- 6/3/2025
SEC Chair Paul Atkins testified before the Senate Appropriations Committee on Tuesday.
Category
🗞
NewsTranscript
00:00The committee will come to order.
00:02This is the second of our fiscal year 2026 budget hearings for agencies under the jurisdiction
00:07of the Subcommittee on Financial Services and General Government.
00:11Today we welcome the chairman of the Securities Exchange Commission, my good friend Paul Atkins.
00:15Paul, thank you for being here.
00:18I'd also like to extend a warm welcome to the other senators that have joined us here
00:23today.
00:24I don't know how well attended your hearing will be today, Paul, but we're going to have
00:28a little bit of motion in and out, but please know that's no lack of interest and it's
00:34just the voting schedule that we've got here.
00:37But I look forward to working with all of my colleagues here in a bipartisan manner to advance
00:41the ball.
00:44Access to deep, liquid markets is a pillar of American economic strength.
00:49It supports innovation, job creation and prosperity.
00:53Regulators like the SEC play a vital role in preserving market integrity, but they must
00:58do so without stifling innovation or in duly burdening investors with excessive compliance
01:02costs.
01:03Chairman Atkins, today, the SEC is requesting approximately $2.2 billion in appropriated funding
01:10for 2026.
01:12This funding supports the SEC's single appropriations account, salaries and expenses, which has remained
01:17relatively flat since 2023.
01:20While enforcement is a necessary tool, it must be used responsibly.
01:25Too often, past chairmen have aggressively pursued unrelated social or political goals, such
01:30as climate change or diversity, that have really little bearing on the fiduciary duty of corporate
01:35officers.
01:36I'm confident that, under your leadership, the SEC will refocus on its core mission, that
01:40is, protecting investors, maintaining fair and orderly markets, and, importantly, facilitating
01:45capital formation here in America.
01:48This hearing also provides an opportunity to clarify the SEC's funding structure.
01:52While the agency is funded through appropriations, these amounts are paid for by transaction
01:57fees that the SEC collects pursuant to Section 31 of the Exchange Act.
02:02Over the last decade, the SEC has collected approximately $20 billion in such fees.
02:08These costs are ultimately borne by investors and market participants and, as such, are simply
02:13another form of taxation.
02:15As Congress considers future funding levels, we must sway the benefits of prudent regulations
02:20against the economic burden that's imposed on the American public.
02:24Every dollar Congress takes from investors to operate the SEC is a dollar not invested
02:27in a new product or not returned to retirees in the form of pension income.
02:33Critically, I want to explore the SEC's evolving role in digital assets.
02:37Under the previous administration, the Commission imposed a regime of regulation by enforcement.
02:42And, frankly, that chilled U.S. innovation and drove it overseas.
02:47Chairman Atkins, I commend your leadership in providing regulatory clarity for digital assets,
02:51and I look forward to working together with you as matters proceed.
02:56Congress today and in days to come, I hope, will be advancing my stablecoin legislation.
03:01We're undertaking careful consideration and much-needed action on digital asset market structure
03:06soon to come.
03:07As a steward of taxpayer dollars and as the vanguard of maintaining market integrity, it's incumbent
03:13upon the SEC to ensure that the regulatory environment supports growth, investment, and
03:17financial resilience.
03:18I want to thank you again, Chairman Atkins, for testifying today.
03:21I look forward to discussing your approaches to these objectives and my questions.
03:25I now want to turn to my colleague, the Ranking Member, Senator Reid, for his opening statement.
03:29Senator Reid.
03:30Thank you very much, Mr. Chairman, and welcome, Chairman Atkins.
03:33It was a pleasure sitting down with you yesterday and discussing.
03:37Thank you so much.
03:38And I look forward to hearing about the SEC's fiscal year 2026 budget request, which we
03:44received Friday afternoon.
03:46Since the Great Depression, the SEC has worked to make the financial markets more transparent,
03:51fair, and efficient for investors.
03:53It has also worked to promote capital formation so that businesses can grow and contribute to
03:59our nation's economic success.
