Transcripts For CSPAN Virtual Currencies 20180212

Virtual currencies are meant to act as a type of money that can be traded online exchanges for conditional conventional currencies such as dollars. Or use to purchase goods and services predominately online. Developers, businesses, and individuals are selling through selling Virtual Currencies through initial point offerings to raise capital. Year, manyst americans have become increasingly interested in Virtual Currencies especially given the meteor rise in valuation in recent fall bitcoin. Just for perspective, on january 2 last year, bitcoin broke the 1000 barrier and then peak in december at a way thousand dollars and as of this morning is trading at roughly 6,900. Today, the market capitalization of bitcoin is roughly 115 billion. Regulators and heads of industry educate investors. Part, the sec as put forth many statements and guideposts to help the markets and investors. Has issued sec bulletins on initial coin offerings. Theyve issued several enforcementbrought actions against fraudsters and initial joy statements of the cftc about enforcement of Virtual Currency related the cftc has also helped inform the markets by offering a dedicated website on Virtual Currencies. Issuing several statements by chairman jean carlo and others on issue. And scheduling hearings on the topic. Much of the recent news about Virtual Currencies on the negative. There is no shortage of examples that increase investor concerns. Its also important to note that the Technology Innovation and ideas underlying these markets present significant positive potential. These aspects underpinning Virtual Currencies have the ability to transform for investors the competition up in the village to access the financial landscape, thus changing and modernizing Capital Foundation and transfer Risk Technology is forwardlooking and we look to our regulators to continue carrying out their mandates. I look forward to hearing more and learning more about Virtual Currency oversight from or two witnesses. That includes with their agencies are doing to ensure appropriate disclosures and safeguards. Senator brown . Thank you and welcome to the chairs. Its good to have you both. Tual currencies habitat capture the attention of investors and speculators and computer programmers and regulators all of the world. I dont know how many people imagine how quickly and broadly bitcoin and the technology is based on the spread. Its nothing short of remarkable for innovators to understand. Understand the risk of emerging technology is no easy task. The volatility of bitcoin has been also remarkable, the attempts to think of it as additional currency. Bitcoins rise last year at 60 decline last month makes yesterdays dow jones record point drop look like a rounding error. Sometimes it appears that scam artists and hackers may understand more about the technology than most market participants. That should concern all of us. I hope our witnesses help us understand the evolution of the markets and raise awareness of the many threats involved and identify the rogatory gaps. Have made several public statements and the potential to abuse these markets. Neither body has sufficient authority to police all aspects of Virtual Currencies but you must make the most of the authority or have. Bitcoin mania has some analogies to the. Com bubble of the early 90s. Virtual currencies may be used to fund those activities. Many other countries is still in development. I am glad the u. S. Has been a leader but we can do more. We need to be able to get ahead of the curve. I called both of you not to forget her day jobs to pursue whereverh misconduct it might appear. That means main street and wall street. Im concerned its business as usual. Proposed week the cftc penalties on three big banks for market manipulation but then decided they deserved waivers. Haveanks in questions Something Like 68 violations of the last 10 years so its very serious. Payoften we see big banks fines and move right along. Recidivist violators wont stop breaking the laws if your agencies serve as sanctuaries. Im disappointed in your on willingness to us you pursue every avenue available. Virtual currencies bring us into a new age for that doesnt mean we overlook basic principles. Thank you. Thank you. We will turn to the testimony of our witnesses. First we will speak to jay clayton, chairman of the u. S. Securities exchange commission. Following him when we hear from christian carlo, chairman of the u. S. Commodity futures trading commission. We appreciate you coming to share your Knowledge Research on this issue. Member,man, ranking distinguished senators, thank you for the opportunity to testify. Its the important topic of crypto currencies, this record operatings offerings and other. The total value of crypto currencies was estimated at 700 billion earlier this year. Raise nearly 4 billion. Today i will attempt to set we stand. My remarks may be viewed by some but itly simplistic shows how i present these issues to main Street Investors. I break the space into three categories. First, a Promising New Technology called black chain. Will bringbelieve it great efficiency Star National and global economies including our capital markets. I hope it does. The commission looks forward to bringing to working with market dissidents who seek to bring efficiency to our market. Categoriesand third are crypto currencies and icos which are some sex subsets of the companies hoping to take advantage of black chain technology. One is a replacement for dollars the other is like a stock offering. Some of the more widely known crypto currencies were introduced as substitutes for traditional currencies such as the dollar or the euro. Those who promote these currencies assert they will make it easier and cheaper to buy and sell goods, particularly across borders. They have asserted that transaction and verification fees and costs will be limited or reduced. These assertions have proved elusive in many areas. Icos. From what ive seen, they are securities offers. They are like stocks and bonds under a new label. Coined use the term the offer is for a digital forget as opposed to a stock certificate. You can call the coin is a functions security, it is security. Ico may have nothing to do with Block Chain Technology beyond the coin itself. Mean youd ico does not are investing in block chain related ventures. Many problems with the way these markets are operating. First the markets have substantially less oversight that are conditional security markets. If you are treading crypto currencies on a platform that looks like a Stock Exchange, do not take any comfort from that look. Stock exchanges have extensive rule sets that are required to conduct surveillance. Have brokerdealers capital and conduct requirements. These requirements and others, without a doubt, are necessary to protect those markets and our investors. Second, many icos are being conducted illegally. Their promoters and other defense are not following Securities Laws. Some say this is because the law is not clear but i do not buy that for a moment. The analysis is simple. Are you offering a security . You have a choice. Follow our rules are conducted Public Offering registered with the sec. Semantic engage with gymnastics or elaborate structuring exercises to avoid having a coin be security are squarely within the crosshairs of our Enforcement Division. What are we doing about this problems . I look forward to discussing that in more detail but i will first start with a comment on jurisdiction and enforcement. Dictiont have directors over the popular markets that trade true crypto currencies. This is not an oversight. The traditional currency markets did not need direct overseeing. They were sovereign backed and regulated with a long history. Crypto currencies, on the other hand, have no sovereign backing. Functioningrently as assets for trading and investment more than medians of exchange. If asked, will work with other regulators to evaluate address this issue. Our friends of the fed, our friends at the cftc and our friends at the state regulators. Know my time is short. To the extent that Digital Assets are securities, i believe every ico i have seen is a security, we have jurisdiction. We will enforce these laws. Many of these laws also include private rights of action. We are working with the doj and other regulars to enforce these laws. They give the opportunity to testify before you today and i stand