Rewriting the Rules: The SEC & CFTC on Crypto, IPOs & the Future of American Markets

**Jason** (0:00)
All right, everybody. Welcome to the All-In interview program. Today, we are delighted to have two of the most important individuals shaping capital markets over the next couple of years. SEC Chair Paul Atkins is with us as well as CFTC Chair Michael Selig. Welcome to the All-In interview show, gentlemen. Glad to be here.
Also with me, my bestie, Chamath Palihapitiya, who is known to participate in capital markets. I think there's a great structure here for us to talk, many opportunities, and then guardrails and things that we should be concerned about in such a dynamic time. Chairman Atkins, this is your third tour of duty since the 90s. Things have changed dramatically. So maybe just to start us off here, and I know Chamath's got a lot of great questions ready to go. So I'm just curious, in your time, let's say the last 40 years or so, what have you noted here about capital markets and how they've changed, and what's important for us looking forward?

**Paul Atkins** (1:03)
Well, thanks. It's great to be here and see both of you all today. Well, so I started out as a young lawyer in New York City doing corporation finance work, you know, new offerings and that sort of thing in the mid 80s.
And there, you know, to be a start-up company and to build your products and do R&D and all that, you had to go public in order to, so Apple and Microsoft, Advanced Micro Devices, all of those companies started off as, you know, IPOs. And so, Andreessen Horowitz has a really, I think, a really good bar chart where they compare the companies of the early and mid to late 80s to today, where, I mean, it just basically demonstrates through the ROI that insiders versus the buyers of the public stock, you know, enjoyed from those early companies, the insiders being, you know, there's not much private equity or venture capital back then, but the insiders, meaning the officers, directors, and whatnot, they had a relatively thin slice of the entire pie. I mean, everyone made out well, obviously, but the public purchasers in the IPO, you know, made out very well over the years and had the lion's share of that. You look at today, the current situation where, you know, we have robust private capital markets and we have fully today half the number of public companies as we had 30 years ago, and it's completely reversed. The return on investment is, you know, mainly to the insiders, private equity, venture capital, and the corporate officers and employees versus the public because they're mature companies when they actually go public. So that's a huge change. The private markets are very robust and strong. But anyway, but the American capital markets are very healthy, I think.

**Chamath Palihapitiya** (3:04)
When you look at that back then, there was a real requirement for everybody to do an enormous amount of work because, to your point, these companies were quite young. You'd be a four or five-year-old company and you'd go public because the going public was not about monetizing anything. It was actually a fundraising moment. It was like a Series C or a Series D. I guess the answer is, the reason it changed was probably because, to your point, there's all these returns. Investors said, well, let's go capture these in the private markets for us and our LPs. But what it also does is then change the nature of how these markets behave. Can you just comment on the amount of time companies are staying private, the dearth of the IPO because it has become a liquidity-defining moment, and is much more so than the financing moment, and whether things should change, and if so, how do you want to change that and why?

**Paul Atkins** (4:01)
Yeah. Well, it's a free market, obviously. So, you know, investors, we should allow the market to develop as it will, but you're exactly right. So now it's more of a liquidity event for insiders.
And so what we are seeing now is in the private markets, you know, there's a lot of capital that's where people are willing to deploy it to companies at early stages and then to stay on. But at the same time, there is, there are inhibitions for private companies to go public. And one of them is the cost of our rules to comply with our rules and the disclosure ones, especially where you have all the annual report requirements, proxy statements and all of that. And so, and the quarterly reporting and so forth. So that is one big inhibition where things are not necessarily focused on materiality anymore.

**Chamath Palihapitiya** (4:57)