May 23, 2025 • 9 mins
SEC Commissioner Mark Uyeda discusses whether tokenization of popular stocks may be introduced to US trading. He speaks with Bloomberg's Matt Miller and Dani Burger.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
The crypto exchange Kraken is allowing non US customers to
trade Apple, Tesla, Nvidia, and other popular stocks as tokens
over a digital ledger. We asked the co CEO of
Kracken yesterday how soon we could see this coming to
the US.
Speaker 1 (00:22):
The folks at the SEC have been extremely promotive of
these types of ideas around how do we bring this
to everyday consumers, how do we bring this to everyday investors?
And so I'm pretty positive that like we'll get to
a place where we can start thinking about how to
launch this again, not just with one company or one customer,
but across the board.
Speaker 3 (00:41):
I'm pleased to say that joining us now is SEC
Commissioner Mark You Wadam, Commissioner, thank you so much for
joining this morning. Now, I understand you just held a
round table about this very issue. What are your thoughts
on tokenization and the ability to do this to trade
equities twenty four to seven and have this new mechanism
for it.
Speaker 4 (00:59):
Yeah, well, certainly we've gone through numerous technological chams of
the history of the top markets. Remember we were in paper,
then we went to uncertificated securities, and then we went
to what we have roughly today book untries on various
financial institutions. Now tokenization is possibly another step forward in
how we do the markets. You know, one thing that
a lot of investors don't realize is the significant amount
(01:21):
of resources that go into what they call the back
office operations. That means a lot of reconciling between positions
among financial institutions, DTC and sec. So again, those are
acroums that hopefully most people don't know about because they
do their job without anyone ever noticing that they're doing
it right. So we've always been open decks experimentation on this.
Speaker 2 (01:44):
How would this work? I mean, is there a framework
in place for approving or denying which tokens would be created?
Or are you in the process of putting that together?
Who would be able to issue the tokens? I have
so many questions about it.
Speaker 3 (02:00):
All.
Speaker 4 (02:00):
These are things that we want to engage with market participants.
Exactly what do you propose to do when it comes
to toganization of security's positions and more importantly, what type
of safeguards are you going to have in place to
protect investors and to guard against conflicts of interest?
Speaker 2 (02:16):
Do we know, sorry, do we know how long it
would be? We were talking with Mike Novograts of Galaxy
Digital a couple of days ago, and he was saying,
in one or two months, he thinks we could see it. Now,
I don't know if he meant, you know, foreign investors
would be able to participate. Do you know how long
it would be till US investors are going to be
able to, you know, pick up their phones and you know,
(02:37):
buy a piece of an Apple stock or Nvidia stock
with a token.
Speaker 4 (02:42):
Well, there are a number of things that we could do.
It could take if we need to do, actual rules
that have to go through noticing the comment and then
are subject to potential review by the court, tecting a
lot of lengthier process, and what we do what we
call either subregulatory guidance, which basically means a no action
letter or an exemptive order, or there's some other things
(03:03):
that we can do. But again it depends on whether
or not with the proposals that they intend to seek
are consistent with our mission of maintaining investor protection, fair
orderly efficient markets.
Speaker 3 (03:15):
Now elsewhere in this world, there also is a big
push for stable coins I know there's a piece of
legislature making its way through Congress at the moment. There's
also some journal reporting that some of the big banks
are possibly considering doing their own. Part of the thing
that the big banks have been worried about is stable
coins moving to other players and other players that are
less regulated. Is that a concern for you if this
(03:36):
is where stable coins emerge from, not from the banking industry,
which again already has some onerous regulation.
Speaker 4 (03:41):
Yeah, well, it depends on whether that particular stable coin
even falls in our SEC jurisdiction. We put out some
guidance earlier this year which said a stable coin that
does not pay interests, is not yield dividends or otherwise
have a profit, it's not a security because that is
a fundamental part of what a security is. You have
to anticipate making profits. Otherwise a gift card could easily
(04:04):
be a security. So stable coins that don't have that
profit motive not part of the SEC jurisdiction. Now, there
is I think some interesting ideas out there. Can you
create essentially a tokenized money market fund that one might
be able to exchange. We do have rules on that,
but that would be something that we would say, all right,
what sort of safeguards do we need on here? Is
this reliable? Do we know that it's going to protect
(04:28):
or at least they're going to appropriately safeguard and custody
the assets underlying the fund. So that's a little bit different.
But you know, the whole banks versus money market funds
has been something that's going on for at this point,
I think almost four decades.
Speaker 2 (04:38):
By the way, I'm sure you read Matt Levine's Money
Stuff and he posits everything as a security, right, I mean,
you can make everything a security if you want, if
you want to go down that route.