ready to work with congress on these issues. Thank you. Thank you, chairman. I have submitted a written statement for the record that details the cftcs work and authority over Virtual Currencies. Wouldour permission, i like to begin briefly with a slightly different perspective, and that is as a dad. I am the follows of a father of three college age children. During their high school years, we try to interest them in Financial Markets. We set up small brokerage accounts with a few other dollars for them to use to buy stocks. Other than my youngest son who owns shares in a videogame company, we havent been able to peek their interest in the stock market. Something changed over the last couple of years. Suddenly theyre all talking about the coin. They are asking me what i thought and should they buy it. One of their older cousins was telling them about it and they got all excited. Members of this committee have had similar experiences. We must crack down hard on those that try to abuse the enthusiasm of fraud. We must educate the public and make good pop policy choices and create migratory frameworks to reduce risks on consumers. Putting my chairman have back on, i believe the right regulatory response has several elements. One, learn everything we can. Initiativehed a new to engage with these innovators and inform the agency about Virtual Currencies and other financial technology. Next is to put things in perspective. 8 00 this morning, the total value of all outstanding bitcoin is about 113. Weve a slightly different figure than you but close. Caps less than the market of one large puppy traded company, mcdonalds. Virtuall value of all currencies around three to 13 billion. Around 7. 6y supplies trillion. The value of all the gold the world is around 8 trillion, which torques the size of the Virtual Currency market. The next task is to tell the public what we learn and educate them. Of noise around Virtual Currency and regulars must help set the record straight. We have produced a large amount of Consumer Education materials including written statements, podcasts, webinars, and a dedicated website. We have even scheduled visits the librarys. Weve never conducted this much outreach for any other financial product. Another element is regulatory coordination. We have to work together. Sec, andudes us, the even state banking officials. The next element is to exercise our Legal Authority while qualifier statutory limitations. Clear, we do not regulate the trading platforms here and abroad. We cannot require them to meet requirements like trade reporting and surveillance. Standard regulations in the futures markets we oversee, yet through our authority over commodity derivative markets, we do have enforcement power over spot coin markets. It it coinlaunched futures, weitcoin regulate. And that leads to tough enforcement. We have launched several civil actions of the past two weeks cracking down on fraudsters and manipulators and more will follow. In closing, i want to quote something chairman clay and i wrote recently. These markets are new, evolving, and international. They require us to be nimble and forwardlooking. Im glad to be with you today and i hope my information is useful. First i will say, i have had those conversations with my own children and youre right. This is an incredibly interesting and growing, new ,rea of financial challenge particularly among my children in yours. Both of you have said in one way or another that neither of you have complete jurisdiction over. Rypto currencies the question i have, is whether you have sufficient jurisdiction. I would like both of you to address that question. Should congress address revising and refining our financial law so that one agency or group of agencies have complete jurisdiction . Do we have sufficient jurisdiction in place . In my position, youre always cautious on speaking for other agencies. I thank you for saying that we , thed all come together federal banking regulators, cftc, sec, states involved as well and have a cordon new plan with dealing with the currency market. I think our main Street Investors look at these trading platforms and assume they are regulated in the same way that the Stock Exchanges regulated as i said, its far from that. You dont take many additional legislative authorities . I think we may. First let us know it you can and cant do and then advise us. I think thats exactly right. We must recognize or the gap is. Said, what we call the spot market for bitcoin is not a regulate marketplace. For us, we are familiar with that because we generally dont have revelatory supervision over spot markets. Thats a longstanding basis. The underline markets we surveilled and will take enforcement action for fraud and manipulation but we dont have the ability to set the standard of the market. Ico, he also is not the jurisdiction. I think the starting point is that. There are other elements and agencies that come to bear on this. There are a patchwork of state regulators across the nation. Some of been very assertive. Some states have nothing. Theres a patchwork here but theres not a conference of structure and thats something i think is a policy discussion and an important one. Have led to my next question. Much of the activity in the markets is crossborder and international. Question of what challenges does at present and what is the per the appropriate role. I will try to be quick. The International Nature of this market is why patchwork is probably not sufficient if its going to continue to develop other snippet market and one to develop as a significant market and one that main Street Investors continue to invest. The challenge of Global Markets is a challenge that i think we face now in many regards 21st century the dawn of the internet. Markets have become truly global. Challenge as we think about regulation. We had that challenge working with overseas relate regulators. We have the challenge of bringing these revelations together in a conference of whole. Its really a tremendous challenge for all of us. In this area, it requires a lot of new thinking. I appreciate remarks from both of you on these issues. I encourage uniform that workgroup. To yourselves and appropriate regulators and evaluate exactly what our structure should look like to do with this. I appreciate that. Senator brown . Nice to see you. Last year, initial coinoperated bash offerings raised about 4 billion. How much of that was raised in the u. S. . Is not clear. Its hard to get a number of that because this is been conducted on largely nonrelated basis. Significant portion to where we should be to paying attention. The sec has taken four actions targeting coin offers. That speaks volumes about the challenges. In response the chairs question, you both talked, leading with you, about agencies working together. And the importance of that. Regulating bitcoin and other Virtual Currencies, doesnt mention any cooperation with the Consumer Financial protection bureau. Hundreds of consumers have filed complaints. How leaving coordinate your work specifically on this but in other areas to . Area, largely through the f sock, i believe i made it very clear my views in this area in this scenario we should all be on the lookout for. The cfpb is a member of that and they have heard my comments there. Perspective, we dont see the cfpb on Security Side of this. Im not aware on a direct action. Several european banks have been fined over 3 million from other regulators but sec has been quiet. Study found that sec is quote, virtually stopped Enforcement Actions against large entities often referred to as wall street firms. That the secidence is able and ready to hold wall street accountable . I actually saw that report so it doesnt come as a surprise to you that someone said to me. I found it annoying to be honest. It didnt reflect the fact that the gestation. For the cases we bring is roughly 22 to 24 months. Any type of statistics have a latency. To them. Period tolatency them. Im confident that the people who are in our Enforcement Division and leading it, many of them former federal prosecutors, two of them heads of the Securities Task force in the ,outhern district of new york are pursuing our security laws vigorously. They come to work everyday day and they have my full confidence. I believe you when you say that. I remember the last sec and it wasnt you. The last sec under a republican president was asleep at the switch. The governor of the richmond Federal Reserve used