>> FROM THE HEART OF WHERE INNOVATION, MONEY, AND POWER COLLIDE, THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: LIVE FROM LONDON AND SAN FRANCISCO, THIS IS BLOOMBERG TECHNOLOGY. COMING UP, ASML'S CEO ON HOW THE U.S.-CHINA RELATIONSHIP COULD SHAPE THE CHIP INDUSTRY. ED: THE FUTURE OF S.E.C. OVERSIGHT. WE WILL BE JOINED BY GARY GENSLER. CAROLINE: WE HAVE THAT AND MANY MORE EARNINGS FOR YOU. FIRST, LET'S CHECK IN ON MARKETS. THE NASDAQ IS CURRENTLY OFF BY ABOUT .10%. THAT IS THE FIRST BACK-TO-BACK LOSSES WE HAVE SEEN IN SIX WEEKS. THERE IS CAUTION ABOUT WHERE

THE GOES FROM HERE EVEN AS THE IMF WARNS OF A GLOBAL SLOWDOWN. BUT WE SEE TECH OFF A LITTLE BIT. WHAT IS RISK SENTIMENT LIKE? ED: OUR TOP STORY IS ASML. WE ARE ABOUT TO GET TO A CRITICAL INTERVIEW WITH THE CEO. THE SHARES ARE WORTH LOOKING AT. AT THE HIGH OF THE SESSION, THEY WERE UP 3%. IT IS WORTH NOTING WE ARE DOWN MORE THAN 15% SINCE THAT FATEFUL EARLY RELEASE OF EARNINGS THAT WE COVERED LAST WEEK, INTENSE FOCUS ON THIS NAME IN THE CONTEXT OF AI AND CHIP INVESTMENT. BRING US THE DETAILS. CAROLINE: THE CEO SPOKE AT THE BLOOMBERG TECH SUMMIT IN LONDON. HE DISCUSSED THE FUTURE OF THE CHIP INDUSTRY AND THE IMPACT OF U.S. REGULATION.

>> THE FOCUS OF CHINA IS ON MAINSTREAM SEMICONDUCTOR. DEMAND FOR THAT HAS BOOMED IN 2021 AND 2022. AS A RESULT, THE DEMAND WE HAD IN CHINA HAS BOOMED AS WELL, AND IT WAS THE TIME WHERE THE DEMAND WAS EXTREMELY HIGH, AND ASML WAS STRUGGLING TO DELIVER TOOLS TO EVERYONE. THEREFORE, WE COULD NOT DELIVER A LARGE PART OF DEMAND IN CHINA. BACKLOG GREW. THE REST OF THE MARKET SOFTENED. SAME IN 2024. SO THE LEVEL OF BUSINESS WE HAD WAS MORE OFF THE RESERVES IN 2022 AND 2021, AND WE HAVE ALWAYS EXPLAINED OUR QUARTER, 50% OF BUSINESS IN CHINA -- THIS WAS RESULTING FROM BASICALLY A LACK BEFORE. NORMAL BUSINESS IN CHINA IS AROUND 20%, 25%.

THAT IS NORMAL DEMAND RELATED TO SEMI CONDUCTORS. >> THERE IS SOMETHING ARTIFICIAL ABOUT THE WAY WE THINK ABOUT CHINA AS A PURCHASER OF EQUIPMENT LIKE ASML'S IN THE SENSE THAT MANY COUNTRIES AROUND THE WORLD HAVE BEEN EXERTING EXPORT CONTROLS ON THE COUNTRY. ARE THOSE CONTROLS GOING TO BECOME MORE STRINGENT? FOR EXAMPLE, CHINA IS NOT ABLE TO BUY YOUR MOST ADVANCED MACHINES. IS IT POSSIBLE THOSE RESTRICTIONS COULD EXTEND TO THE LEVEL USED FOR MORE MAINSTREAM PRODUCTS? >> IF YOU GO BACK TO THE ROOT CAUSE OR PRIME MOTIVATION OF EXPORT CONTROL, IT WAS TO PREVENT CHINA FROM HAVING ACCESS TO ADVANCED TECHNOLOGY. BY NOT HAVING IT IN CHINA, WE PRETTY MUCH STOP TO GO BEYOND. YOU MAY BE ABLE TO DO A FEW

CHIPS AND YOU MAY SEE SOME OF THAT IN THE PRESS BECAUSE THE WORLD IS WATCHING CAREFULLY, BUT FUNDAMENTALLY BY NOT HAVING EV WE HAVE PLACED CHINA -- THE REGULATIONS HAVE PLACED CHINA 10 TO 15 YEARS BEHIND WHEN IT COMES TO ADVANCED TECHNOLOGY. WE ALWAYS TALK ABOUT CHINA. WE USUALLY FORGET TO MENTION WHY THOSE RESTRICTIONS HAVE APPLIED ON CHINA. A LOT OF WORK HAS BEEN DONE WITH OTHER PLAYERS AND INDUSTRY ON THE MOST ADVANCED EV TECHNOLOGY, AS WE KNOW IT TODAY, SO THERE HAS BEEN A LOT EVERY DAY TO CONTINUE TO WIDEN THIS TECHNOLOGY GAP. >> BASED ON YOUR INTERACTION WITH THE PRIME MINISTER OF THE NETHERLANDS AND THE FOREIGN MINISTRY, IS IT YOUR EXPECTATION THAT RESTRICTIONS WILL BECOME MORE LIMITING ON