04:01The SEC meets its mandate by making sure that public companies are truthful and honest in
04:07their disclosures, by making sure that investors are not defrauded by their stockbroker or their
04:12financial advisor, and by making sure that when fraud does happen, investors get their money
04:19back.
04:20Unfortunately, the Trump administration has placed, in my view, at risk the SEC's ability
04:25to do all of these things.
04:27In some ways, this harkens back to the 2000s, when an underfunded SEC eager-to-please industry
04:35utterly failed to detect and address the Enron debacle, Bernie Madoff's fraud, and ultimately
04:41the Wall Street collapse and the Great Recession.
04:45Today our financial markets are even more complex than ever, and the Trump administration's chaotic
04:51economic policies has roiled the markets for investors.
04:55The resulting volatility opens up fresh avenues for insider trading and for market manipulation,
05:00and it creates a perception among the American people that the market is rigged.
05:05Throughout the government, there appears to be special rules for those with close political
05:09and financial ties to the President.
05:12As an independent agency, the SEC should be acting independently.
05:17However, it has dismissed pending cases against individuals and companies that do business
05:23with the President and that have been major political donors.
05:27And I'd like to hear the rationale for these submissals.
05:31It's important, I think, to establish, again, to reaffirm the independence and the integrity
05:36of the SEC.
05:38While holding vast amounts of market-moving information, the SEC, as we discussed yesterday, has invited
05:46DOGE inside the building.
05:47It has done so at the same time there has been an open case involving DOGE's Earthwell chief,
05:53Elon Musk.
05:54In view of the potential conflict of interest, I'd like to hear what vetting the DOGE representatives
05:59received, what information they can access, what restrictions are placed in their activities,
06:05what conflicts they may have, and what influence they have over commission and staff actions.
06:09Finally, the SEC appears willing to approve new financial products that could have significant
06:15risks for investors in the broader economy.
06:17For example, the SEC has just approved new products that package opaque, illiquid, and complex
06:23loans into securities that are supposed to be highly liquid and safe enough for retail investors.
06:29I'd like to hear how investors will be able to get their money out when the loans backing
06:34these products perhaps go south.
06:37In this environment, the SEC should be building its strength and expertise, but over four months
06:42it appears to be disarming itself.
06:44The agency has cut its headcount by at least 15 percent, including some of its most experienced
06:50employees.
06:51I'd like to get your impressions of what this rapid brain drain is impacting the SEC.
07:01And again, the bottom line here is, does the budget request provide the sufficient resources
07:07the SEC needs to carry out its critical responsibilities?
07:11Again, thank you, and I look forward to the testimony.
07:17Chairman Atkins.
07:18Well, thank you, Chairman Haggerty and Ranking Member Reed and members of the subcommittee.
07:24Thank you for inviting me to testify today.
07:26This testimony reflects my individual views as Chairman of the Commission and does not necessarily
07:32reflect the views of the Commission or my fellow Commissioners.
07:36I'm grateful for the opportunity to discuss the SEC, including our important mission on
07:40behalf of our fellow citizens, investors, and taxpayers, and to speak to some of my priorities
07:46as Chairman.
07:48First and foremost, it is a new day at the SEC.
07:51I am determined that we return to our core mission that Congress set out for us more
07:56than 90 years ago.
07:58The SEC's three-part mission was enunciated by Congress in the Exchange Act.
08:03That's first, investor protection, which is vital to our mission, holding accountable
08:08those who lie, cheat, and steal.
08:10Second, capital formation is at the root of what we do.
08:14Fostering a direct economical route for investors' capital to find its way to entrepreneurs and
08:20industry to create products and services that the market needs.
08:26The third core part of our mission is maintaining fair, orderly, and efficient markets.
08:32Congress calls on the Commission to ensure that our regulations balance costs and benefits,
08:38that they do not become too burdensome by adding needless friction to the marketplace, undermining
08:43the capital formation that yields so much benefit.