to tell me watch us and let you know let us know youre watching us. That sec mighted lose 100 of its enforcement staff by not replacing those who leave. This would represent a 7 reduction in enforcement headcount. To be able to fight conditional misconduct. How can you do that . Personnel is my biggest challenge a moment. We have a hiring freeze as a result of natural increases in costs. And peopleeeze retiring or taking other jobs, it reduces the size of the workforce. I could use more people in enforcement. I could use more people in trading in markets. Those the two areas where think the American People get the greatest return. Us,hen you come in front of and i appreciate your candor, and you say youre having trouble no trouble, i just cant. Thosein that message to who want to game the system and those who want to defraud the system, is in the message that the sec is not the cop on the beat that even a chair wants to be . Do i want more bodies to do more . Yes or. I we sleep at the switch . Absolutely not. With your budget, our understanding is, i hope the freezes lifted and i hope the budget is enough and i hope you will speak to us and ask particularly people on the oversight of the isle for the dollars you need in the five stability you need to put them on the beat. I think ive been very straight about increment amount of money and where i think i can be added. Senator shelby. Thank you. , you areclayton chairman of two powerful regulatory bodies but you have different jurisdictions. Smacks of security come somewhere in your range, doesnt not . With a commodity, something that can be deemed a commodity, clearly comes your range. The Federal Reserve is the biggest bank regular we have an treasury is involved in this. How are you going to put together a task force . Can you doing around . You said, youre of the treasury, your of the commodities, you have securities. Perhaps some others we havent thought about. Let me start by recognizing the treasury secretary. He has brought us together. The ftc, the sec, and representatives to talk about this. The funny thing about the scripted currencies is the only work if the integrated the only work for their purported purpose if there integrated with the financial system. Therefore necessarily touches on all of our regulation. The treasury secretary has been out on front of this and has created a Virtual Currency working group of, the sec, the fed, and we have had a number of preliminary conversations. I got another of bilateral conversations with the treasury secretary. We are going to be cornet in our various responses. Its begun with some broad conversations and establishing jurisdiction. We need to know what we are doing what we are not doing. Do you need additional legislation in this area . Or do you think you can work to get germs from this without that . We live in a virtual world. At the same time, descriptive , they lack intrinsic value, it seems to me. They lack liquidity. People have probably made a lot going up and lost my going down but i dont know as opposedottom is to a sovereign issue currency. Do you disagree . I dont know are the natural equilibrium point is in this but i will tell you there are some economists who posit that there is a relationship between difficultyue and the which isost of mining a process of electronically producing these. There are some charts ive seen that is spotted a correlation relativelyo be correlated until last summer. , but the pointst the economists are making is that there is some sort of floor. The level set is not zero. Im not endorsing a point of view, and assuring that with you. Chairman clayton, any comments . There are a lot of smart people who think there is something to the value of the crypto currency in international exchange. Saying those benefits manifesting themselves in the marketplace. Im looking at the stick protecting mainstream investors. How do you put a value on crypto currencies . Does the market put a value on it . What something is worst is what someone is willing to pay for it but in our world, the securities world, there are rules that dictate how much you have to tell somebody about what it is you are selling them. Part of your mandate is to protect investors. Thats right. Chairman of commodity futures trading, hes seen commodities go wild at times. Your mandate is to watch the commodities, right . Market integrity. You also mention personnel. Theres a hiring freeze. We talked the other day. Im hoping will give you every tool you need to do your job and to hire the people you need to execute that. Thank you very much. Senator reid. Thank you for your testimony. Questions, you do need more personnel but specifically to you have the computer experts that can begin to understand how these crypto currencies work . Not just on a daytoday basis but look ahead and say this is the direction its going which could have very significant negative effects. You have anyone like that . We formed a crypto Currency Working Group and theyve done exceptional job getting up to speed on this. Identifying some of the very issues you talk about. This,rging area like could use more horsepower . Always. Good point. Ery looking out across the International Nature of this and trying to understand where its and through the things that people say at up . That is very important where are the technologies located . I would say we have accommodation of economists and technologists. The technology doesnt make economic sense. We have people ended economics of office and enforcement. The we need more. Do you have the technologists . Weve done a couple of things in 2017 to get ahead of the curve. Agencys first ever chief innovation officer. Someone who comes with a deep background in all these. We also created lab cftc. Its located in new york city. So much of this innovation is taking place there. Can protecting consumers, we also formed a task force. Force that task brought three civil actions against bitcoin fraudsters and as i said my testimony theres more to come. The research questions, we do need more resource. Authority to put out a budget request. We do need additional resources. Those are usually for cyber encryptor currencies. Bitcoin is just one crypto. Urrency they seem to me to be proliferating. Every date is a new variety. Some of them fraudulent and some of them based on the same technology. Theseeer expansion of crypto currencies is an issue. One other unrelated question. Theseu tracking all emerging currencies . Is someone looking longterm of the systemic effects . This is eerily reminiscent of the late 90s in derivatives which were nominally small parts of the market that were esoteric. , will start with chairman. Bitcoin is one of many. Many, there are a handful that of gun significant traction. Thats important for listeners to know. I think its interesting, this one caught my big coin which became known as my big con. People it was a ponzi scream scheme. We went after them and will continue to do that. In terms of systemic risk, it is a relatively small market by ratio. We have to watch it and watch it carefully. As i mentioned, the sec doesnt have direct jurisdiction but we have had to watch it. They are integrated with the markets that we do oversee. I have a hard time getting around my head around it. Of them fluctuating in different places doesnt make a lot of sense to me. Systemic, i agree. But if people are getting ripped that presents reputational risks. A can of systemic effects. Changing gears, ill make a comment and follow up with a written question. Consideration for this is to allow initial public offer send, forced arbitration. I think that would be a bad idea idea. We will talk. Thank you, mr. Chairman. Curious, i go back to where i learned with a pen and pencil to begin with and we did not have a quilt that time but we did have number two lead. This thing is fascinating to see how quickly things are moving but everything we talk about seems to translate back in the dollars. That is not change until now. Suddenly were talking about a new type of exchange and sounds a lot like bartering. Its a bartering that could avoid a value in dollars and cents. The brings up, howdy taxes . Case, i noticed both you regulatorye you have oversight abilities are using today. Whether or not there are scenes that the filled, it appears that some basics that a lot of us dont quite understand still have to be answered. I think mr. Clayton, you start with this discussion with regard to the issue of