WHEN: Today, Tuesday, January 14, 2025
WHERE: CNBC’s “Squawk Box”
Following is the unofficial transcript of a CNBC interview with SEC Chair Gary Gensler on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Tuesday, January 14 for his exit interview. Following is a link to video on CNBC.com: https://www.cnbc.com/video/2025/01/14/watch-cnbcs-full-interview-with-sec-chair-gary-gensler.html.
All references must be sourced to CNBC.
ANDREW ROSS SORKIN: Let’s talk with Gary Gensler on his exit interview. The SEC leadership still making headlines with just four days left before President-elect Donald Trump taking office. The current SEC Chair Gary Gensler stepping down yesterday to Robinhood broker dealers agreed to pay $45 million to settle SEC charges that they violated more than 10 security law provisions related to brokerage operations. We’re going to talk about that and so much more. Joining us right now is SEC Chair Gary Gensler in his exit interview. Gary, thank you so much for joining us and thank you for talking with us throughout your time in office. There’s about a hundred questions that I have on my list, but I want to start with one that I think actually may be in a way the hardest and I think it’s a political question but it’s also a philosophical question, which is, when you look back at the work that you did over the last four years and you also look at this election, specifically this election and you look at the number of folks in the crypto world who ultimately turned out, not just turned out for President-elect Trump, but turned out for President-elect Trump with money, with dollars, the huge amount of money that went into effectively his campaign as to some degree a rebuke of what was happening with your efforts to block some of the things that they were doing. I’m so curious how you personally think about that today.
GARY GENSLER: First, Andrew, Joe, Becky, so good to be with you and thank you for inviting me. Look, I think, I believe deeply in our great democracy. I think this election, though as you point out there was money raised from the crypto field, I don’t think that’s what this election was about. This field, the crypto field, a highly speculative field, has not been compliant with various laws, whether it’s any money laundering laws, sanctions laws, or in our case, securities laws. Now, Bitcoin’s not a security, but these 10,000 or 15,000 other tokens, the investing public has been hurt over the many years. My predecessor, Jay Clayton, who’s going to serve again in the Trump administration, but Jay Clayton had brought about 80 cases. We’re a law enforcement agency. That’s what we’ve continued to do to protect the investing public so they get disclosure, to protect against fraud, manipulation, and there’s just been too much of that in this field. And then, of course, to address conflicts when you had these crypto exchanges not only operating as exchanges, but also trading against their customers and on and on.
SORKIN: Gary, I think the question, though, is, you know, some critics have said that the SEC has pursued a policy that has been focused more on litigation, if you will, or rules by way of litigation than actual law, that perhaps there should have been a greater effort put on creating real laws, not just guidelines, which then created this litigation. I’m looking, by the way, at even what just took place in the last, what, 48 hours from this court as it relates to the Coinbase case, where they’re asking the SEC now, your — effectively you, to, quote, “explain yourself” as it relates to some of the things that are being done. And by the way, the judge in the case said to the SEC, quote, “It should not give yet another poor explanation in an already long line of them.” And so I know it’s a hard question, but I put it to you because I think that the public is trying to understand the way you’ve thought about it thus far.
GENSLER: Look, I thought about it that we have laws. Congress has passed those laws. Of course, they can change that. But a sector of this field, crypto, the investing public is investing based on projects and these things without prejudging any one of them, many of them are under the securities laws. And in that field, there’s a lot of noncompliance. Look, Andrew, in most of what you talk about on any given day, you talk about the fundamentals of a stock or a bond or the markets, the valuations of mixed fundamentals and momentum or sentiment. And this crypto field seems to trade mostly on sentiment and much less on fundamentals. But if the fundamentals are there, and I say if, then make the proper disclosures under the securities laws. That’s the basic bargain.