CHINA'S ABILITY TO PURCHASE MACHINERY LIKE ASML'S? >> IF YOU LOOK AT THE GEOPOLITICAL LANDSCAPE, I THINK IT IS CLEAR THE UNITED STATES WILL CONTINUE TO APPLY PRESSURE. THE QUESTION -- THE DISCUSSION WE HAVE IS THE EUROPEAN POLITICAL LEADER -- AT THE END OF THE DAY WE ARE A EUROPEAN TECHNOLOGY COMPANY, SO THESE ARE THE PEOPLE WE HAVE THESE DISCUSSIONS WITH. THE QUESTION IS, WHAT IS RIGHT FOR THE NETHERLANDS AND EUROPE? SO WHAT RESTRICTIONS MAKE SENSE WHEN IT COMES TO NATIONAL SECURITY AND WHERE DOES IT STOP? A LOT OF THE FOCUS IN CHINA TODAY IS ON MAINSTREAM SEMI-CONDUCTORS AND THIS IS DIFFERENT FROM AI, SO THAT IS THE DISCUSSION WE HAVE. THE PRESSURE WILL CONTINUE TO BE THERE.

IF YOU LOOK AT THE LANDSCAPE, THAT IS WHAT IT IS. I THINK THE DISCUSSION WILL GET MORE SOPHISTICATED OVER TIME AND STAKES WILL BECOME HIGHER. ED: THAT WAS ASML'S CEO EARLIER TODAY AT THE BLOOMBERG TECH SUMMIT IN LONDON. LET'S DISCUSS THIS MORE. I TOOK A QUICK GLANCE AT MY TERMINAL. LISTENING TO THAT INTENSE CONVERSATION, THE THEMES ARE CLEAR. WILL THERE BE MORE EXPORT CONTROLS FROM THE U.S. TO CHINA WHEN IT RELATES TO THE LEAD EDGE OF CHIPS? WILL THERE BE INCREASED TENSIONS IN THE SUPPLY CHAIN? WE LISTEN TO THE INTERVIEW, HOW DO YOU THINK ABOUT ASML? >> WHEN WE THINK ABOUT THE OVERALL SEMI CONDUCTOR CHIP EQUIPMENT INDUSTRY, I THINK ONE OF THE KEY THINGS THE CEO

FOCUSED ON IS THE MAINSTREAM VERSUS AI. WE ARE SEEING THAT GROWTH ON THE AI SIDE. WE LIKE NAMES LIKE ETCHING TOOLS. ONE AREA IS GROWING MORE. I THINK THE MAINSTREAM SIDE IS TRYING TO NORMALIZE A LITTLE WITH EVERYTHING GOING ON IN CHINA AND YOU HAVE TO FIND BALANCE BETWEEN THE TWO AS WE LOOK AT WITH THE CHIP INDUSTRY IS GOING TO LOOK LIKE GOING FORWARD. CAROLINE: LOOKING AT IT GOING FORWARD, DO YOU HAVE ANY VIEW THAT WILL CHANGE POST NOVEMBER 5 WE HAVE A DIFFERENT OUTCOME FROM AN ELECTION AND IN JANUARY WHEN WE HAVE A DIFFERENT ADMINISTRATION IN THE U.S.? >> IT IS SOMETHING WE TALK ABOUT IN TERMS OF POTENTIAL REGULATORY ISSUES AND POLICIES THAT MIGHT GET PUT IN PLACE,

WHETHER IT IS TARIFFS AND WHATNOT. IT CAN CHANGE THINGS GOING FORWARD, BUT WE HAVE TO WAIT AND SEE WHAT DETAILS WILL BE ONCE WE KNOW WHO IS IN OFFICE AND WHAT TYPES OF POLICIES THEY WILL AT PAST. >> WHAT HAS BEEN CLEAR IS THERE IS THE AI PERSPECTIVE AND THEN EVERYTHING ELSE. IS IT INVESTABLE AT THE MOMENT WHEN WE ARE STILL SEEING INVENTORY WEIGH SO HEAVILY? >> IN THE NEAR TERM, IT IS TOUGHER. WE ARE SEEING OVERSUPPLY OF AUTOS AND INDUSTRIALS ARE STILL STRUGGLING, SO IT IS NOT AS GREAT AS IT WAS IN 2020 OR 2021, BUT I THINK GOING FORWARD AS RATES COME DOWN AND WE SEE THE ECONOMY CONTINUE TO STAY STRONG YOU CAN SEE A LOT OF THAT CONTINUING TO GROW FOR THE LONG-TERM.

CYCLICAL INDUSTRIES GO THROUGH EBBS AND FLOWS, AND YOU HAVE TO PLAY THROUGH THAT. ED: THAT IS WHY THE CONVERSATION IS SO INTERESTING. THEY ARE HISTORICALLY CYCLICAL AND FISH -- INDUSTRIES. FORGET THE EQUITY PORTION OF THIS. IS THERE A RISK THAT IT IS OVERDONE AND OVER INVESTED? >> THE BIG RISK IS SOME OF THESE HYPER SCALARS PAUSE AND TAKE A LITTLE OF THEIR FOOT OFF THE PEDAL WHEN IT COMES TO OVERALL CAPEX INVESTING ON THE AI SIDE, BECAUSE THEN YOU HAVE THE CYCLICAL LOW ON THE MAINSTREAM SIDE AND A PAUSE ON THE AI SIDE, SO THAT WOULD BE THE BIGGEST CONCERN. WHEN YOU LOOK AT IT IN A THREE TO FIVE YEAR OUTLOOK, IT WILL EQUAL OUT AND PROVIDE GROWTH ON BOTH SIDES.