08:47On the 30th of May, I submitted to Congress the agency's fiscal year 2026 budget request.
08:53I'm pleased to support President Trump's request of $2.149 billion for the SEC operations.
09:00This request reflects the focus on returning to the core mission that Congress set for the
09:05agency, as well as resource needs for the crypto task force.
09:09This budget level is flat as compared to both fiscal year 25 and 24 enacted funding levels.
09:18My time in public service and the private sector has allowed me to see firsthand how regulations
09:23affect markets and investors.
09:26They can stoke innovation, facilitate investment goals, and create opportunities or burdens on
09:32businesses' ability to compete and serve their customers.
09:36How we implement regulations at the SEC is crucial.
09:39It's one thing to write a regulation, quite another for it to achieve its intended goal.
09:45Regulations should be smart, effective, and appropriately tailored within the confines of our statutory
09:51authority.
09:52A key priority of my chairmanship will be to develop a rational regulatory framework for crypto
09:57assets and the crypto markets that establishes clear rules of the road for the issuance, custody,
10:05and trading of crypto assets while continuing to discourage bad actors from violating the law.
10:12Clear rules of the road are necessary for investor protection against fraud.
10:17Policymaking will be done through notice-and-comment rulemaking, not through regulation by enforcement.
10:23The Commission will utilize its existing authorities to set fit-for-purpose standards for market participants.
10:30The Commission's enforcement approach will return to Congress's original intent, which is to
10:35police the violations of these established obligations, particularly as they relate to fraud
10:41and manipulation.
10:42The SEC is returning rulemaking to regular order.
10:45Our comment periods will not be artificially short, and the public will have ample time to provide feedback.
10:51The SEC will also be sure to take into consideration how rules overlap and how regulatory burdens build in keeping with our obligation to consider their costs and benefits.
11:02There will be targeted, common-sense reorganizations to come at the SEC.
11:07To start, I'm seeking approval from Congress that this ban, what is known as FinHub, innovation should be ingrained into the culture of the SEC-wide and not limited to a relatively small office.
11:24We've begun a process to review our technology infrastructure and our contractual obligations in that regard.
11:31And so, to close, we will work with our colleagues in the administration, especially other financial services and regulators, and with you all here in Congress, to bolster the economy and build on U.S. leadership of global markets.
11:44This SEC will make every effort to ensure that the U.S. is the best and most secure place in the world to invest and to do business.
11:53So, thank you all very much.
11:54Thank you for your testimony, Mr. Chairman.
11:59Before we turn to questions, I'm going to recess this committee for about 10 minutes so we can go to the Senate floor and vote.
12:07When we return, we'll resume with questions for our witness.
12:17Chairman Atkins, under the previous administration, the SEC engaged in a regulation-by-enforcement approach.
12:23That chilled U.S. innovation in digital assets.
12:26It took away our leadership position in the digital assets arena and, frankly, drove digital asset innovation overseas.
12:34Now, thanks to your leadership and that of Acting Chairman Ueda, the SEC has taken important steps toward providing regulatory clarity for digital assets.
12:42Likewise, Congress is taking action right now by advancing my stablecoin bill, the Genius Act.
12:48And by undertaking that legislation, we're going to open the door to undertake even further legislation on market structure.
12:54Chairman Atkins, if you could just take a moment and explain why swiftly providing rules for the road for digital assets is important to America.
13:03Well, thank you, Chairman.
13:04Yes, it's, I think, vitally important because innovation doesn't, cannot occur in a vacuum.
13:14Innovation and new products, you know, depend on certainty.
13:19And the more certain the rules of the road are, the better then people can go and get legal opinions in order to do things and make investments so that they're sure of what they're investing in and that the rules will change down the road.
13:36So, unfortunately, you know, because we have, for now, you know, almost a decade, you know, lack of certainty in this area, I think that has chilled the investment climate, at least in the digital asset space.
13:52Yeah, I certainly agree.
13:53And I sadly have seen innovators leaving America telling me they're going to start their next business in another country, this type of thing, simply because they lack the clarity that you're describing.