JOE KERNEN: I was glad to have you coming on today, Chair Gensler, and I was thinking of just an overriding question about Bitcoin and what we’ve seen for the past four years under your tenure. And I can only come up really with two scenarios, and neither one of them are great. The first one is that under your leadership, it was, you know, really dragged kicking and screaming into where we are today. And it’s a far cry from four years ago. You’d have to admit it, you know, with ETFs and adoption by so many different firms. It’s almost like there were so many obstacles put up for it made it very hard for what could be a transformative new asset or industry. So that’s on the one hand that you did, or on the other hand, it should have been very closely scrutinized. And at $95,000, if this is — is ephemeral and built on air and a beanie baby, there’s going to be an absolute bloodbath. So either you stood in the way of a totally new industry, or you were unable to prevent a huge bubble from forming, which is going to end very badly, and neither one is going to be much of a of a legacy to look back on.
GENSLER: Joe, I know from our conversations in the past, you view Bitcoin very differently than these 10,000 or 15,000 other tokens.
KERNEN: But if the — it was hard for Bitcoin under you, though, under your regime, it’s very difficult for anything good to happen for Bitcoin.
GENSLER: Joe, within the first few months in the job, we had Bitcoin exchange traded funds based on futures.
KERNEN: After a lawsuit.
GENSLER: But also, you recall when I was coming into this role, the whole GameStop events. And that market is so much more critical to you and the American public than crypto, the $60 trillion equity markets. And we have put in fundamental reforms, not only shortening the settlement cycle where you can get your money in one day rather than two day if you’re an everyday investor, but that actually the markets will be more efficient. We addressed ourselves to the second most important market, I would say, the U.S. Treasury market that had had jitters for so long, a $28 trillion market and fundamental, important reforms. We addressed ourselves to corporate governance that insider no longer can file a plan on a Monday the same time they have insider information and sell their stock on a Tuesday. They’ll now have to wait three months. So I’m very proud of the record and this focus that you all have had on crypto. I understand it brings in eyeballs. It sells newspapers and so forth. But the capital markets at $120 trillion, I’m very proud of our record.
SORKIN: Gary, let me go to a different topic. We’re going to move way off of crypto. But another topic that has frankly become quite controversial, which is both climate rules, which now, you know, in litigation that you put forward. And then there were efforts early on that I think effectively either were abandoned or you tell me around ESG rules boosting board diversity, for example. There were some workforce management issues and other things. And the whole country or world seems to have shifted in some — in some way. You may not agree with the way it has shifted. But I, again, wonder how you think about this election, what you think’s happened even in this country. Obviously, almost every single day, there is another Fortune 500 company coming out with announcements that they’re abandoning DEI programs. They’re abandoning ESG programs. They’re abandoning a lot of the things that were being talked about by this administration and by the SEC as it related to rules and other things that they were trying to put forward.
GENSLER: Andrew, as a securities regulator, I’m neutral to just about all that you just said. We’re not a climate regulator and we’re not a workforce regulator. We’re a securities regulator. But when I came into the role, we had found that of the top thousand companies listed on the exchanges, a majority were making disclosures about their climate risks. And investors were telling us that they found those disclosures inconsistent but material to their investment decisions. So we grounded in materiality. We went out. We heard the public. We got tens of thousands of comments, lots of investors who wanted this information to be more consistent and just based on material information. And I’ve been consistent since my confirmation that we would ground it in just what’s material to investors. As you might recall, the back and forth. Yes, some advocates wanted more, but we’re just a securities regulator. And I believe that we rightly just addressed trying to bring consistency.
SORKIN: OK, Gary, even if we both — we could stipulate that — that it was for disclosure purposes, I’m curious just on a very personal level what now that you’re taking off and leaving the role, what you make of this reversal as it relates to ESG and DEI and some of these other things that had become almost a staple of corporate America over the last four, five, six, seven years that was developing.
