There we go: let's check this out crypto in the crosshairs again news breaking this afternoon, that the securities and exchange commission is scrutinizing the relationship between the u.s arm of binance. That's the world's largest cryptocurrency exchange and two trading firms with ties to binance's founder shang, peng zhao. The wall street journal is reporting that the two market maker firms, sigma chain and merit peak, have been controlled by zhao, but that those relationships were allegedly not disclosed to investors or customers. This latest news only adds to the very detailed focus the sec has been giving to the crypto space and as the multi-trillion dollar market for digital money continues to grow.

Investors eagerly await news on how the sec plans to regulate it. Let's see if we can find out and get some news here joining us now in a fox business exclusive sec chair gary gensler, welcome chairman. We appreciate you being good to be back with you liz look. I know you don't speak to individual cases, but on this breaking news about binance, can you tell us why something like a crypto exchange, not disclosing relationships with market makers is an issue or would be an issue for the sec.

So let me take it to a little higher level most of the activity in this asset class. As you said, two trillion dollars is happening on centralized exchanges or lending platforms, and you saw yesterday we had an announcement that i can speak about with regard to one of the lord's lending platforms uh, and why does it matter if 95 of the activity is happening There what's important is investors, get basic investor protection protection is against fraud and manipulation, and, as many of the tokens on these platforms may well be securities, that's where the securities and exchange commission comes in well, you're, talking about the block fight settlement, where block fi, paying Out a hundred million dollars for handling, or at least putting together, allowing people to park their crypto in exchange at least an account for a pretty incredible monthly interest payment. You said that those were unregistered and that they have to register is block fi now registering. Can you at least give us an update on that? Well, they entered into a settlement arrangement to do so in a timely way and importantly uh.

What we found there is that not only was it not complying with what's called the 1933 act or registration, but also the investment company act of 1940, offering the public returns by pulling those assets and investing those assets, the crypto assets and but we're working with them. We're trying to see if we can get this just feels like a financing yeah. What the is this is gary inside an investor protection envelope and then he's right on the crypto train lately, based upon that to uh, invest or even to speculate. That's up to the public, but to have the basic protections of protecting against fraud, manipulation to have disclosure.

These are the things that we have in our stock markets and really important if this technology is going to go anywhere. Well, i get it because you want to protect investors, and i truly believe that that's at the heart of what you try and do, but it has been an exponential growth spurt that we have seen i mean, did you see the super bowl gary? All of those crypto commercials they had them, calling it uh the crypto bowl super bowl, where a bunch of mortgage companies like ameriquest, which that was right into the 08 crisis. Back in 2000, there were 14 super bowl ads about dot com companies, many of which went defunct later, so i wouldn't sort of confuse the advertisement with the credibility behind some of that or the viability of these projects. Well, let me tell you why i'm not banks have have advertised in the super bowl they've gone under certain uh, you know drink companies, it's it's part of sort of the free market, and i understand that this is very much a brand new and and nascent uh Investment operation or opportunity for people, but it really feels like it's been a transformational 12 months.

I mean you look at how many people and businesses are choosing to invest in or accept cryptocurrency. So i want to get to the sec's approval of futures, etfs bitcoin futures etfs. My question to you is this: you've rejected a bunch of uh a bunch of offers when it comes to bitcoin spot etfs, whether it was sky bridge or all kinds of names. You had grayscale's application, that's being assessed at the moment: you've rejected wisdom, trees, fidelity krypton, um each site, every single time, the sec sites.

You need more to know about how they're going to prevent, share manipulation, fraud and lack of liquidity. What could any of these funds that are dying to get their etf out? There say to you that would get you to yes when it comes to preventing manipulation. Well again, i don't want to get ahead of any specific project and it comes in front of our five member commission, but generally speaking, what's really important is these underlying markets bitcoin and the other markets, the underlying cash markets for trading on exchanges and those exchanges? I continue to say come in work with the sec register under the securities laws. It's probability weighted, but you've got 75 or 500 or thousands of tokens on your platform say what you're gon na do what what hey hey? What the hell is that that chicago mercantile exchange has had a regulated market since 2017 by our sibling agency, the commodity futures trading commission, an agency i was once proud to chair, so you you should know, i think, really well with the cftc.

So that's part of that framework. We don't have that framework uh for the underlying cash market at this time. Okay, i want to move on to a lawsuit that the sec has filed with x, against ripple xrp and again, without commenting on specifics, because i know you don't what's the sec's theory on certain elements of the crypto world that are considered securities uh, which would subject Them to the sec's stricter purview versus currencies which are not held to that kind of purview, so it's pretty straightforward actually is that in the 1930s, after the collapse of the markets and the public getting defrauded, there was a basic bargain and congress wrote with a very Broad bush, the definition of security and they included like 30 32 different terms and, amongst those terms, the conceptual framework is, was the public investing money, anticipating profits on the efforts of others and the supreme court in the 1940s and multiple times since that, had the same Approach, my predecessor, jay clayton, said it as well as i could say that in looking at these tokens, it's rare to find one that isn't doing, that the public is investing hoping for a profit based on the efforts of some other group. Okay.

But that's with any investment there is that caveat emptor. Buyer beware element to all of the stock market. What confuses a lot of people gary and if you could really clarify here, is you know? Where do you draw the line? The distinction between what is a security and what is an actual currency. You know, example a what ripple did selling xrp to build out its underlying blockchain network, no different than example: b: ethereum floating an ico uh.

You know a a coin offering uh to help its underlying ethereum blockchain. There is no difference. A lot of people say so so liz. You started by saying you weren't going to ask me about specific cases, and so, if i can example a example b yeah when i help the audience know that it's not i'm not really allowed to talk about specific cases.