>> YOU KNOW WHAT WE DO NOT TALK AS MUCH ABOUT? THE TECHNOLOGY BIT. I'M PRETTY SURE HE WOULD SAY ASML IS AT THE CUTTING EDGE. I BRING THAT UP BECAUSE HE WOULD PROBABLY ALSO SAY THERE IS NO COMPANY IN CHINA THAT COULD DO WHAT THEY DO, SO IN ALL THE RISK AND CHAOS AND POLITICS, IS THAT WORTH CONSIDERING IF YOU ARE AN INVESTOR IN THE TECHNOLOGY SECTOR? >> ABSOLUTELY. CHIP EQUIPMENT MAKERS ARE DOWN SUBSTANTIALLY FROM THEIR HIGHS, SO I BELIEVE THEY ARE PROVIDING AN OPPORTUNITY TO GET IN FOR INVESTORS AND THE NEAR TERM MIGHT NOT BE AS REWARDING AS YOU MIGHT THINK BUT OVER THE LONG-TERM YOU CAN SEE THAT BENEFIT OF THESE CHIPMAKERS. THERE ARE NOT A LOT OF THEM OUT THERE.

ONLY A FEW OF THEM CAN DO WHAT THEY DO FROM A TECHNOLOGICAL STANDPOINT. CAROLINE: THEREIN LIES THE HEART OF THE COMPETITION. NOT JUST COMPETITION COMING FROM CHIPMAKERS BUT EVENTUALLY THESE HYPER SCALARS, WHETHER WE SEE THEM REMAIN COMMITTED TO PURCHASING CHIPS AT THE RATE THEY ARE, WHAT ABOUT MAKING THEIR OWN SHIPS? HOW ARE YOU TRYING TO SEE THAT OUT OVER THE NEXT THREE TO FIVE YEARS? >> YOU HAVE TO KEEP YOUR PULSE ON ALL OF IT. FROM THE HYPER SCALARS PERSPECTIVE, I DO NOT THINK ANYBODY WANTS TO BE SOLELY RELIANT ON NVIDIA GIVEN THE SUPPLY ISSUES THEY HAVE HAD AS WELL. IT IS SOMETHING WE CONTINUE TO MONITOR ON A QUARTER BY QUARTER

BASIS AND DO OUR RESEARCH ON. ED: INVITATIONS HAVE STARTED GOING OUT THIS WEEK. I WONDER IF WE WILL TALK ABOUT THE SAME STUFF IN JANUARY OR IF WE MIGHT HAVE MOVED ONTO SOMETHING NEW THAT YOU HAVE FOUND THROUGH YOUR RESEARCH. >> I THINK WE WILL CONTINUE TO TALK ABOUT AI FOR SOME TIME. I THINK THERE ARE STILL A LOT OF AREAS TO UNFOLD. THERE COULD BE A KILLER APP THAT SURPRISES US. WE NEVER KNOW. THAT IS WHY YOU HAVE TO >> KEEP YOUR FINGER ON THE PULSE. WE WILL BE TALKING ABOUT QUANTUM THEN I AM SURE. THANK YOU. COMING UP, WE WILL HEAR FROM THE SAP CFO. THIS IS BLOOMBERG TECHNOLOGY. CAROLINE: SAP SHARES JUMPING TO A RECORD AFTER THE COMPANY ANNOUNCED AN INCREASE IN CLOUD REVENUE.

THE COMPANY CEO -- CFO DOMINIK ASAM SPOKE WITH BLOOMBERG EARLIER. >> IF YOU ADJUST FOR CURRENCY FLUCTUATION OF 27% AND BY NOW MORE CLOUD REVENUES, BY NOW MORE THAN ANY OTHER SOURCE OF REVENUE, WE CAN SAY AFTER FOUR YEARS OUR STRATEGY IS PAYING OFF. IF YOU LOOK AT THE COMPOSITION, 84% OF THE CLOUD REVENUE IS GENERATED BY THE CORE CLOUD OFFERING OF S.A.P.. THAT HAS GROWN 36% AND THAT IS THE 11TH QUARTER WHERE THAT GROWTH HAS EXCEEDED THE 30% GROWTH MARKET, SO THAT IS THE CORE ENGINE POWERING OUR GROWTH. WHAT IS BETTER, THE BACKLOG, WHICH IS THE 12 MONTHS AHEAD COMMITTED SUBSCRIPTION IS FLOORING AT 29%, SO THERE'S VISIBILITY ON GROWTH LYING AHEAD.

>> WHEN IT COMES TO MARKET CAP, THE STOCK IS UP 50% YEAR TO DATE, SO YOU CAN TAKE SOMETHING OF A VICTORY LAP ON THAT FRONT. THE MARKET CAP IS UP ABOUT 100 BILLION EUROS SINCE THIS TIME LAST YEAR. IT MEANS ON YOUR LIST YOU ARE BUMPING AGAINST THE 15% CAP. IS GERMANY STILL A GOOD PLACE TO BE LISTED? THAT IS A CHALLENGE FOR YOU AT THIS POINT. >> WE WOULD LIKE TO SEE THAT 50% CAP DISAPPEAR, BUT WE ARE REALLY FOCUSING ON THE LARGE POOL OF CAPITAL AVAILABLE IN THE UNITED STATES. THERE'S STILL ROOM FOR US TO GROW AND ATTRACT NEW INVESTORS. WE WOULD LIKE TO ATTRACT CAPITAL INTO GERMANY, AND ON THAT FRONT, I AGREE THE 15% CAP IS NOT HELPFUL.