GENSLER: Well, I know I’m just managing the SEC’s 5000 people. We benefit from recruiting and giving opportunities to the diverse population we have in America. Three hundred and thirty million people, regardless of gender, race or background or orientation, that helps our agency. But in terms of securities regulator, really, investors have to decide what’s relevant. We did not put forward. We at the SEC, under my leadership, didn’t put forward any disclosure rules around workforce or diversity. We did come in and do something around climate because that’s the markets were already having those disclosures. What I do think is the markets will figure out the investors will figure out whether the climate disclosure is relevant and material to their investment decisions.
BECKY QUICK: But is it material? It was material a couple of years ago and it’s not now. I don’t understand the materiality of it. And—
GENSLER: Well—
QUICK: There are some investors decide that or whether — it’s just very gray.
GENSLER: I think, Becky, you’re right that things can change. Twenty and thirty years ago, companies did not make disclosures about cyber risk. They didn’t make disclosures around climate risk. I came into the role and found many, many investors wanted and demanded that type of disclosure. And so we took those two projects up. What might be the case five or 15 years from now could shift as well. And I think our great agency is just about bringing some consistency and truthfulness that people don’t lie. Think about artificial intelligence right now. Many companies are sort of puffing themselves up and promoting that. It’s important that they not, let’s say, call it AI wash, that they’re truthful in what they say.
KERNEN: Gary, earlier, just to return, just what I understand completely what you think is going to happen or whether your thinking has evolved. It almost sounded like you wanted to separate Bitcoin from the rest of the industry. And I’m wondering whether you’re actually warming to the idea of at least Bitcoin and whether again, people are tweeting you that I said you either stood in the way of an extraordinary industry or were utterly unable to prevent a massive bubble. What do you think the future holds? Do you have a feeling on which it is? Do you think Bitcoin has inherent value and is a store of value? Or do you feel that — that when we look back on a 10, 15, 20 years from now, it’s going to be something from the 18th century with tulips or whatever?
GENSLER: Joe, it’s hard to predict. I think I really do like you because I know that you think I’m going to out you think negatively on many of these – coins, you, Joe.
KERNEN: Right.
GENSLER: But in terms of — in terms of Bitcoin, we at the SEC have never said it’s a security. I have not—
KERNEN: What do you say? It’s you taught at MIT. I think, you know, I think you’ve got to have some kind of feeling, you’ve read you’ve read the books, Bitcoin Standard.
GENSLER: Yeah. I think that Bitcoin is a highly speculative, volatile asset. But with 7 billion people around the globe, 7 billion people want to trade it just like we do have gold for 10,000 years. We have Bitcoin. It might be something else in the future as well. These other thousands of projects need to show their use case and show that they actually have fundamentals underlying them or they won’t persist, Joe.
KERNEN: Oh, my God you own Bitcoin.
GENSLER: That’s where the public that’s why the public needs disclosure.
KERNEN: You must own it now. That’s what it—
GENSLER: I don’t—
KERNEN: You loved it.
GENSLER: I’ve never owned.
KERNEN: You love — you loved it. You don’t like those other coins.
GENSLER: I’ve never owned any of these. And I’ve been consistent for seven or eight years on this.
KERNEN: Well, now you can because you won’t be a SEC chair anymore.
SORKIN: Gary, a different lane. One of the other new features of the market or a market is this idea of prediction markets. We just had the CEO of Kalshi on the broadcast yesterday. He has brought on to his business as an advisor, Donald Trump, Jr. I’m curious what you think of prediction markets. And I’m actually very curious specifically, what do you think of Kalshi’s decision to hire the son of the President-elect?
GENSLER: I have no views on who somebody hires. But capital markets themselves are great. They have $120 trillion capital markets, whether it’s stocks, whether it’s bonds, whether ultimately it’s prediction markets are about predicting future cash flows of our predicting future opportunities for businesses that you have on the air. So they’re all in sense about prediction markets. And that’s why I’m so proud of what we did. Some of the reforms we put in place is to have better disclosure. Yes. And only that which is material to investors so they can make their own judgments about the future. That’s in essence a prediction market.