whether or not andhad control over and ico the fact that if there issuing, in this particular case, bitcoin or the opportunity to market it, you had identified it as a stock released the value of something. What is, in this case, that and canhe you utilize you delve in a little bit more of how your Agency Response the regulatory theme. Definition of a security is , it includes if you are offering the security or offering me something. A coin. And i give you money. Giving you of my that money is to profit from your efforts. I may take the money and Grow Business and that will increase the value of the coin. You can tread to somebody else. You may be able to get value for tomorrow in fact, you probably will. By now seeking a more value in a few days. Thats it security. Commodity wise, if we are looking to trade commodities, you would not have interest in the subject of investigating or reviewing whether or not a training of an act monday but will we talk about the cftc were talking about a different story recommend is most certainly an item of interest to you. Are they commodity . Or the security or they both . Would so challenging about bitcoins that has characteristics of multiple different things. One of the phrases used has been that its a medium of exchange, store value, or means accounts. All those three things have different connotations. If its a medium of exchange, its a currency like instrument. We see number of means exchanges that enclose the bet. There was recently a big coin commerce. Accepted the coin from registrars can they couldnt cross the payments. In that case, it has applications from the fed and currency. From our point of view, when it is used a store value, that is very much like an asset a commodity. Of thishear a lot people buying and holding. If you go on to the twitter universe youll see a phrase h or d. L. Which means hold on till dealer hold on for dear life. She bought the coin years ago and shes in h odl. Shes not a fraudster or manipulator, she just believes in it. I think she represents a lot of folks that think there is something in this i want to hold onto it. In that regard, its a commodity. The problem is, in the cash market, we dont have Regulatory Authority. We are looking for fraud and we intend to be aggressive. People like my niece caps security that theres not fraudsters eminent players out there when there are too many. I suggest we bring them both back in at later date once we looked at the differences. Thanks. Senator warren. Thank you. Chairman claydon, on january 26, lindbergh published an article entitled sec weighs a big gift to companies, blocking investor losses. Lossesknow, classaction are how investors can hold companys accountable in the defraud people. The article says the sec is thinking of letting Companies Sell shares in initial Public Offerings while at the same time allowing those companies to prohibit investors from being classaction lawsuits against them. Wow. Forcing investors to give up class actions when they have been prodded, the sec has never allowed corporations to bar investors who have been cheated from bringing classaction lawsuits. I just want a straight yesterday i answer. This enormous change in sec policy . I think you know that i cant prejudge an issue that may come before the sec but it be happy to talk to you about this. When we get to the bottom line. I cant dictate whether this issue comes before us are not because of the way it has come before the sec in the past. I am not anxious to see a change in this area. Im reading to lose here. Agency, the change cannot happen without your approval. Affection not right. If it came up before the agency im only one of i votes. Im going to guess theyre going to be at least two votes against that in the best you will be the deciding vote. I dont want to prejudge the issue. If this issue were to come up before the agency, it would take a long time for it to be decided because it would be the subject of a great deal of debate and like i said, in terms of where we can do better, this is not an area that is on my list for where we can do better. What, im going to let you get away with that because what im reading is real skepticism about a role like this. Mission is to protect investors, not throw them out of the bus and i cant think of anything that would do more harm to investors in saying they have to prewaive their right to sue a company in a classaction the company chased them. Is not a change that stash is t i hear you. The Financial Advisors that get kickbacks for representing a commodity despite the interest their clients cost americans about 17 billion dollars every year. Rule put a fiduciary into limit these conference of interest in retirement accounts like 401 k s. You issued a request for information as can for Public Comment on rulemaking related to the standards of conduct or , advisors, and brokerdealers. Can you say to this committee that a rulemaking youtopic wille existing protections for Retirement Savers . Making an absolute Statement Like that sen. Warren yeah, and absolute statement. From one baseline . Senator warren code just sen. Warren you to strengthen the rule or pass the same rule or weaken the rule. I want to know that you will not we can the rule. Let me tell you what i am trying to do. The relationship between investment, advisor, broker, dealer. Have a 401 k , and annuity and if you stocks is regulated by no less than five people. They all have different standards. My Main Objective is to bring clarity to that without jeopardizing Investor Protection. Warren that is the question im asking. Whether you are jeopardizing a protection that people are checked to save for their protection. Clarity could be do whatever you want. Clarity has cost americans saving for their retirement 17 billion a year. It is a combination between an insufficient standard which we are looking to increase, a the of clarity and also standard is only as good as the remedy. One of the things im looking at, believe me, ive spent a lot of time try to get a right to one of the things were looking at is what dollars to you collect when someone has done you harm . You could have a really strong standard that if there is no dollars there, that is a problem. Sen. Warren i agree with you, mr. Chairman. Count me in. That is what the American People look to the fcc for. Thank you. I want to change the subject alone it back to a coin back to bitcoin or crypt occurrences. We see ipos and tax jurisdictional arbitrage. Do you guys see that today in this developing crypto currency. Clayton . Who pays for frivolous transaction lawsuits. Shareholders, customers, employees. So regulatory arbitrage is one of many issues that i see in this market. , tax loss and things like that are there. Of course they are because recordkeeping, it is difficult to trace. South korea and china are phenomenally playing in this war. Most of the current investment comes from the u. S. I dont know we know enough yet to know that. South korea and china are heavily invested. They have a new rule that says you have to use real name Bank Accounts and arms trade. Those are the things i am asking for. Is there arbitrage going on around the world . There is a regulatory arbitrage. You are making a great point because this was a largely unregulated space across the world. Now what you are seeing is ease country taking a perspective view, action etc. Which goes to how functional is this asset class and how would we regulate it. How does it work . There is a lot happening that is beyond the understanding your average investor. How would you know . How can we i understand theres interaction between all of our regulatory agencies. You what areoth of you seeing and what are you anticipating we need to do to to combat that . I identified two areas of arbitrage proceeding. One is regulatory. We are also seeing price arbitrage as well. Theres something called the kimchi premium because theres so much interest there. In manyarly days markets, every American City had a cotton exchange. Here we have different regional and International Markets and matures,s this market a single a price may develop. On terms of regulation, unfortunately, i think some time ago there was this perception that bitcoin was off the regulatory grid. One of the things that chairman clayton and i have been working to do is to disuse that notion. We are limited in our Regulatory Authority but when it comes to enforcement, and when it comes to icos, we are using our