THERE'S OTHER REGULATION ON FUNDS WHICH WERE ACTIVELY MANAGED. IT IS ALSO CONSTRAINING TRYING TO CONVINCE THOSE WHO RUN THESE INDICES TO RECONSIDER THAT CAP. ED: THAT WAS S.A.P.'S CEO. ALSO SPEAKING, HE SAYS HE IS OPEN TO A SECONDARY LISTING. WE LISTED IN NEW YORK OVER A YEAR AGO AND AT THAT TIME WE WERE LOOKING AT SECONDARY LISTING. WE ARE STILL OPEN TO IT. IT IS NOT TOP OF MIND NOW, BUT WE WILL CONTINUE DISCUSSIONS WITH BOTH STAKEHOLDERS. ANOTHER CONVERSATION WAS WITH A TECH INVESTMENT GIANT. WE TALKED ABOUT ROADBLOCKS FACING ADOPTING GENERATIVE AI AND WHERE HE WILL INVEST IN THE TECHNOLOGY. HERE IS PART OF THE CONVERSATION.

>> THE LEADERS HAVE TO STOP SAYING I AM GOING TO INVEST $100 MILLION AND BE THE PERSON THAT LEADS AND SPENT TIME UNDERSTANDING THE TECHNOLOGY AND THAT WE ARE JUST STARTING. THERE IS SO MUCH DEVELOPMENT AHEAD. THEY SHOULD SHOW HOW THEY USE AI TO BE MORE PRODUCTIVE AND DISTRIBUTE MORE. THE YOUNGER PEOPLE DO NOT UNDERSTAND WHY WE ARE HAVING THIS DISCUSSION. THEY USE CHATGPT OR OTHER THINGS TO STUDY MORE. SO LEADERS LEAD, SHOWING WHAT IS A GOOD USAGE OF AI INSTEAD OF JUST WRITING ABOUT HOW MUCH WE ARE INVESTING. >> ARE YOU GOING TO INVEST IN MORE GENERATIVE AI COMPANIES? >> WE WANT TO HELP THE GROWTH MARKETS TO LEAD THIS NEW REVOLUTION HAPPENING NOW. >> THE BIGGEST HOLDER OF TENCENT AS A STOCKHOLDER BUT

HAVE SO MANY INVESTMENTS ACROSS THE EMERGING MARKETS, SO REALLY A CONVERSATION ABOUT HOW IN SOUTH AFRICA THEY ARE ADOPTING GENERATIVE AI AND THEY ARE CUTTING COSTS. >> ALSO, EXPOSURE IN INDIA AND SOUTHEAST ASIA. HE IS A CEO TO WATCH. ANOTHER STORY THEY ARE WATCHING HERE, CHIPOTLE ROLLING OUT AN ARTIFICIAL INTELLIGENCE ASSISTANT AIMED AT IMPROVING EFFICIENCY. IT WILL COVER MANY ADMINISTRATIVE TASKS IN THE RECRUITING PROCESS. THE CHAIN HOPES IT WILL CUT THE TIME IT TAKES TO HIRE WORKERS. COMING UP, META FIGHTS BACK AGAINST FAKE CELEBRITY SCAMS. THIS IS BLOOMBERG TECHNOLOGY. ♪ ED: META IS FIGHTING BACK AGAINST FAKE CELEBRITY SCAMS. WHAT IS THE ACTIVITY THAT META IS

TRYING TO COUNTER HERE AND TERMS OF CELEBRITY IMAGE? >> SOMETIMES SCAMMERS WILL RUN LINKS TO A SCAM WEBSITE WHERE THEY TRY TO STEAL YOUR DATA AND GET YOU TO SEND MONEY, AND THEY WILL USE AS PART OF THE ADD PICTURES OF REAL CELEBRITIES TO MAKE IT SEEM MORE AUTHENTIC OR LEGITIMATE. PEOPLE WILL SEE AN IMAGE OF A CELEBRITY AND THINK IT IS AN ENDORSEMENT BY THEM OR SOMEONE THEY ARE FAMILIAR WITH, AND THEY ARE MORE LIKELY TO CLICK. IN THIS CASE, META IS SAYING WE NOTICE THE SCAMS ARE HAPPENING, SO THEY ARE GOING TO USE FACIAL RECOGNITION SOFTWARE TO MATCH, IS THERE A CELEBRITY ON THIS AD AND DOES IT MATCH WITH A CELEBRITY IN THE SERVICE? >> FOR ANYONE WHO HAS BEEN LOCKED OUT OF THEIR ACCOUNTS

MET MANY OF US HAVE, YOU NO LONGER HAVE TO GET YOUR PASSPORT READY. THEY MIGHT USE TECHNOLOGY FOR THAT AS WELL. KURT: THEY WILL TEST THE IDEA OF A VIDEO SELFIE. YOU HOLD UP YOUR PHONE AND TAKE A SHORT VIDEO OF YOUR FACE AND SEND IT IN. THEY WILL MATCH THAT VIDEO TO PHOTOS ASSOCIATED WITH THE ACCOUNT. IF THERE IS A MATCH, THEY WILL SAY THIS IS INDEED THE ACCOUNT AND YOU CAN GET BACK IN. THE WHOLE THING COULD TAKE ABOUT A MINUTE AND THEY WILL DELETE THE VIDEO AND DATA ASSOCIATED WITH IT IMMEDIATELY AFTER. THIS IS SOMETHING THEY ARE TRYING TO DO TO EXIT AT THE PROCESS. RIGHT NOW, THEY HAVE OTHER WAYS TO VERIFY IDENTITY, BUT IT IS MORE CUMBERSOME. THEY ARE THINKING THIS COULD BE A FASTER WAY OF GETTING PEOPLE