14:03So, I think it's much needed.
14:05I'd like to turn our conversation now, though, to another area that I think is something that has an issue here in America that's gone on far too long.
14:13That has to do with the dominant proxy advisory firms.
14:16That's ISS and Glass-Lewis, to be specific.
14:19And they've been able to operate here in the United States with very little regulatory oversight.
14:23The firms have exploited their duopoly, and they've used it as a means to basically hijack corporate governance.
14:31And what they're doing is they're pushing costly and destructive partisan agendas through as they provide their recommendations.
14:39Think about it.
14:40U.S. public companies and their retail investors pay the price as shareholder returns take the backseat to, quote, woke partisan agendas.
14:49These agendas are advocated by the so-called proxy advisors and the recommendations that they put forward for their clients.
14:55The firm's perverse influence on capital markets is only made more concerning by the fact that they're both foreign-owned.
15:01ISS is 80 percent owned by a German entity that openly claims to, quote, allocate capital to sustainable initiatives.
15:09While Glass-Lewis is owned by a Canadian private equity firm, which has stated that ESG remains a, quote, key factor in investment decision making.
15:19Chairman Clayton attempted to address the problem by amending the proxy rules definition of solicitation to include proxy voting advice.
15:27His rulemaking imposed a baseline level of transparency and accountability on these firms.
15:32However, Chairman Gensler arbitrarily and capriciously reversed key parts of Clayton's 2020 rule.
15:38This allowed ISS and Glass-Lewis to continue their shakedown of American companies.
15:42Chairman Atkins, broadly speaking, do you have concerns about the activities of these proxy advisory firms?
15:48And I'm curious what measures the SEC might have taken thus far to address those concerns?
15:55Well, thank you, Mr. Chairman.
15:57I do have concerns about gamesmanship and abuse of the corporate governance process and the back and forth that's gone on over the last few years.
16:10So I want to be sure that we are able to address that and look into it.
16:16And that's going to be part of our program going forward.
16:19Good. I'm glad to hear it's a priority.
16:21ISS previously sued the SEC over Clayton's 2020 rulemaking.
16:25Under Gensler, the Commission dropped its defense of that rule.
16:28If the SEC were to resume its defense of the rule and do so successfully,
16:31the reasonable regulatory requirements imposed under Chairman Clayton would be restored.
16:36I urge the Commission to consider defending Clayton's rule and to explore every possible avenue,
16:40to rein in the proxy advisors, and shield the competitiveness of our U.S. capital markets.
16:45Now I'd like to turn to CSDD, another favorite.
16:49The European Union has adopted the Corporate Sustainability Due Diligence Directive, also known as CSDDD,
16:55to impose extraterritorial regulation on U.S. companies.
16:59Motivated by ESG and other progressive policy goals and arguably a desire to use regulators to kneecap more successful jurisdictions like ours,
17:08the rule imposes significant compliance burdens that will hamstring U.S. competitiveness.
17:13The EU's economic growth is evaporating thanks to the massively increased regulatory burdens that it has imposed on itself.
17:20Rather than reform its own failed regulatory state, the EU would prefer to undermine our economy by imposing growth-killing rules on U.S. businesses.
17:29Beyond its massive compliance costs, the CSDDD is an affront to U.S. sovereignty.
17:34Major policies impacting our businesses ought to be debated and decided by U.S. lawmakers, not faceless bureaucrats in foreign capitals.
17:42In recent weeks, even President Macron and Chancellor Merce have acknowledged that this extraterritorial regulation should be repealed.
17:49Chairman Atkins, I'd just like to know whether you're concerned about the extraterritorial regulation that's going on,
17:54and if so, if you could describe the harmful effects that we'll have on U.S. companies that are ensnared by the EU's rule.
18:02Well, thanks, Chairman. Yes, I do.