full authority to drive the message. Other countries are doing that. Weve had conversations. I have communication with the head of the Japan Financial Service Agency about things that were going on there. Jay clayton spoke eloquently in switzerland. We are beginning our communication with other regulators. This is not off the grid. Part of that is you are seeing it in the bitcoin price. As the word is getting out that we will go after misconduct, i think you are starting to see that reflect in the price. What little time we got left, public both of you to respond we got left, i would like both of you to respond. Can you both address what your agencies are doing to combat that . Amthis is one of things i worried that investors do not understand. When you have a unregulated exchange, the ability to manipulate prices goes up significantly. Just a few cornet sales can change the price. Just a few coordinated sales can change the price. We formed this Virtual Currency Enforcement Task force. We got some really good people on this. We brought three actions in the last few weeks. The are more to come. There are more to come. We are digging deep and seeing a lot. I dont want to get ahead of that, other than to say we are working the be part. The beat hard. We have enforcement jurisdiction. Thinks, mr. Chairman. Senator donnelly. Sen. Donnelly this would be to both of you. Now that the fcc have asserted jurisdiction. What other ways can your agencies prevent Retail Investors from falling victim to fraud and manipulation . I am happy to take this question. Earlier, Ranking Member brown mentioned what are we doing at the fc we formed a ,artnership with the cfpb Consumer Education in the area of bitcoin. One of the things i learned is american libraries are a place where a lot of people go and research bitcoin. One of the most frequent searched items from a Library Computer is bitcoin. We are teaming up with cfpb to educate librarians who get some of the questions asked to be able to direct Library Patrons to use our resources, our bitcoin website. We are really getting very creative in the area of Consumer Education. I mentioned we got several podcasts on the subject with thousands of downloads. We are working as hard as we have ever worked. We have never done as much work on Consumer Education. We also have an office of Investor Education and engagement with a number of groups. They have done a terrific job getting the word out. Outerms of getting the word , there are Financial Intermediaries and other actors that we are counting on to act responsibly. Let me ask you a followup. He goes to the point you just made about the libraries it goes to the point you just made about libraries. Do you feel it remains audible to online manipulations that are difficult for you guys to pick up . Senator, and the broad range of marketplaces, seniors, they seem to be the prey of choice for fosters and manipulators for fraudsters and manipulators. See and we prosecute continuously fraudsters who would seek to prey on either less sophisticated seniors who maybe dont have the retirement nest egg that they believe they need. Theyfall prey to rich fall prey to get rich quick schemes. It is a big part of our enforcement effort. Let me ask you this. This goes to perspective and to hopes and dreams. What warnings would you give there was an article in the Washington Post yesterday and it was about good, hardworking americans. People who have worked really hard and want to have a pension. It was about a group of friends and neighbors from kentucky. The title was bitcoin is my potential pension. What would you say to them to help protect them from winding up in a situation a few years from now where it didnt work out . It is such a troubling development, senator. If you are going to get the money, you better be prepared to lose it. I agree with everything. Say say this to them, there are things like Disruptive Technologies the come along but it should not disrupt the way you look at markets for us on the way you look at investing. Pumping all of your money into a Disruptive Technology has a very high likelihood of not working out for you as an individual. We see Disruptive Technologies come along. There will be winners but there will be many losers. That is the way it works. Let me ask you one other question. How can both of you to ensure these Virtual Currencies are not used by terrorist groups are nations like north korea to evade sanctions . We work very closely with Law Enforcement. We commence the program with the fbi where we have fbi agents with our agency know to look at this. At the end of the day, the use of these cash markets for that, it is going to require Cooperation Among multiple agencies, especially because of their antimoneylaundering operation, a see some of these issues before we can and bring our expertise to bear and coordinate with our Law Enforcement agencies. Same here. I was supplement that with saying we have a Dark Web Working Group that tries to monitor what is going on in that space in order to identify these type of issues. Senator kennedy . Sen. Cassidy thank you, mr. Chairman sen. Cassidy thank you, mr. Chairman. Giancarlo, when is the a stocke you bought Exchange Traded funds, mutual funds or a bond . I hold a generally traded fund. When was the last time you bought one . Before i started at the commission. Two years ago . Yes. What did you buy . Equity . Index funds. Did you sit down and read the prospectus . I am not supposed to say that i probably didnt read it cover to cover but i will confess i didnt read it cover to cover. How many investors you think dont read it . Most. What is the point . We are talking about all of the dangers and the risks of cryptocurrencies like bitcoin. I am putting aside the shyster fraud issue. What is the point . Of all this over disclosure if nobody is reading it. Why do we want to do the same thing with bitcoin . Historically it has been one of the foundational principles of our Securities Laws that adequacy of disclosure, full disclosure is one of the building blocks. I will tell you having been in business, most visits people will tell you most Business People will tell you they study the perspective to find out what they can sue one. I think you see where i am going. I am going to ask you both a. Question about how far do you think thats a philosophical question about how far do you think we should go . I dont think the disclosure we have right now works. It is good for the lawyers. It is good for the Financial Advisors. I think we over disclose. Betnt think you can i you each have smart lawyer on your staff. You can go to him and say, write me a good disclosure for bitcoin. You would get it back and look at it and then take 50 names from the washington, d. C. Phonebook and asked them to come in and say read this and tell me if it makes any sense. What is the point . How far do you think we ought to go here . In terms of cryptocurrencies . I am separating this from the Block Chain Technology. China outlawed it. Has too. Has two . We goe you suggesting after the shysters and fully disclose . That is exactly the question we are here to pose and take forward which is what is the right way to deal with this new technology. Just as a person watching it i am not satisfied when i see people thinking that these trading platforms of cryptocurrencies have the same kind of protections that a Stock Exchange would. I am very unhappy that people , likenducting icos Public Offerings of stock, but they should note they should be following the private placement rules for registering with us. Those two things make me unhappy. Breaking out how to deal with them is why we are here. I agree with you that we should be careful not to go too far. Me, this ico space, it is pretty clear that the people disclosure can be improved. Let me make a suggestion. I dont want to go over. Last tomas questions, i got a little last time i asked questions, i got a little carried away. Member for me on double secret probation. A Ranking Member of put me on double secret probation. This disclosure, you can extend disclosure we have now to bitcoin and you havent done anything. I am not suggesting you shouldnt have disclosure but you have to have a disclosure that makes sense and helps people. Other than the lawyers. I agree, senator. Senator warren. Senator warner. Sen. Warner i usually agree with my friend from louisiana. We may be on top of something that may be transit just trust maybe transformational. You