INTO ACCOUNTS AUTOMATICALLY IF THEY GET LOCKED OUT. ED: WHY DO THIS? WHAT IS THE MOTIVATION? KURT: THINK OF THE SCALE THEY OPERATE ON, 3.3 BILLION USERS ACROSS DIFFERENT SERVICES. PEOPLE ARE GETTING LOCKED OUT EVERY DAY. THEY CANNOT KEEP UP WITH THIS FROM A HUMAN STANDPOINT. THEY NEED TO AUTOMATE THESE THINGS. THEY ARE SEEING HERE IS A WAY TO DO THIS QUICKER. PRESUMABLY IN THE FUTURE IT WILL BE CHEAPER. I THINK IT IS PART OF THEIR OVERALL PUSH TOWARD AI. CAROLINE: IN 30 SECONDS, THERE IS A COMPLEX RELATIONSHIP WITH FACIAL RECOGNITION TECHNOLOGY AND META THE PAST. KURT: META HAS BEEN SUED IN THE PAST FOR USING TECHNOLOGY TO PROFIT WITHOUT GIVING USERS

APPROPRIATE RECOGNITION, APPROPRIATE WAY TO OPT IN. THIS IS A TYPE OF TECHNOLOGY THEY HAVE BEEN HAMMERED ON IN THE PAST. THEY WALKED AWAY FROM IT FOR A COUPLE OF YEARS AND NOW IT FEELS LIKE THEY ARE BACK INTO IT. WILL BE INTERESTING TO SEE IF MORE LAWSUITS COME OF THEM TRYING TO GET BACK INTO THE FACIAL RECOGNITION SPACE. >> GREAT REPORTING, THANK YOU. COMING UP, OUR CONVERSATION WITH GARY GENSLER. THIS IS BLOOMBERG TECHNOLOGY. ED: WE WELCOME OUR AUDIENCE TO A SPECIAL CONVERSATION WITH GARY GENSLER. THE SEC IS LOOKING AT TOOLS AND FINANCES. IN PARALLEL YEAR AGO, YOU EMBARKED ON THIS RULEMAKING PROCESS. I WANT TO START BY ASKING, WHAT

SORT OF ADDITIONAL AUTHORITY OR POWER DO YOU FEEL YOU NEED THROUGH A RULE THAT YOU WILL NOT BE ABLE TO REGULATE THROUGH EXAMINATIONS? >> I THINK THE USE OF ARTIFICIAL INTELLIGENCE, WHICH HAS BEEN AROUND FOR AT LEAST 10 YEARS, HAS TAKEN ON AND IS A TRANSFORMATIVE PART OF OUR ECONOMY. EVERY BIT IS TRANSFORMATIVE AS 100 YEARS AGO WHEN WE ELECTRIFIED SO MANY THINGS IN OUR MARKETS AND FACTORIES. THAT TRANSFORMATIVE. IN FINANCE, IT IS BEING USED TODAY BY MANY BROKERAGE APPS AND INVESTMENT ADVISORS THEY ARE SELLING TO THE PUBLIC, JUST AS WHEN WE ARE LOOKING AT MOVIE APPS THAT WE FIGURED OUT LONG AGO THAT I AM A ROM COM TYPE OF GUY AND WANT TO WATCH THOSE MOVIES. IT IS TO ENSURE IN THE

ALGORITHM THAT THEY ENSURE THEY PUT PUBLIC INTEREST AND CUSTOMER INTEREST AHEAD OF INVESTMENT ADVISOR. THAT IS IT IN A NUTSHELL. CAROLINE: DO YOU THINK THERE IS FINANCIAL SYSTEMIC RISK STILL LIVING LARGE BECAUSE OF ADOPTION OF AI? AND AI MODELS BEING TOO SIMILAR FROM ONE BROKERAGE TO THE NEXT? >> I DO THINK SO. I WILL GO WITH THE MOVIE HER WHEN SCARLET HANSEN PLAYED A VIRTUAL ASSISTANT. -- SCARLETT JOHANSSON PLAYED A VIRTUAL ASSISTANT. WE COULD SEE THAT IN FINANCE. THERE ARE TWO OR THREE LARGE CLOUD PROVIDERS BACKING THE BIGGEST INVESTMENTS IN GENERATIVE AI. AS THE FINANCIAL SECTOR RELIES ON THOSE, IT IS NOT ONLY POSSIBLE BUT LIKELY THAT SOME FINANCIAL CRISIS IN THE FUTURE,