Speaker 4 (04:49):
Well, I thought his theme was more everything's security is fraud.
Speaker 2 (04:53):
Yes, that's a good voto. That's a good point. Everything
security is fraud. I got that wrong. Let me ask
about the Trump coin ETF that right now is in registration.
Is there any way that you would not approve that?
Don't you have to? He's kind of like your boss's boss.
Speaker 4 (05:11):
Well, we don't approve based on who is the boss's boss.
What we do look at is we apply the same
rule book that we apply any other type of security
that's been registered for offering on us. We are what
we call merit neutral. We are disclosure agency, so as
long as we are comfortable that the appropriate disclosures have
(05:33):
been made, there is no real legal basis for us
to hold up a registration Stamen and meme coins.
Speaker 2 (05:38):
Is that something you could see, uh trading in ETFs?
Speaker 4 (05:42):
Well, that's, you know, a very interesting question. We have
had a number of types of financial products that are
that have other types of non securities assets. We put
out again some guidance earlier this year that name coins
and NFTs are not securities. But if you put it
into a package like some sort of collective investment vehicle
(06:02):
and then you sell interests in that, than that the
interest in that vehicle very well may be a security.
Speaker 3 (06:08):
Can I just ask, Commissioner, because you're doing a lot
of work on this, you're heading up a new crypto
task force too. We've mentioned just literally the tip of
the iceberg of work that is being done in crypto.
There's been reporting that SEC staff is shrunk by something
like fifteen percent so far this year. Has that made
it more difficult for you?
Speaker 4 (06:23):
Yeah? Well, first off, it's actually one of my colleagues,
Commissioner Hester Purse, who is leading the Crypto task course
and that was one of the first things that I
did when President Trump designated me as the acting chairman,
was in fact a day one issue was to put
her in charge. You know, I think she's got a
fun little moniker as crypto mom. To put her because
the issues of crypto are across all aspects of what
(06:44):
we do at the SEC. So we've got a number
of workstreams going on that and we've had already four
round tables with respect to crypto. This is something that
we should have been doing years ago. And the reason
why we do these roundtables and we sow us from
the public is we want to make sure that we
make informed decisions and we just don't come down through
(07:07):
what I believe happened the last four years is what
we call regulation my enforcement. I don't like something, we
might not have a positive view of crypto, so therefore
we're going to take an enforcement action against that. That's
what we do. We're supposed to be merit neutral.
Speaker 2 (07:20):
I want to ask about something other than crypto. We're
so focused on that just because of the newsflow lately,
but really private markets have been at the heart of
the discussion we have on this segment Wall Street Beat,
and it looks increasingly like retail investors want to get involved,
and certainly firms want to sell retail investors these products.
(07:42):
So what kind of guardrails do you think the SEC
needs to put in place as private markets become more prolific.
Speaker 4 (07:51):
Well, our Trump and Paul act insessified on the Hillary
this year. He's very interested in getting more exposure of
retail investors private assets. But and there was a very
big cavin it needs to make so that there needs
to be the appropriate disclosures. There needs to be the
other safeguards in terms of financial professionals who recommend these
and how they satisfy their fiduciary duties and their duties
of care before they recommend them. Now, when I look
(08:13):
at private assets, my perspective is this, before I joined
the SEC for two and a half years, I was
a state regulator for California. When I look at the
asset mix that underlies my retirement in the California Public
Employees retirement system with small slices allocated venture capital, private credit,
private equity, and then I think of myself, if I
(08:34):
go now onto the marketplace and say, can I find
a diversified fund that would provide exposures not only to
public equities and public bonds, but also small slices of
these other types of assets. You can't find it, so
I think it's very important that we at least explore
how we can make it possible. So as former chairman
Jay Clayton would call it, mister and missus four OL
(08:54):
one K can have the same exposure that many of
our local and state government employees have through their retirement
defined benefit REGs harmon plans.
Speaker 3 (09:00):
Are you not concerned about the liquidity mismatch? This has
been a real problem for when it comes to retail,
not just the educational but should you want to pull
it out, should you need access to which retail investors
often do, that you could have something that looks like
a run on these assets. Is that a real concern.
Speaker 4 (09:14):
I think there's a big difference between the retirement market
and the non retirement market. What we've seen is the
retirement market tends the assets tend to be what they
call sticky. Is much rare for people to pull them
out early because there is also a tax penalty if
you would draw those assets early, and many times, especially
for younger workers, if they have a thirty or forty
(09:34):
year investment horizon. Some of these less liquid assets are
much more appropriate than say, somebody who is amassed quite
a bit over a lifetime of savings and therefore one
K and now they're seventy years old. Their investment horizon
may be much shorter and less appropriate for these types
of private assets.