But it's pretty straightforward. Raise money from the public, as you say, you have a basic bargain of full and fair disclosure and anti-fraud protections, and you register with the government agency called the securities and exchange commission and that's really. What we're trying to do is help continue with that basic bargain. We're technology neutral: if people want to invest or speculate in this field, then these tokens and, most importantly, the platforms, the trading and lending platforms come in register.

Do it within the law not trying to skirt the law. Okay, we've got so much more to talk about. I do want to quickly ask you about payment for order flow. This, of course, was an issue that came to the forefront during the mean stock uh craze a year ago january.

The question became: is it a conflict of interest? On the one hand, i do get that there are people who look at this situation and say well wait. A minute brokers are getting, you know, are giving are getting paid by market makers just so that individual investors can have free commission trades. You know, on the one hand, it is helpful to the market, but it's the answer to ban payment for order flow gary or simply solidify disclosures, so that people investors can make their own decision about whether they want to pay a commission and not deal with a Market maker, so we're looking at the sec as to how to facilitate and drive greater efficiency in this market, so investors get a better deal. Payment for order flow, as you mentioned, is a payment between a broker that a broker receives for your order flow, and there are inherent conflicts of interest there we're looking at how we can ensure greater competition when you place a market order in the u.s a market Order a retail platform well over 90 percent of those trades go straight to the dark market, so a wholesaler that bought that order flow rather than competing trade by trade, and that's what we're trying to think through under the authorities.

We have sounds like there are a lot of open, open doors that we need to get inside and look more deeply into uh chairman garrett gensler. Thank you very much for joining us. We appreciate it. Please come back.

Thank you so much liz you stay well and be well. Thank you up. Next charlie casparino, standing by with instant analysis, that's about as much as i want to listen to up. Next is charles gasparino, with insta analysis, wow! Well, there's a couple key takeaways for me on that uh that gary gensler live stream.

Let's uh, i'm gon na keep this up on top monitor over here, just in case something pops up that i find to be uh interesting, let's go on! So what is sort of the big takeaways here? Well, two of the things that they talked about. You know pfoff, i think lace, liz claiming kind of threw in p5 and liz claiming, if you don't know, was the person who was interviewing gary gensler uh. She threw in a bone there for p5, we'll talk about that last, but the big thing that he that was talked about is sort of cryptocurrency. There's been a lot of talk.

A lot of debate lately regarding whether or not cryptocurrency is a currency, or it is a security, and how do you differentiate those two uh sort of things right, liz claiming that's a great question. I think the specific question is: where is the line she wants to know like? What's the difference between ripple and ethereum like if you, if you wanted to raise money for ripple these guys defrauded people, you know how's that any different from ethereum or from this or from that or from that, and then that right, a lot of in a lot Of ways most cryptocurrencies trade as securities and not as a currency trey is part all right. So the story behind that i looked up polyamorous because last night on on twitch i was streaming and somebody brought up polyamorous and i was like what does that mean again and uh right when i googled it? I was like ah yeah, that's it and i have a terrible habit of closing out a tab. So you know now you guys know that i didn't know what that means and uh you you've got that you've got that available to you, but nonetheless we continue on right.

Where is the line for me? I'm going to draw this out on the handy-dandy whiteboard. This is a this is this is pretty easy stuff. I don't think you have to think more than a split second to be able to differentiate whether or not this is a uh, a security or a currency so hold on one second, zero. Four, six, nine! Three! All right, beautiful all right! So, let's come back to i don't care about this.

I just want. I want my whiteboard. Why can't i not draw on my whiteboard right now: hey amc in case you're wondering at 19.5 cents. Not a whole lot happened in that uh time frame when we were watching uh watching the the news come on whiteboard there.

We go all right so check this out. If we were to draw up uh a dollar right. This is a currency. You got a u.s dollar.

One dollar is typically equal to one dollar. There's, obviously rare examples of this right. You can go and look at like some quarters are worth like 50 cents. Some pennies are worth like a quarter whatever, but for the most part a dollar is is worth a dollar and that to me, is is sort of what i would classify just let this be known right, i'm classifying this as a currency.

If i was to, if i was to go to the books and try and figure out what a currency is a security, however, since i wouldn't really want to trade, a dollar for a dollar doesn't really make sense. I wouldn't go up to somebody and go hey. Uh, can i can i give you this dollar in exchange for that dollar, because i think your dollar is going to be worth more than my dollar? No, i'm never going to do that. That doesn't make any sense.

In fact, my dollar would depreciate in value. That's a currency, a security is hey. I believe that ripple is going to be worth more money in a future date than it is right now. So i'd like to buy some right, i toss some money in bam.

I buy some ripple at a later date. I said i want to sell some ripple. Oh, i decided to sell it and the process you hope for is that you are net positive cash. You want to make money right.

That, to me is a security. Is it something you're using as an investment? Is it something you're using to park cash, or is this something that you're using to dictate the value of something that you're trying to purchase or uh that you use in a day-to-day life to take care of your expenses right? That's that's to me as a currency and a cryptocurrency, which is, i think, the name is kind of goofy in and of itself should maybe even call the crypto security. I don't know because it really doesn't really act like much of a currency sure you can buy stuff with it. You can go, buy a pizza.

If you'd like you can go, do this. You can go do that, but at the end of the day, you're buying that crypto, because you're hoping that increases in value, which is a characteristic of a security. So i think if you're gary gensler uh the decision's pretty simple, you regulate uh security. I mean in the same way you regulate the stock market.

You kind of have to regulate a security uh with the hopes of preventing people from getting defrauded like is happening with ripple uh. That's sort of the big thing. I think what gary gensler delivered was a bit of a nothing burger. I think it was kind of kind of dog to be frank with you uh, but it is what it is.