cannot separate what may be block chain from these cryptocurrencies. If at the same rate of increase in the next two years that we have had less couple of years, were talking a couple hundred million. We would be north of 20 trillion. I think i was lucky enough to get in the cell phone business back in the early 1980s and everyone thought it was going to be a Small Business and they were wrong and i got rich. Were looking at the same, transmission that is about to take place. We talked about some of the Consumer Protection issues. We got Cyber Security issues. It third of the bitcoin exchanges have been cyber hacked between 2009 and 2015. Im not sure what the right regime ought to be. I would commend the treasury secretary for putting a working group together. This is the reason we created this in the first place that this rises to the level of systemically relevant event, i would just be curious whether you believe i commend with both of your truck to do. Whether this should elevate to a level of analysis . Senator, i had the same question you had which there is a big rise here. If it does keep going, is this a systemic issue which is one of the reasons we brought it up at of stock. I commend the treasury secretary for forming the working group. I want to go back to separating icos and cryptocurrencies. Icos our securities offerings. We should related like we regulate securities offerings. Just real quickly on the issue of disclosure, what were seeing is not an absence of disclosure, it is false disclosure. It is often fraught and we need to step in their. Just step in there. With is often fraught fraud and we need to step in there. , these discussions are taking place at the right levels of debate. But there is so much more to be done. This focus on bitcoin and crypto assets. I think theres definitional issues. You get a whole new platform where they are creating filesharing or extra computer time. Im not sure what kind of assets those fall into. Are they potentially regulated within your realm . Is there a trade exchange, a tokenization exchange between access excess computer time . The definition of a security, i believe the people who wrote the 34 they were smart. They did it on a principles basis. They said if youre giving people money in exchange for future development of a business with the hope of a return and whether that return comes in the form of server time or your ability to serve to sell server time, it is a security. I concur with the approach in terms of icos and there has been some very bad behavior. Yet certain icos the sec has not stopped. Are you going to go back and review the ones that are Going Forward . When they were written there was a recognition that there was a tremendous amount of security activity in this country. We were going to rely on gatekeepers to help us enforce those and liability help us enforce those rules. Accountants, lawyers, underwriters, sellers and the like. I am counting on those people to do their job. I have made that clear. Let me ask chairman giancarlo. One of the things im concerned about was we made and moved too fast on allowing we may have moved too fast on allowing futures trading on bitcoin. Trading allowed future contracts on bitcoin, yet the sec is not allowed uts. I am worried etfs. Im worried that we need a more corrugated effort because the potential just need a more coordinated effort because the potential could be as transformational as wireless was. We are going to need a much more corrugated effort. And much more coordinated effort. I believe it is important that we coordinate. We are all individually and collectively understanding our authorities and understanding this new technology. It was a communication amongst myself, chairman clayton, the treasury secretary and others in connection with a corn futures. Record futures a corn futures are different than the bitcoin market. Bitcoin is an anonymous area. , bitcoin futures, mostly institutional. Bitcoin futures regulated. Because futures regulated. Bitcoin unregulated. We are having visibility and underlying spot markets. Completely agree on coordination. Technologyis great that has promise. The are these pure cryptocurrencies which we need to take a look at across treasury, cftc and there are securities offerings that are called icos that should be undertaken as security offerings. Consistent with our regulatory regime. Senator cotton. Sen. Cotton thank you gentlemen for your appearance. I want to continue on the line of questioning the senator warren began. Putting aside bitcoin other kinds of cryptocurrencies based on block chain for distributed Ledger Technology, what are your thoughts on the potential value of the Underlying Technology of block chain and distribute its technology both to enterprises and consumers and Government Agencies . It is important to remember if there were no bitcoin, there would be no distributive Ledger Technology. S i am nocation pieinthesky jammer. I report what i dreamer. I report what i read. The applications range range range from potential and Financial Services industries but in the way Charity Dollars are spent, the way refugees are accounted for across the globe. There was an article this morning about the use of distribute it Ledger Technology for 2. 5 billion people about the world who dont have access to banking services. Areaf the areas in our own of agriculture futures, 66 million tons of american soybeans were just handled through a block chain transaction by the Dreyfus Company for sale to china. Bitcoin is being used in our American Transportation system. Most importantly, the potential of this unit lever Leverage Technology to be able to do was market surveillance and headed been available in 2008 and see the counterpart credit exposure from one bank to another bank in real time with position, that would have enabled much more precise policy choices that had to be made in a rush without good data. The technology has enormous potential. What are the challenges in it . Those we cannot say. The potential seems extra ordinary. Mr. Clayton . Mr. Clayton i agree. The potential seems extra ordinary. Look anywhere in our economy where recordkeeping has costs is potentially reduced is an opportunity for this technology. This is one of them. I hope people pursue it vigorously. Lets turn our temp lets 4. 6 astention to a percent which is high, not the highest ever. It generated a lot of news coverage. Faced 2 r has inflation are you less for two years now. Bitcoin is saying 32,000 increase in its value over the last five years to client by 60 in the last 30 days. What are the factors driving extreme price volatility in bitcoin relative to securities and public traded companies or the u. S. Dollar . Recently the volatility we have seen in bitcoin was not as large as we have seen in other asset classes, such as the fix product which is known as the fear index. We have seen extraordinary volatility in bitcoin, but in our world and commodity derivatives, we are used to volatility in asset classes. That is one of the things that emerges in a futures product is meant to do. Provide those who are exposed to that volatility means of hedging and mitigating the risk to that volatility. Mr. Clayton . As to clayton i dont really know what is driving the. Olatility in bitcoin they are not correlated with sovereign currencies. Different something from what would drive the dollar. That is one of the issues before us is there does to be of a lot of all tilted compared to the medium they are supposed to be a substitute for. What does that work what is that volatility portend for cryptocurrencies is a future alternative to legal tender . Point. Raise a great maybe that volatility an asset is highly volatile. It is not a very effective means of exchange, because to dont know how much youre getting by the time you receive it. How much youre paying at the time you have to pay. If you agree on a price on they one but after sources on the 10th, the unit exposures up to significant risks . My time as a food my time has expired. Could do that currencies are currently posing as a way for rogue nations, criminal organizations to evade sanctions. Weve seen reports from north korea. Im glad you are working closely with our intelligence agencies. Thank you. Senator menendez. Going to welcome a fellow new jersey and. I have been actively following both venezuela and russias interests in developing Virtual Currencies for the purposes of negating your sanctions. I