Speaker 2 (09:51):
Very cool, Commissioner. Great to get to spend some time
with you. I hope we can have you back on
the show.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
The crypto exchange Kraken is allowing non US customers to
trade Apple, Tesla, Nvidia, and other popular stocks as tokens
over a digital ledger. We asked the co CEO of
Kracken yesterday how soon we could see this coming to
the US.
Speaker 1 (00:22):
The folks at the SEC have been extremely promotive of
these types of ideas around how do we bring this
to everyday consumers, how do we bring this to everyday investors?
And so I'm pretty positive that like we'll get to
a place where we can start thinking about how to
launch this again, not just with one company or one customer,
but across the board.
Speaker 3 (00:41):
I'm pleased to say that joining us now is SEC
Commissioner Mark You Wadam, Commissioner, thank you so much for
joining this morning. Now, I understand you just held a
round table about this very issue. What are your thoughts
on tokenization and the ability to do this to trade
equities twenty four to seven and have this new mechanism
for it.
Speaker 4 (00:59):
Yeah, well, certainly we've gone through numerous technological chams of
the history of the top markets. Remember we were in paper,
then we went to uncertificated securities, and then we went
to what we have roughly today book untries on various
financial institutions. Now tokenization is possibly another step forward in
how we do the markets. You know, one thing that
a lot of investors don't realize is the significant amount
(01:21):
of resources that go into what they call the back
office operations. That means a lot of reconciling between positions
among financial institutions, DTC and sec. So again, those are
acroums that hopefully most people don't know about because they
do their job without anyone ever noticing that they're doing
it right. So we've always been open decks experimentation on this.
Speaker 2 (01:44):
How would this work? I mean, is there a framework
in place for approving or denying which tokens would be created?
Or are you in the process of putting that together?
Who would be able to issue the tokens? I have
so many questions about it.
Speaker 3 (02:00):
All.
Speaker 4 (02:00):
These are things that we want to engage with market participants.
Exactly what do you propose to do when it comes
to toganization of security's positions and more importantly, what type
of safeguards are you going to have in place to
protect investors and to guard against conflicts of interest?
Speaker 2 (02:16):
Do we know, sorry, do we know how long it
would be? We were talking with Mike Novograts of Galaxy
Digital a couple of days ago, and he was saying,
in one or two months, he thinks we could see it. Now,
I don't know if he meant, you know, foreign investors
would be able to participate. Do you know how long
it would be till US investors are going to be
able to, you know, pick up their phones and you know,
(02:37):
buy a piece of an Apple stock or Nvidia stock
with a token.
Speaker 4 (02:42):
Well, there are a number of things that we could do.
It could take if we need to do, actual rules
that have to go through noticing the comment and then
are subject to potential review by the court, tecting a
lot of lengthier process, and what we do what we
call either subregulatory guidance, which basically means a no action
letter or an exemptive order, or there's some other things
(03:03):
that we can do. But again it depends on whether
or not with the proposals that they intend to seek
are consistent with our mission of maintaining investor protection, fair
orderly efficient markets.
Speaker 3 (03:15):
Now elsewhere in this world, there also is a big
push for stable coins I know there's a piece of
legislature making its way through Congress at the moment. There's
also some journal reporting that some of the big banks
are possibly considering doing their own. Part of the thing
that the big banks have been worried about is stable
coins moving to other players and other players that are
less regulated. Is that a concern for you if this
(03:36):
is where stable coins emerge from, not from the banking industry,
which again already has some onerous regulation.
Speaker 4 (03:41):
Yeah, well, it depends on whether that particular stable coin
even falls in our SEC jurisdiction. We put out some
guidance earlier this year which said a stable coin that
does not pay interests, is not yield dividends or otherwise
have a profit, it's not a security because that is
a fundamental part of what a security is. You have
to anticipate making profits. Otherwise a gift card could easily
(04:04):
be a security. So stable coins that don't have that
profit motive not part of the SEC jurisdiction. Now, there
is I think some interesting ideas out there. Can you
create essentially a tokenized money market fund that one might
be able to exchange. We do have rules on that,
but that would be something that we would say, all right,
what sort of safeguards do we need on here? Is
this reliable? Do we know that it's going to protect
(04:28):
or at least they're going to appropriately safeguard and custody
the assets underlying the fund. So that's a little bit different.
But you know, the whole banks versus money market funds
has been something that's going on for at this point,
I think almost four decades.
Speaker 2 (04:38):
By the way, I'm sure you read Matt Levine's Money
Stuff and he posits everything as a security, right, I mean,
you can make everything a security if you want, if
you want to go down that route.
Speaker 4 (04:49):
Well, I thought his theme was more everything's security is fraud.