SORKIN: Treasuries, settlements on treasuries, there’s been a little bit of a debate about what’s happened, obviously, this fall about what the timeline is going to look like into the future after you’re out of this office. What’s your take?
GENSLER: Well, our U.S. Treasury market is the base of our capital markets. I’m very proud of what we did working with Janet Yellen, working with Jay Powell, bipartisan reforms that we put in place to build greater resiliency, lower the risk of our U.S. Treasury market while also promoting more competition, what’s called all to all trading. So there’s forward momentum. There’s still things to be implemented over the next 18 months. But I’d note this, our $28 trillion Treasury market is predicted by the Congressional Budget Office to grow to about 35 or 36 trillion in four years. It’s going to grow 25%. And so we need these reforms to make sure the markets work smoothly and taxpayers can have the confidence their government can borrow in, you know, liquid markets that the international community trusts.
SORKIN: Gary, what do you think the biggest risk in the market is today?
GENSLER: Look, I think where we have a presidential transition and democracy has spoken, but there’s policy uncertainty. There always are around these transitions. Some of those policies will be sorted out over time, but there’s policy uncertainties for sure. I have spoken over these last four years. There’s also pockets of capital markets that have a lot of leverage, a lot of borrowing and low margin. And that’s usually in this sort of space between the commercial banks providing leverage to the macro hedge funds in what’s called the repo market. And then lastly, I do think that artificial intelligence is transformative, already has affected productivity in a positive way. But there’s still risk out there on the horizon.
SORKIN: How much do you think about the shadow banking system in terms of the loan market, which in many ways has moved away from the traditional banks, though there’s a connection to the traditional banks?
GENSLER: Look, I think capital markets are best when they’re competitive, they’re deep and lots have access. That’s what we have promoted at the SEC and the reforms we’ve done. And so the large private fund market, whether it’s private credit, private equity, venture, I think that’s been a feature, not a bug of our capital markets. And we benefit as Americans to have large, robust, non-bank provisions of capital.
SORKIN: OK, Gary, before we let you go, here’s the final question.
GENSLER: All right.
SORKIN: And I asked this with Lina Khan, and I want you to think about the answer. If you could do it again and you could do anything differently, given all of the things that we’ve just talked about, what would it be?
GENSLER: So you don’t want me to just say, come on your show more often, right?
SORKIN: We can do that. We’d love to have you back. And now you’ll be—
GENSLER: Big mistake, not coming more.
SORKIN: Now you’ll be untethered, completely.
KERNEN: Yeah, a big mistake, not coming on more.
GENSLER: Look, look, look, I would say this, Joe and Becky, Andrew and your listeners. It is a great privilege to serve. I think that we put in fundamental, important reforms on three quarters of our capital market. The stock market and the Treasury market measured 90 trillion total. We put in place key reforms on corporate governance that insiders can’t sell their stock in a day but need to wait the 90 days. But also with regard to that, they have to give back compensation that they might have for erroneous profits. I think we settled a really tough thing with China. So I’m really proud of what we did, but we’re human.
SORKIN: We’re nothing—
GENSLER: We’re not going to get them all right.
SORKIN: Gary, you’re an introspective guy. There’s got to be something on the list. You say, you know what? I would have done that. That’s the one thing in retrospect. I wish I could have gotten to something. No?
GENSLER: Look, look, I would have liked to have got these treasury market reforms and equity market reforms finalized and certainly with the courts, and this is important to your viewers, the courts are shifting dramatically and I would have definitely wanted to have been able to anticipate all the shifts in the court so that we could do things that were survived court challenge a little better.
SORKIN: Gary, I want to thank you for engaging with us over the next — over the last four years. We hope we’re going to get to engage with you a lot more unplugged, if you will, over the next four, and we look forward to seeing you again very, very soon.
GENSLER: Alright, we will.
SORKIN: Congratulations on your — on your four years in the role. We’ll see you very soon. Thank you.
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