THAT EVERYBODY IS RELYING ON IT, THAT WHETHER IT IS LIKE SCARLET YOU HANSEN -- SCARLETT JOHANSSON GOING OFF-LINE OR TAKING CAPITAL MARKETS OFF A CLIFF. THAT IS A HARD PROJECT TO SOLVE. BECAUSE OF THE DOMINANCE OF A FEW BASE MODELS LIKELY IN THE FUTURE. CAROLINE: DO MORE CLEAR RULES NEED TO BE ENVISAGED? >> THERE ARE IMPORTANT INVESTOR PROTECTION ISSUES ABOUT THE CONFLICTS. WE CAN DO THAT AND PROCEED FORWARD. I HAVE ASKED STAFF FOR RECOMMENDATIONS. A SECOND AREA IS FRAUD. FRAUD IS FRAUD. I THINK THAT IS GOING TO PLAY OUT NOT ONLY FOR US BUT IN OTHER AGENCIES AROUND THE COUNTRY AND THE FEDERAL TRADE COMMISSION AND ELSEWHERE. ON SYSTEMIC ISSUES, IT IS A TOUGH CHALLENGE THE GLOBAL

REGULATORS NEED TO COME TOGETHER. HOW DO WE PROTECT AGAINST WHAT IS LIKELY TO BE A CONCENTRATED, INTERCONNECTED SYSTEM RELYING ON SCARLETT JOHANSSON FOR THEIR LOVE WAS ONE THING IN A FICTIONAL MOVIE, BUT WHAT DO HERE? ED: IF YOU ARE JUST RUNNING US, WE ARE SPEAKING WITH SEC CHAIR GARY GENSLER. YOU'RE ALSO BUSY IN PARALLEL WITH THE CRYPTO INDUSTRY. THERE IS CONSENSUS THAT THOSE PARTIES WANT TO HAMMER OUT SOME SORT OF NEW JURISDICTIONAL FRAMEWORK FOR CRYPTO REGULATORS. TO MAKE PROGRESS ON SETTLING OVERSIGHT OF THE INDUSTRY. CAN YOU TALK TO US ABOUT THE WORK YOU ARE DOING AND IF YOU ARE MAKING PROGRESS IN THAT FIELD? CHAIR GENSLER:

THERE IS NOTHING INCOMPATIBLE ABOUT THE TECHNOLOGY. THIS HALLOWEEN, IT WILL BE 16 YEARS SINCE THAT PAPER WAS WRITTEN. SO HAPPY SWEET 16 IN A WEEK. THERE'S NOTHING INCOMPATIBLE ABOUT DECENTRALIZED LEDGER TECHNOLOGY. IT IS IMPORTANT IN THE SECURITIES MARKET THAT INVESTORS GET TO DECIDE ON INVESTMENTS BUT THEY GOT PROPER DISCLOSURE THAT WE GUARD AGAINST CONFLICTS OF INTEREST. WE WILL CONTINUE TO DO THAT. IF A MARKET IS EVER GOING TO HAVE TRUST, AND EASE TO COME INTO COMPLIANCE AND A LOT OF THIS FIELD -- WE HAVE SEEN THE CHALLENGES IN THIS FIELD WHERE PEOPLE HAVE LOST MONEY. REGULAR INVESTORS HAVE LOST MONEY IN A FIELD THAT IS NOT PROVIDING THE FUNDAMENTAL DISCLOSURE ABOUT THEIR PROJECTS.

AND INVESTMENT CONTRACTS AND SCHEMES. AND THERE IS A FIELD THAT HAS A LOT OF CONFLICTS IN THE MIDDLE OF IT. ED: SOMETHING INTERESTING HAS BEEN HAPPENING WHERE YOU HAVE BEEN FOCUSING ON POLICY AND REGULATION. IN THE FIFTH CIRCUIT COURT OF APPEALS, THERE HAVE BEEN SUITS FILED IN A BUSINESS FROM THE COURT. HOW DO YOU RESPOND TO THAT AND ADJUST POLICY IN RESPONSE TO THE LITIGATION SIDE? CHAIR GENSLER: GOOD QUESTION. WE DO EVERYTHING WE DO IN THE LAW AND HOW THE COURTS INTERPRET THE LAW. IF COURTS INTERPRET IT, WE ADJUST. IT IS PART OF OUR GREAT DEMOCRACY. BUT I DO THINK WE ARE FOCUSED EVERY DAY ON HOW WE DRIVE LOWER COST IN THE SYSTEM. THAT IS WHY WE DID EQUITY

MARKET REFORM UNANIMOUSLY THROUGH OUR COMMISSION AND WHY WE WORK HARD ON TREASURY MARKETS AT THE BASE OF OUR CAPITAL MARKETS AND DRIVING LOWER COSTS AND LOWER RISK IN THESE CONSEQUENTIAL MARKETS. >> REMINDING OUR AUDIENCE, WE ARE IN CONVERSATION WITH SEC CHAIR GARY GENSLER. THERE IS THIS ONGOING NARRATIVE THAT YOU HAVEN'T NOT CHANGED MUCH OR ADJUSTED MUCH IN TERMS OF REGULATION VIA ENFORCEMENT. WILL THAT CHANGE? DO YOU SEE RULES COMING TO BEAR FROM CONGRESS RATHER THAN ENFORCED? >> WE HAVE BENEFITED FOR NINE DECADES FROM ROBUST LAWS FROM CONGRESS AND RULES FROM VARIOUS AGENCIES, NOT JUST THE SEC BUT THE TRADING COMMISSION, ANOTHER SIGNIFICANT AND GREAT AGENCY I