simply letter to secretary mnuchin on the subject. Under what circumstances would the sec and cftc have a role in new cryptoe proposed ruble currencys . More broadly aes the sec and cftc have role in preventing the use of Digital Currencies by foreign governments to evade u. S. Sanctions. Our jurisdiction would be very limited in that area. As i have spoken, we do have Enforcement Authority for fraud and manipulation. If we thought that estimate was being used for manipulation purposes, we would not hesitate to take authority, but you are touching on an area where the greatestional lapse is for the two agencies sitting before you. Let me ask you. What if you are manipulating to avoid u. S. Sanctions . I would have to speak to our enforcement captain. We will look at it. I would like to have you do so and i like to hear back. Tencentinteracting with to the extent you may have limited jurisdiction . Adequately integrated into the financial, Regulatory Network that watches for illicit activities . Mentioned, chairman clayton and i are a part of a Virtual Currency test task force that includes the fed and we have had our first meeting. We will have more to come. It happens that we are meeting with the Virtual Currency team this week on a previously scheduled meeting to get some introductory discussion started and cooperation between our agencies. Im asking this question. I would say to both of you, to the extent that you have a role to play and you lack the present authority to do so, i would love to know about that. If you determine it is necessary, because my sense of cryptocurrencies largely driven to evade u. S. Sanctions and undermine sovereign currencies. Both of them are a challenge to the National Interest of the united states. We have seen as a medic increase in the number of initial coin offerings. Companies are using digital told digital tokens. The initial coin options grow from 96 million in 2016 to over 4 billion in 2017. Many of these icus are relying on celebrity promoters, for example last year Floyd Mayweather used instagram to promote the purchase of tokens. I have done extensive work on the prepaid cash where we have seen celebrities like the kardashians to sell products to come to a deep cost to consumers. The next avenue of exportation. I worry about unsuspecting investors they dont have the resources to understand the true risks. What can the fcc do the sec do to protect investors . Senator, i am not going to comment on a specific instance, but some time ago we put out an alert that said if you are promoting securities, you are taking on Securities Law liability. I believe that has attempted down some of this endorsement activity. I will say it again right here, if youre promoting securities, you are taking on Securities Law liability. I appreciate that. I hope you will think about doing more to protect consumers. Can you walk us through why the sec is not comfortable with approving etfs . Product services are largely a retail product space. We have made it clear to the marketplace that there are a couple of issues with having an etf that is based on a cryptocurrency. They go to price discovery, custody and some other issues around volatility. We let the industry know that those are issues that are of concern to us. We dont want to approve an etf product with a cryptocurrency on july or until we can get under liar until we can get those issues. Senator moran. Thank you very much. So hard to have a conversation with me but im delighted to be back on the committee. Let me first start by suggesting to you that if you have suggestions, i will not have a chance to see you again. The subcommittee before we take a look at fy 19, assuming we are successful in the next few days on fy 2018 and budget caps, we will have an opportunity to reconsider spending levels for fy 2018. Yet major requests through the budgetary process. If there are priorities in which as we go back to a potentially increased funding and any levels of jurisdiction, i would welcome your input as to what it is, the highest priority. Ive heard the commentary earlier in regard to one of the ,uestions to senator reid was the hiring freeze has created challenges. I dont know if we can overcome that. Much. Nk you very i didnt want to get ahead of the process. 19 2019 expresses the sentiment. Depending on what the president budget is released. I offer it doesnt need to be day just doesnt need to be today. Doesnt need to be today. You may have answered this question just now with senator menendez. Doesnt you indicated while you were reluctant to approve an etf proposal daca but doesnt etf proposal . The snt an etf reduce mitigated concerns, reduced the volatility and increased price discovery and reduce risks . My question is dont additional products help alleviate some of the challenges we face . Is cryptocurrency so unique that it is different than other items that are traded on exchanges . The cftc product has that affect, it is largely an institutional product. You can take both sides of the market and it gives people a chance. Etfs, you can take both sides of an etf, but redundantly they are offered for a long investor, someone who wants exposure to the rise and fall of bitcoin or other currencies, just as it would. A different dynamic than a futures product. We have long taken and Investor Protection view of improving those types of products. If we get comfortable with those rules, then we can move forward. Topic. We raise a one of the things that i have try to Pay Attention to and often in cooperation with the senator from mexico, senator udall, trying to modernize our i. T. System within the federal government. You indicated, chairman clayton, about the 500 million loss in japanese cryptocurrency in your written testimony. We have now passed as part of the National Defense authorization bill what has been labeled as in gt act, the modernizing government technology. What it does is create a fund to rideral agencies themselves of their legacy technologies and have access to dollars. To replace that legacy. Ncourages moving to the cloud again with the opportunities for us to have better technologies and Safer Technology systems to reduce our vulnerabilities. You. T would encourage you have a lot at risk in the safety and security of the data you hold. That e your resources i am sure youre telling me you are spending many millions of dollars and working diligently you have the right personnel in place but i would guess if you ask agencies who have been hacked themselves and whose data has been released. I would be delighted to be reassured. Will not be reading in tomorrows paper. Orre has been a hack at cftc sec. I would offer you the opportunity to take a look at that legislation and see how it might be a benefit to your agencies. And to suggest any ideas that you have for what congress can do to further strengthen Cyber Security within your worlds. Thank you very much. Mr. Chairman, thank you. Thank you. I apologize. I had another Committee Hearing going on at the same time but i appreciate your written comments. So important. Who was attorney general for the state of nevada and worked on Consumer Protection issues, obviously weeding out any type of fraud is important. Start with a couple of questions that i have. Companies thatat originated outside of the cryptocurrency space, like kodak and burger king have recently jumped into the cryptocurrency space. However, some critics have warned that companies are using block chain as an opportunistic venture to pop up stock prices without having a clear business plan. Long island tea changes name to long block chain and watched its stock soar. I concerned that consent are you concerned that Companies May be using block chain as a scheme to bump up their stock prices . The short answer is yes. The longer answer is, i have put out a warning in the space. I have put out a warning to Securities Lawyers as well which is nobody should think it is ok to change your name, to something that involves block chain when you have no real underlying block chain business plan. And try to sell securities based on the hype around block chain. What does that mean meanally westmark specifically . Sec website,on the a speech on this. This is an area of concern for us. Is something new, people seek to raise the value of the securities without the underlying goods is problematic. Thank you, senator. As you know, the jurisdiction of the cftc and sec are different. Chairman clayton is concerned with