get it right.

And then this is how we make America the crypto capital of the world, yeah, and making America a crypto capital of the world, something that we think keeping a close eye on here at the New York Stock Exchange and here on Wall Street.

So when it comes to oversight as well as responsibilities, what are your ambition for the CFTC?

So the CFTC obviously oversees commodities including digital commodities.

It was the CFTC who first came out in In 2015 and said that Bitcoin was indeed a commodity that was under our jurisdiction and courts have agreed with that position.

So I don't think that there's any question about the fact that the CFTC has jurisdiction over digital commodities like Bitcoin and like ether.

So as we build out on the Clarity Act and the different registration regime that is contemplated there, I think it's going to be really important that we make sure we hit the ground running.

That we move with full speed ahead to make sure that we get these entities registered and compliant with important safeguards in place, but that actually also promote growth and innovation and we're not holding people back from making sure that the entrepreneurs and other, you know, builders, American entrepreneurs and builders that left the United States because of the lack of regulatory clarity.

We don't slow them down from coming home.

You've seen that people want to come home to the US.

They want to build their businesses here.

They want to invest here and they want to bring jobs here.

That's why it's so important that we have regulatory clarity in this space.

So that's going to be first and foremost, and I really.

Encourage that we use all of the tools that we have available, including that we use, you know, temporary exemptions if necessary, provisional registration or other kinds of grandfathering in order to provide that short runway to a path to registration and compliance, and we don't take too long because of course the clock is running.

It's been running for a long time and there is going to be necessarily a gap between when the legislation passes and then when we can get the rules written.

So it's important to use all of our tool.

Now there's also people who really advocate for a free markets approach, and they say that people should be able to opt in to the regulatory regime that they want, and I appreciate that and I understand where that's coming from.

And speaking of the clock ticking, it's easy for all of us to be anticipatory and wonder what does the timeline look like, but we have to keep in mind that there is a lot of work that goes into the regulatory landscape, especially when it comes to actual legislation.

So what are you looking at in terms of timeline here?

So leadership in the Senate's been really clear.

You just saw that the Senate Banking Committee released their discussion draft for market structure for digital assets, and the Senate Agriculture Committee has also announced that they'll be releasing something soon.

So we are moving full steep ahead and it's going to be great.

And since you're here at the New York Stock Exchange, I do want to get your take on tokenized equities.

So traditional equities.

Companies that are listed here at the New York Stock Exchange, shares are listed easy to invest in, but when it comes to tokenized equities, what do these gem.

So this is where I think we come back to sort of a foundational aspect of digital assets.

What do we really mean when we talk about regulation of digital assets?

So there's crypto as a new asset class like Bitcoin and ether, and that's where it's so important to get the regulatory clarity clear so that way people know what kinds of financial products and. can they have that has this new asset classes underlying the same way that FX commodities, rates, equities, credit, etc.

That's really important.

That's important for people who want to put together ETFs.

That's important for people who have fund structures.

Now on the other hand, you have the tokenization and the blockchain technology as really just a new form factor.

It's like when we move from paper stock certificate to electronic trading on screens.

See all the screens here.

And then now we could be moving to having tokens on a digital blockchain.

So it's just the technology, it's just modernization.

The financial markets have always led the way in modernization.

So to me, when you say tokenization of equities, they're equities.

They're still securities.

They're subject to the securities laws, but they're now in a better technology that's more efficient, and we're to be able to see more access and liquidity come in through the tokenization of equity.

Now one of the things that I think is really interesting and important is that tokenized equities have been available to non-US investors for years.

You can access securities from for non-US investors.

This has happened for years and you've been able to do that because of American depository receipts.

Now what I think is really exciting about tokenization of equities is through this new technology making that delivery more efficient, making that access more open.

If you think about what this could mean for US capital markets, you're talking about an influx of billions of dollars into US capital markets that's going to help to grow the American economy.

It's going to help to grow US companies.

It's a win-win because also what is the greatest engine for wealth creation and prosperity over the last 100 years?

US capital markets, securities.

So then you think about all of these non-US investors.

You have a lot of different countries who are trying to move from being a nation of savers to being a nation of investors when.

Their citizens are able to invest in US capital markets.

That's going to lift everybody up to a future of shared prosperity because again the US capital markets have been proven as the best way to create wealth.

And Caroline, last but not least, before I let you go, speaking of technology, we take a step back and look at the History of the New York Stock Exchange.

We've seen innovation and how technology as well as human capitalsect here on the trading floor.

But when it comes to expectations in terms of blockchain, do you expect to see publicly traded securities exist primarily on the blockchain, or what do you think?

I think that this is something that takes an entire ecosystem.

This is going to evolve over time.

Again, moving from paper stock certificates and open outcry and all the traders on the floor running around with their tickets, just like in the movies that we watch now.

It took time.

Electronification of fixed income securities has been an initiative that's been in progress since the 1990s, and we're still not quite there yet, which is why people feel like tokenization can help to leapfrog.

A bringing more illiquid instruments like certain corporate bonds, certain sovereigns, creating more liquidity here.

Real estate, of course, is an example of a real world asset that people are hoping that they can bring in more budget.

So it's going to take time, but you have so many new and innovative companies that are not just financial services firms but different vendors and service providers, infrastructure.

Sure companies that are all very focused on this.

When you see the investment that's come into the space and importantly the talent, the talent that has moved in traditional financial services to these blockchain and digital asset companies, you're really seeing the maturation of the sector, which means there's more to come.

Well, Caroline, it was great talking to you.

Thank you so much for your time and for joining me here at the New York Stock Exchange.

Thank you for having me.