WAS HONORED TO CHAIR, TO PROMOTE MARKETS AND PROTECT INVESTORS AND PROMOTE CAPITAL FORMATION IN THE MARKETS IN THE MIDDLE. THAT IS WHAT WE WILL CONTINUE TO DO, WHETHER IT IS RELATED TO THE STOCK MARKETS, WHETHER IT IS RELATED TO THE TREASURY MARKETS, WHETHER IT IS RELATED TO BONDS AND FIXED INCOME MARKETS, AND EVEN RELATED TO THIS NEWER MARKET WHERE TOO MANY PEOPLE HAVE BEEN HURT AND TOO MANY PEOPLE HAVE LOST MONEY AND WOUND UP IN BANKRUPTCY COURT TO DEAL WITH CLAIMS AND WHAT PRESIDENT ROOSEVELT LAID OUT AND HAS BEEN LOOKED AT OVER THE YEARS, CONGRESS COULD ADJUST BUT IT IS ABOUT DISCLOSURE TO THE PUBLIC SO THE PUBLIC CAN DECIDE AND GUARDING THE PUBLIC AGAINST CONFLICTS AND FRAUD AND THINGS THAT HAPPEN IN CAPITAL MARKETS THAT

ARE UNREGULATED. WE SAW THAT HAPPEN IN THE 1920'S. YOU CAN READ ABOUT IT. WE DO NOT WANT THAT TO HAPPEN TO THE INVESTING PUBLIC AND UNDERMINE THE TRUST IN THE OVERALL ARC ITS WE KNOW THEM. CAROLINE: ONE DISCLOSURE FROM FORMER PRESIDENT TRUMP IS HE HAS SOME PLANS TO INTRODUCE HIS OWN CRYPTO PLATFORM. WHAT DO YOU MAKE OF THAT? CHAIR GENSLER: I AM NOT GOING TO COMMENT ON ANY ONE PROJECT. I THINK YOUR VIEWING AUDIENCE CAN APPRECIATE THAT. IT IS JUST NOT WHAT WE DO. I WILL YOU GO TO YOUR NEXT QUESTION. ED: YOU TALKED ABOUT THE INVESTING PUBLIC THAT YOU SERVE. THERE IS SOMETHING HAPPENING WHERE PRIVATE CREDIT FIRMS ARE TAKING PRIVATE MARKET ASSETS WHERE YOU COULD DEBATE THE REAL VALUATION AND WRAPPING THEM IN

PRODUCTS LIKE ETFs THAT ARE MORE RETAIL FRIENDLY. IT IS A NEWER AREA, AND I KNOW IT IS OF INTEREST TO OUR AUDIENCE. HOW DO YOU REGULATE THAT, AND HOW MUCH ARE YOU THINKING ABOUT THAT NOW? >> OUR DOLLAR CREDIT MARKETS COOK WITH YOUR COMMERCIAL CREDIT AND BORROWING, PROBABLY GROW WIDER IN EXCESS OF $30 TRILLION. BANKS AND NONBANKS PLAY IMPORTANT ROLES IN THAT, SO PRIVATE CREDIT EXISTED WHEN I STARTED 47 YEARS AGO. THERE WERE DIRECT LOANS THAT COULD BE MADE OUTSIDE THE BANKING SYSTEM, BUT YOU HAVE SEEN A GROWING SHARE INVOLVED IN THAT. I THINK THAT COMPETITION IS GOOD FOR BORROWERS, MY INVESTORS, AND THE LIKE. THAT IS COMPETITION IN OUR CAPITAL MARKET, BUT IT STILL HAS

TO COMPLY WITH RISK MANAGEMENT, DISCLOSURE, AND THE LIKE. OUR ROLE IN IT IS IMPORTANT, BUT I THINK THE COMPETITION IS ACTUALLY BENEFITING A LOT OF BORROWERS. I WOULD NOTE IT HAS NOT LIVED THROUGH A DOWNTURN. IT HAS NOT BEEN TESTED IN THE INEVITABLE AT SOME POINT DOWNTURNS THAT WILL COME. THERE ARE ALSO INTERSECTIONS BETWEEN THIS PRIVATE CREDIT EMERGING SYSTEM AND THE INSURANCE SECTOR AND THE BANKING SECTOR, PARTICULARLY THE INTERSECTION WITH THE INSURANCE SECTOR. AND RATINGS AS WELL. WE ARE LOOKING AT SOME OF THIS, BUT OVERALL IT IS CAPITAL MARKETS BENEFITING FROM COMPETITION. >> APOLLO AND STATE STREET HAVE A PRIVATE MARKET ETF PENDING. MY COLLEAGUES TELL ME IT IS CONTROVERSIAL.

WHAT CAN YOU TELL ME ABOUT THAT CASE STUDY? >> THE SAME THING I TOLD CAROLYN EARLIER. IN A ROW LIKE MINE, I TRY TO STAY DISCIPLINED, AND I DO NOT COMMENT ON SPECIFIC PRODUCTS OR PROJECTS THAT MAY BE IN FRONT OF THE STAFF FOR OUR COMMISSION. I HOPE YOU'RE LISTENING. PUBLIC UNDERSTANDS WHY. >> DO YOU WORRY ABOUT THE LIQUIDITY MISMATCH? >> THERE IS A LIQUIDITY MISMATCH IN BANKS, SO OUR BANKING SYSTEM IN THE U.S. HAS $20 TRILLION IN DEPOSITS. A LOT OF THEM ARE INSURED, BUT A LOT OF THEM ARE UNINSURED, SO BANKS TRANSFORMED LIQUIDITY AND MATURITY OR DURATION. AND THEN YOU THINK ABOUT IT IN THE NONBANKS SECTOR. YOU HAVE A BETTER MATCH OF MATURITY OF THE LIABILITY SIDE.