18:05I am very concerned about the extraterritorial effect of these rules,
18:12and particularly to small businesses in the supply chain, vendor chain, to multinational companies,
18:22because by the terms of some of these directives, you know, some of these requirements,
18:29especially third-party rights of litigation and action is, you know, is very threatening to manufacturers and other suppliers here in the United States.
18:44So I will definitely, you know, take steps, you know, with our counterparts abroad to make them understand how concerned we are
18:53and to, you know, to push back on those effects on the United States company.
18:58I appreciate you making that a priority.
19:00On the executive branch side, I think you can make a great deal of progress.
19:02On the legislative branch side, I've introduced the Protect Act, which is reciprocal
19:06and it would push back on this sort of extraterritorial jurisdiction as well.
19:09So thank you for making that a priority.
19:11I'll turn now to Ranking Member Reid.
19:13Well, thank you very much, Mr. Chairman, and thank you, Chairman Atkins.
19:17As we've proceeded, there have been a significant number of complaints
19:27of cases, or several at least, that have been dismissed by the SEC
19:32and the individuals have associations with the President or his family.
19:38And it raises the question, the public, you know, is there some connection
19:42between their political connections and their legal standing?
19:46The most probably notable of these is Mr. Justin Sun, who was sued by the SEC for fraud.
19:56Mr. Sun is the biggest investor in Trump's meme coin, funding at least $40 million to the Trump family.
20:03He invested $75 million in Trump's other crypto project called World Liberty Financial.
20:09He's affiliate with crypto exchange HTX, which was the first to list Trump's stable coin, USD1.
20:18He created the Tron blockchain, and according to a crypto research firm,
20:23the overwhelming majority of Hamas cryptocurrencies seized by Israeli authorities
20:28has been tethered on the Tron network.
20:31In addition, Mr. Sun was reportedly under investigation by the Department of Justice for Financial Crimes.
20:38And yet his case was dropped.
20:41What was the rationale for dropping the case against Mr. Sun?
20:47Well, thank you, Senator.
20:50So that I, you know, I believe that case was dropped before I got to the SEC,
20:59or if not, I didn't participate in it.
21:02But, so I can't speak to the specifics of that case.
21:07But, you know, the, as far as, you know, a lot of these cases that were brought by the SEC,
21:17as we are looking again at the rules and looking to, you know, bring some order to the crypto markets and the rules that govern those,
21:34we're trying to square, you know, our enforcement stance with, you know, what's, what our stance is with respect to those assets.
21:42Well, I think you appreciate the, at least the impression that is generated here.
21:47I'm doing a quick calculation.
21:50Over a hundred million dollars was given to the President directly and indirectly.
21:55And suddenly a case that was brought, I'm sure not furiously, but with evidence, et cetera, was suddenly dropped.
22:02How would you reassure the American people that there will be no political interference in the operation of the SEC?
22:11Well, Senator, I've been, this is now my third time at the SEC, so I've been in and around the agency for 30-some years.
22:20And so I, and going, you know, working with many chairmen and commissions over the years, I can tell you that, you know, the commission addresses issues forthright and that without fear or favor and under both parties.
22:39And so I'm proud of the record of the SEC and assure you that, you know, we will continue to do that while I'm chairman.
22:46We had an opportunity, I guess, and again, thank you for coming by.
22:50It was a great opportunity to talk about some of these issues.
22:54One is the presence of those within the SEC and also the staffing cuts that have been initiated across the government, but also at SEC.
23:05So starting with the staffing cuts, how many staff have left the Division of Corporate Finance?
23:12Is this, do you have those numbers?
23:16I, perhaps, but I can, what I can tell you is that overall, 15% of the staffing of the agency have left voluntarily.
23:27So they took voluntary retirement by these things.
23:31So 11%.
23:33So Corp Fin is a bit below the average of 15%.
23:39Right.
23:40So, again, this is the Division of SEC that looks at filings for companies, IPOs, et cetera.
23:49It's a loss of, I presume, since they left in retirement.
23:52These are senior personnel, probably some of the most experienced members.
23:56Can we assure the public and the corporate community that they'll still be efficient, effective, and timely review?