Speaker 2 (04:53):
Yes, that's a good voto. That's a good point. Everything
security is fraud. I got that wrong. Let me ask
about the Trump coin ETF that right now is in registration.
Is there any way that you would not approve that?
Don't you have to? He's kind of like your boss's boss.
Speaker 4 (05:11):
Well, we don't approve based on who is the boss's boss.
What we do look at is we apply the same
rule book that we apply any other type of security
that's been registered for offering on us. We are what
we call merit neutral. We are disclosure agency, so as
long as we are comfortable that the appropriate disclosures have
(05:33):
been made, there is no real legal basis for us
to hold up a registration Stamen and meme coins.
Speaker 2 (05:38):
Is that something you could see, uh trading in ETFs?
Speaker 4 (05:42):
Well, that's, you know, a very interesting question. We have
had a number of types of financial products that are
that have other types of non securities assets. We put
out again some guidance earlier this year that name coins
and NFTs are not securities. But if you put it
into a package like some sort of collective investment vehicle
(06:02):
and then you sell interests in that, than that the
interest in that vehicle very well may be a security.
Speaker 3 (06:08):
Can I just ask, Commissioner, because you're doing a lot
of work on this, you're heading up a new crypto
task force too. We've mentioned just literally the tip of
the iceberg of work that is being done in crypto.
There's been reporting that SEC staff is shrunk by something
like fifteen percent so far this year. Has that made
it more difficult for you?
Speaker 4 (06:23):
Yeah? Well, first off, it's actually one of my colleagues,
Commissioner Hester Purse, who is leading the Crypto task course
and that was one of the first things that I
did when President Trump designated me as the acting chairman,
was in fact a day one issue was to put
her in charge. You know, I think she's got a
fun little moniker as crypto mom. To put her because
the issues of crypto are across all aspects of what
(06:44):
we do at the SEC. So we've got a number
of workstreams going on that and we've had already four
round tables with respect to crypto. This is something that
we should have been doing years ago. And the reason
why we do these roundtables and we sow us from
the public is we want to make sure that we
make informed decisions and we just don't come down through
(07:07):
what I believe happened the last four years is what
we call regulation my enforcement. I don't like something, we
might not have a positive view of crypto, so therefore
we're going to take an enforcement action against that. That's
what we do. We're supposed to be merit neutral.
Speaker 2 (07:20):
I want to ask about something other than crypto. We're
so focused on that just because of the newsflow lately,
but really private markets have been at the heart of
the discussion we have on this segment Wall Street Beat,
and it looks increasingly like retail investors want to get involved,
and certainly firms want to sell retail investors these products.
(07:42):
So what kind of guardrails do you think the SEC
needs to put in place as private markets become more prolific.
Speaker 4 (07:51):
Well, our Trump and Paul act insessified on the Hillary
this year. He's very interested in getting more exposure of
retail investors private assets. But and there was a very
big cavin it needs to make so that there needs
to be the appropriate disclosures. There needs to be the
other safeguards in terms of financial professionals who recommend these
and how they satisfy their fiduciary duties and their duties
of care before they recommend them. Now, when I look
(08:13):
at private assets, my perspective is this, before I joined
the SEC for two and a half years, I was
a state regulator for California. When I look at the
asset mix that underlies my retirement in the California Public
Employees retirement system with small slices allocated venture capital, private credit,
private equity, and then I think of myself, if I
(08:34):
go now onto the marketplace and say, can I find
a diversified fund that would provide exposures not only to
public equities and public bonds, but also small slices of
these other types of assets. You can't find it, so
I think it's very important that we at least explore
how we can make it possible. So as former chairman
Jay Clayton would call it, mister and missus four OL
(08:54):
one K can have the same exposure that many of
our local and state government employees have through their retirement
defined benefit REGs harmon plans.
Speaker 3 (09:00):
Are you not concerned about the liquidity mismatch? This has
been a real problem for when it comes to retail,
not just the educational but should you want to pull
it out, should you need access to which retail investors
often do, that you could have something that looks like
a run on these assets. Is that a real concern.
Speaker 4 (09:14):
I think there's a big difference between the retirement market
and the non retirement market. What we've seen is the
retirement market tends the assets tend to be what they
call sticky. Is much rare for people to pull them
out early because there is also a tax penalty if
you would draw those assets early, and many times, especially
for younger workers, if they have a thirty or forty
(09:34):
year investment horizon. Some of these less liquid assets are
much more appropriate than say, somebody who is amassed quite
a bit over a lifetime of savings and therefore one
K and now they're seventy years old. Their investment horizon
may be much shorter and less appropriate for these types
of private assets.
Speaker 2 (09:51):
Very cool, Commissioner. Great to get to spend some time
with you. I hope we can have you back on
the show.
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