initial court offerings that are misrepresenting the affiliation, whether it be with kodak or otherwise. We focus on fraud and manipulation broadly and estimates where there is wild claims. I mentioned the case we brought on a Long Island Firm called my big coin was traded to be my big con. Moneyere taking peoples and not investing in anything except for their own houses and fancy cars. We have been very aggressive in using our Enforcement Authority. We brought cases just last month alone. Ive said there will be more. We are looking into this and monitoring markets very carefully. We believe that our big task is bringing enforcement cases and let people see that, as well as Consumer Education. It as a deterrent effect. Thank you. It has been reported that more than 3 million bitcoin have been stolen. One in seven bitcoins stolen. On generate 26, coin check on january 26, coin check was fact. Was hacked. If people put money into a stock or bond and it was stolen there would have the federal government still try to help. Nvestors when virtual crutches are stolen, what can buyers do to get the money back . Point and a very good it is one we have emphasized in our investor alerts. When you engage in investing online with an offshore entity, the chances that we can do anything practical to get your money back are very low. In our futures market, we have system safeguards, requirements that futures exchanges have cyber protections in place. Without those practices. These underlying spot markets which we do not regulate, we dont have the authority to require them to have cyber safeguards in place. A lot of these companies are young, they are startups and focused on putting what resources they have into developing the technology. You mentioned the seven protections were just out there. Where has conversations with them. We have asked questions. If that is already happening. Just the theft is already happening. The underlying stages, while we do have the Enforcement Authority, we dont have the same Regulatory Authority we have in the markets. So therefore, this is a cap or the same kind of protection rules like custody. It was gone. It is buyer beware. Around the space, a lot of education is important from all of these federal agencies to buyers, until Something Else can be done with the thing were trying to figure out. I know my time is up. Thank you. Thank you, senator. I hadnt planned on having a second round. Senatorgreed to allow shelby and senator warren cap one of the question. Senator shelby. Senator shall mr. Lieberman i want to get into the area center shall become you know what goes up comes down. We dont know when and so forth. Than anperhaps more ordinary correction . Do you have a judgment on that at all . Chairman . Your question is exactly the question i asked by staff and some of my colleagues, because we should be asking those questions. By this morning, there was nothing to indicate that any of our systems didnt function as they were expected to function yesterday. This was the largest volume since november 2016. There was a significant price change, but it was not a we have two types of limits. We have single stock limits and we have market limits, the circuit breakers. Neither one of those were hit in any great detail. The single stock was nine. The target breakers did not get hit. As id here today, sit here today, there was nothing they came up that concerns me for my foxing standpoint. Days like yesterday, our job is to look out. Portom the regulatory stem standpoint, are you saying . Ou dont see anything amiss you can control what goes up and what goes down. What spooked the markets . Is it profittaking . Is it a whiff of inflation . People who watch the markets and participate in the markets are seeing the fed is beginning to raise interest rates. The fed has information perhaps we dont have. The economy is hot. Unemployment is low. So forth. Can we combination really say . I cannot really say. There are a lot of opinions on those things. Our job is to look at the functioning and look at the systemic risks. Im asking myself, is there anything that happened yesterday they gives me a different view of systemic risks that i had the day before . So far, no. That is a question i ask myself almost every day. We know when the market is going up, people are elated that when it is going down, some people are often. Just some people profit but not a lot of people elated. Do you have a comment . I am following a recollection of saying a mentor of mine was my age induction into the Financial Markets used to say, when i would ask him what drove the market up yesterday . He would say oh it was up, more people bought and sold. We laugh but what he said to me was when you look at the pundits in the market was up yesterday because of this that may have been why or maybe not. The reporters or the pundit needed a reason so they pick something out. I dont mean to be facetious but markets are very complex. Sometimes it is oversimplifying it and you hear on the news and by people who are stock pickers and they say, it is because of this. I dont know how anybody really knows. If they are fundamental moves and changes, that is where we have to deal. Our job is to look at the structural underpinnings and see whether there is anything that is not foxing. If the fundamentals are sound. Witty late night and Early Morning this morning. Checking our exchanges are in order and make sure the margin orders were held. The system held of the system worked as it was designed to do. So, the right system and write policies are in place. The markets always evolving and always organic. That is why we need to stay very close to them. The market always corrects. Is this ordinary . Is it a correction . The market will correct itself and we go from there, is that fair . Senator warren . Sen. Warren i want to go back to Virtual Currency. I want to ask about initial point offerings. Icos. Some icos raise money for legitimate companies but others are just ponzi schemes. Many of the investors in icos are just everyday americans. It is now so bad that facebook recently banned all ads for Virtual Currency related products and icos. There was so many deceptive and misleading advertising that targeted regular consumers. How to ask a little bit of a question around how we make icos safer . Chairman clayton, the sec ,vidently recognized the risk so it announced last summer that it would consider certain coins to be secure just security meaning they would have to be registered with the commission. In 2017, companies raised more icos. Billion in how many of those companies registered their ico with sec . Not one. As of today, how many have registered for upcoming icos . Not one. Can you say a word about why that is so . Yeah. Gatekeepersk the that we rely on to assist us in making sure our Securities Laws are followed have done their job. We have made it clear with the law is. As i have said many times, there are thousands and thousands of private placements that go on every year. We want them to go on. We want people to raise capital but we want them to do it right. What i see is to is they take the disclosure like benefits of a private placement and then add to it the public, general solicitation and Retail Investor promise of a secondary market without registering with us. Folks somehow got comfortable that this was new and it was ok and it was not a security, it was just some other way to raise money. I disagree with them. It is not new but it is not ok and another way to raise money . Correct. Im understanding you to say it is a violation of law. Registration only matters when companies dont register, their tokens of securities, they can hide information and the sec doesnt have the information it needs to monitor this market. I am happy for these people to do private placements but do them right. As a private do it placement to get all the benefits of public ex line should i take today as you are sounding a warning bell . Yes and it is not the first time. I appreciate the opportunity to do it today. Thank you, mr. Chairman. Thank you to our witnesses. We appreciate that only your testimony but the work that you are doing. I would ask you to get back to me. Recommendations as you refine your evaluation of our current financial legislative system and whether we need to provide further clarification from congress. This hearing is adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. 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