24:05Well, yes, Senator.
24:06So, again, I've been in and around the SEC now for 30 years, and I have to say I'm very proud of the staff.
24:13I think they're very competent, and I think there's a deep well of competency there.
24:18And so the good thing, I mean, one thing that comes of retirements is that it allows junior people to, you know, who are competent to move up the ranks.
24:29So I think that circulation is good.
24:31I miss the former folks who have left, but they took that voluntarily as far as the retirement goes.
24:40Well, my time's expired, so let me yield back to the Chairman.
24:44Thank you, Ranking Member Reed.
24:46I'll now turn to Senator Coons.
24:47Thank you, Chairman Hagerty and Ranking Member Reed, and to Chair Atkins.
24:51Thank you for being here and for your service.
24:54I appreciated finally receiving more details on the President's budget request, and I hope more broadly this is not the new normal for this administration.
25:03We need timely cooperation in order to draft our appropriations bills.
25:07I appreciate your appearance here today and the directness and clarity of your presentation.
25:13I'm taking a look at your proposed budget.
25:15It does include some cuts, particularly of concern to me as the Enforcement Division.
25:20And as you were just discussing with Ranking Member Reed, the number of career officials who've taken buyouts or have been pushed to retire.
25:28How many people have left the Enforcement Division over the last six months?
25:33Well, so there's been a, nationally for enforcement, 15% decrease, so it's right at the average for the agency overall.
25:45And again, you know, we have a deep well of experience, and not just here in Washington, but throughout the regions.
25:55And so we're very competent people, and as we look at, you know, going forward, our request is stable as to, you know, previous years.
26:06And so, you know, where there are gaps, we'll fill them in.
26:09And, you know, I have confidence that we'll be able to do the job that we need to do with what we have.
26:18President Trump signed an executive order that paused all future investigations and enforcement actions under the Foreign Correct Practices Act for at least nine months, if I'm not mistaken.
26:29No, for 180 days, forgive me.
26:31I recognize this applies to the DOJ, but the SEC also plays a critical role in helping implement FCPA.
26:38You're authorized to share information obtained with the DOJ if they uncover potential criminal activity.
26:44I'm troubled that the President in this action seems to be deciding which laws will be enforced and which laws will have their enforcement suspended.
26:53Is the SEC under your leadership still prioritizing enforcement of the FCPA, and has the SEC offered any evidence to the DOJ that's been rejected due to that executive order?
27:06Well, I can't speak to any particular, you know, investigation or activity.
27:12I understand you can't speak to any particular investigation, but you certainly can report on whether or not that executive order has resulted in the SEC stopping all investigation or enforcement of the SCPA.
27:23Well, many of these cases involve many different aspects of the securities laws, so just that one section.
27:30Familiar with me.
27:31And so, to my knowledge, you know, nothing has been directly affected, but, you know, I'm happy to get back to you on that.
27:41I'd appreciate it.
27:42Earlier you said the core mission of the agency you now lead is to protect investors against those who would lie, cheat, or steal, which I would agree with you is in some ways really the core mission.
27:53The FCPA, although some have decried it as putting American business at a competitive disadvantage, I think actually puts us at a competitive advantage.
28:01Because foreign governments, foreign companies know that they can count on American business to secure its business advantage around the world fair and square, not through underhanded ways or not through bribery.
28:13So, I certainly would appreciate your following up with me on what you see as the enforcement trajectory for the FCPA.
28:21Last, cryptocurrency is a very pressing issue, an issue you have a lot of experience with.
28:27And I come at this topic through the lens, of course, of my home state, which has long been an established financial services and banking center.
28:35You've endorsed allowing crypto exchanges to handle both traditional securities and crypto in one entity.
28:42If exchanges like Coinbase that are crypto exchanges are permitted to offer their services as well as more traditional things, stocks and bonds, how do you ensure they're held to the same rigorous standards as more traditional banks and investment firms?
28:59Well, so that's part of our task now to try to come up with regulations that make sense for the industry and that allow for innovation.
