SEC Chair Gary Gensler on Digital Assets, Proxy Firms, and EU Regulations

Regulatory Clarity for Digital Assets

• 💡 Digital assets require regulatory clarity to foster innovation, as innovation cannot occur in a vacuum.
• ⚠️ A lack of certainty in this area for nearly a decade has chilled the investment climate in the United States, driving innovators overseas.
• 🇺🇸 Congress is advancing legislation like the Genius Act to provide rules for digital assets and open the door for further market structure legislation.

Concerns with Proxy Advisory Firms

• 🎯 Proxy advisory firms like ISS and Glass Lewis operate with little oversight, exploiting their duopoly to hijack corporate governance.
• 💰 These firms push costly and destructive partisan agendas through their recommendations, impacting US public companies and retail investors.
• 🌍 Both ISS and Glass Lewis are foreign-owned, with ISS majority-owned by a German entity focused on sustainable initiatives and Glass Lewis by a Canadian firm prioritizing ESG.
• ⚖️ Chairman Gensler arbitrarily reversed key parts of a 2020 rule that imposed transparency and accountability on these firms, allowing them to continue their influence.

Extraterritorial Regulation and US Competitiveness

• 🇪🇺 The EU's Corporate Sustainability Due Diligence Directive (CSDDD) imposes extraterritorial regulation on US companies, motivated by ESG goals.
• 📉 This directive imposes significant compliance burdens that will hamstring US competitiveness, mirroring the EU's own evaporating economic growth due to increased regulatory burdens.
• 🏛️ Major policies impacting US businesses should be decided by US lawmakers, not foreign bureaucrats.
• 🇺🇸 The SEC is concerned about the extraterritorial effect of these rules, particularly on small businesses in supply chains, and will take steps to push back against these effects.
• ⚖️ Senator Hagerty has introduced the PROTECT Act as a reciprocal measure to push back against this extraterritorial jurisdiction.