29:10And so, our task force, you know, is holding roundtables and we'll come out with a report here in the next couple months.
29:19And we'll come up with proposed rules of the road to, you know, and take comments, you know, in that regard.
29:30And then go ahead and go to, you know, go through with a rulemaking process.
29:35Well, as you go through that process, I just urge you to hold to that core understanding of the role of the SEC to protect crypto investors from being harmed by fraud and market manipulation.
29:46The traditional financial services industry is subject to comprehensive regulation.
29:52And I think there's an understandable anxiety on their part about facing a direct competition from a financial sector that is lightly regulated or not at all.
30:01And while I recognize the value of innovation and of making sure that the United States remains on the cutting edge of innovation and financial services, I think that also has to be balanced with protecting investors and thus retaining the confidence that global investors have in the credibility of the American capital markets.
30:18And you have a unique role. I think your background and experience will be relevant. I very much look forward to staying in touch on this because I think this crypto task force you put together is going to be critical.
30:29Last question. Do you believe the SEC needs any new statutory authorities to regulate crypto and carry out the recommendations of the task force?
30:37Well, thank you for that. It would be great to be undergirded by statute.
30:44But in the meantime, I think we have enough authority to under the under the securities laws to be able to come out with regulations in this regard.
30:57But it's always best to have that that firm foundation.
31:01Agreed. Thank you, Mr. Chairman. Thank you, Mr. Chairman.
31:03Thank you, Senator Coons.
31:05Chairman Atkins, we're awaiting Senator Van Hollen's arrival.
31:08This gives me an opportunity to ask you another question and that broadly addresses what I think you and I have discussed before.
31:15My viewpoint that our capital markets remain one of the greatest sources of competitive advantage for the United States of America.
31:22And in my view, staying on the cutting edge of innovation in the capital markets is going to be a critical aspect of that competitiveness.
31:29I mentioned earlier in our discussion the fact that I'm introducing stablecoin legislation, the Genius Act, to begin to move us down that road,
31:38to create rules of the road for digital currency that would essentially take the United States into a modern-day payment system.
31:45It's got many benefits, particularly among those extending the position of the dollar as the world's reserve currency, stimulating demand for U.S. Treasuries,
31:54and providing critical protection for U.S. consumers.
31:59I would very much be interested in your thoughts as to how we look at providing the statutory underpinning that you just described.
32:08And if you had a chance to look at the stablecoin legislation that I proposed, whether that gets you moving in the right direction.
32:14Well, thank you.
32:17I salute you for advancing that bill and having it considered by the Senate.
32:24I think that one of the primary use cases for digital assets is stablecoin and for payments and the rapidity of the transactions that are able to be done through that.
32:43And so I think that to have a bill such as yours that would provide for those both protections and to set forth that foundation, I think, is really important.
32:56We have strong bipartisan support. I look forward to working with you and your team to advance this area.
33:01Now I'll turn to Senator Van Hollen.
33:03Thank you, Mr. Chairman.
33:06Mr. Chairman, good to see you again.
33:08At your confirmation hearing, you and I discussed the issue of the public company accounting oversight board, the PCOB,
33:17which was formed, as you know, after some major companies like Enron failed after cooking their books and none of their auditors stopped in to correct the issues.
33:31And Enron's failure alone cost its shareholders about $67 billion.
33:37So Congress created the PCOB in effect to audit the auditors and make sure they stop fraud at companies they audit before we have catastrophic failures like we witnessed in the Enron case.
33:50When you and I talked about this before in the banking and housing committee, you agreed that the function played by the PCOB was essential.
34:01Is that still the case?
34:02Yes, sir.
34:03So one of the reasons I raised it then was I was concerned about efforts to fold the PCOB into the SEC because of concerns that it would lose its punch and its ability to do the job.
34:21The House reconciliation bill, as you know, does fold the PCOB into the SEC.
34:28I think that it will be it will it will fail under the Byrd rule.
34:32But I want to talk for a moment about the merits of of that proposal, because my understanding from the SEC itself is that at least as of last month,
34:45the SEC does not have the personnel with the experience conducting those in-depth examinations or inspections of registered public accounting firms.
34:56That's based on information from the Office of the Chief Accountant.
35:00Do you have any reason to think otherwise?
35:03No, because we don't have that function.
35:07But but if we get the if it's folded into the SEC and we get the funding, we could take over that function using the examiners, I would imagine, from the PCOB and not miss a beat.
35:21Well, I want to I want to press you a little bit on that, Mr. Chairman.
35:24How many of the 600 PCOB employees do you is the SEC plan to hire to keep this important function going?
35:34Well, I think we haven't done any study on that yet. So but so I think you say very easily that you could absorb them.
35:43That obviously requires additional funding, does it not?
35:48Exactly. And the way I understand it, that funding is is contemplated by the by the.
35:55Well, so it's interesting you say that because the PCOB right now is funded by a firm, a fee on the firms overseas, right?
36:04Well, and also on public companies, there is a basic wealth tax on companies.
36:09But it's a fee. It's a fee generated revenue.
36:13Right. That the SEC approves. And yes.
36:17But the reconciliation bill, Mr. Chairman, eliminates that authority.
36:21It eliminates the authority of the PCOB. I mean, it eliminates the PCOB.
36:26It folds it in the SEC. It does not include the authority to raise the the red, you know, have fee based revenue.
36:36Were you aware of that?
36:38Yes. But I what I understand is that there is contemplated funding for that and built into our budget.
36:47We do have since it's an even budget from last year, when you account for people who have left voluntarily from SEC,
36:55we have about one hundred million dollars or so that could help tighten it over.
36:59Right. Are you aware of what the current PCOB budget is?
37:04That's perhaps four hundred. I don't.
37:07Yeah. No, you got it. You got it right. It's four hundred million.
37:09You've got one hundred million in your budget. That's a three hundred million dollar gap.
37:14If you want to maintain, in my view, the same functionality, which is something that I think all of us should be very interested in,
37:23not just with respect to U.S. companies.
37:25But as you and I discussed, Senator Kennedy and I passed legislation to make sure that companies based in China that are publicly listed on U.S. exchanges are subject to this audit procedure.
37:39I assume you think that's a good thing that they're subject to that.
37:44Well, I think the functions of PCOB are vital, as we spoke of before.
37:49And, you know, should that be folded into us, we'll be back to you all to, you know, for the proper resources to carry it forward.
37:58So we won't miss a beat on that.
38:00I'm just saying, Mr. Chairman, it's pretty clear that the resources are not there in this budget if it gets folded in.
38:06I mean, as you pointed out, you've got a hundred million extras.
38:09We're both pointing out the current budget is four hundred million.
38:13So unless you really think you can buy or get rid of a lot of people and still do the job, we have an issue here.
38:23But in my view, when something is not broken, we shouldn't try to come up with a different fix.
38:34If there are reforms to the PCOB that you recommend, maybe that would be a better route to take if we want to make sure that they continue to have the capacity to oversee, you know, companies in China and elsewhere.
38:46I would also just point out in closing, Mr. Chairman, that a number of other countries have raised concerns about this contemplated change in the House.
38:56Because their agreements, their audit agreements, are with the PCOB, and they point out that it is not a U.S. government entity, right?
39:05It's a separate, independent entity.
39:07And as soon as that role is taken over by a more of a government entity, all those agreements will need to be renegotiated, if they're willing to renegotiate them.
39:19So thank you, Mr. Chairman.
39:21I hope we can continue to pursue this issue because I think that what the House did is essentially breaking a system that is actually working quite well right now.
39:35Thank you for raising that, Senator Van Hollen.
39:37And, Chair Atkins, I want to thank you for your testimony today.
39:41The record will remain open for one week, and members will be able to submit questions for the record during that time until June the 10th.
39:49So now this meeting is adjourned.
39:53Thank you, Mr. Chairman.