OF A PRIVATE FUND AND THE ASSETS THEY HOLD, SO IT IS NOT WITHOUT RISK. IT MIGHT BE IN PART OF THE MARKET THAT CAN BETTER BEAR THAT ILLIQUIDITY RISK. CAROLINE: IT IS INTERESTING HOW YOU HAVE THIS AS A LINE OF SIGHT BUT ALSO EVERYTHING WE HAVE ARTICULATED, AI MIGHT CRYPTO, PRIVATE MARKETS. YOUR TERM IS UNTIL JUNE 2026. WILL IT RUN UNTIL THEN? WHAT DO YOU WANT TO GET DONE IN THE REMAINING MONTHS? >> IT IS THE GREATEST PRIVILEGE OF MY LIFE OTHER THAN HAVING THESE THREE WONDERFUL DAUGHTERS I HAVE. EVERY DAY I COME INTO WORK AND THINK WITH MY COLLEAGUES AND FELLOW COMMISSIONERS, HOW DO WE GET THINGS DONE FOR THE INVESTING PUBLIC THAT THE MARKETS IN THE MIDDLE WORK FOR

THEM, NOT THAT ISSUERS AND INVESTORS ARE WORKING FOR INTERMEDIARIES BUT THAT MARKETS WORK FOR THEM? SO LOWERING COSTS, TRANSPARENCY, AND THE LIKE, AND ACCESS TO MARKETS AND THEN RESILIENCY TO USE CENTRAL CLEARING AND SO FORTH. WE LAID OUT AN AGENDA OF 50 OR 55 PROJECTS. WE HAVE GONE ACROSS THE LINE AND PROPOSED AND ADOPTED 43 OF THOSE. THE OTHER PROJECTS TO A NUMBER OF THEM I HAVE ASKED STAFF TO CONSIDER POSSIBLE RE-PROPOSALS, BUT WE ARE STILL WORKING ON RULES AROUND MARKET STRUCTURE AND TREASURY MARKETS AND SEGREGATION OF FUNDS. WE WILL CONTINUE TO MOVE FORWARD AND ELECTIONS HAVE CONSEQUENCES. CAROLINE: THEY DO. I WILL LET YOU RETURN TO SOME

ROM-COMS. COMING UP, WE WILL TALK MORE ABOUT CRYPTO. THIS IS BLOOMBERG TECHNOLOGY. ♪ CAROLINE: LET'S CHECK IN ON CRYPTO. BITCOIN AT ONE POINT WAS AT $70,000. WE ARE NOW TRADING AT THE 67,000 DOLLAR LEVEL. WE ARE LOOKING AT ETF INFLOWS OF $2 BILLION. WHAT DOES THE ELECTION MEAN FOR CRYPTO AND REGULATION? YOU WERE LISTENING TO THE CONVERSATION WITH GARY GENSLER. I'M INTERESTED IN WHAT YOU THINK THE ELECTION MEANS FOR YOUR SPACE. >> THE ELECTION MEANS WE ARE GOING TO BE ATTENDING TO THE DISPOSITION OF A NEW ADMINISTRATION TOWARD INNOVATION, INCLUDING BITCOIN INNOVATION, SO WHAT WE HOPE TO SEE REGARDLESS OF THE ADMINISTRATION IS THAT THEY

TAKE A THOUGHTFUL APPROACH, A STUDIED APPROACH, AND THAT THEY ARE DISCERNING IN HOW THEY APPLY REGULATION TO MAKE SURE WE ARE UPDATING SO THEY FIT WELL WITH THE CURRENT INNOVATION AND THEY ARE NOT JUST PROTECTING INVESTORS IN THE ECOSYSTEM BUT THAT THEY ARE ALSO FOSTERING INNOVATION SO AMERICA CAN CONTINUE TO LEAD. CAROLINE: DOES IT CONTINUE TO LEAD WITH THE REGULATORY ENVIRONMENT AND POTENTIAL NEXT PRESIDENT? HE IS SAYING HE WANTS THE U.S. TO BE THE CRYPTO CAPITAL. IF REGULATION STAYS AS IT IS, WILL IT REMAIN SO? >> THE U.S. HAS AN ADVANTAGE IN THAT MANY OF THE TOP FOUNDERS AND MOST INNOVATIVE COMPANIES IN THE SPACE, INCLUDING THOSE ADVANCING PAYMENT TECHNOLOGY,

ARE BASED IN THE UNITED STATES. THEY CAN CONTINUE TO INNOVATE WITH A REGULATOR THAT SEES ADVANTAGES OF HAVING THAT ACTIVITY IN THE U.S. AND WE ARE HOPEFUL REGARDLESS OF THE ADMINISTRATION THAT THOSE INVOLVED WILL LOOK TO FOSTER SUCH INNOVATION. I ALSO WANT TO NOTE BITCOIN INNOVATION IS NOT HAPPENING IN A SILO. IT IS RELEVANT TO OTHER INDUSTRIES SUCH AS THE TRANSITION TO RENEWABLE ENERGY AND EXPLOSION OF INTEREST AND OPPORTUNITY IN GENERATIVE AI. BITCOIN RELEVANCE TO THAT BRINGS ATTENTION TO BITCOIN TECHNOLOGIES AND REGULATORS WILL RESPOND TO TAKE A STUDIED APPROACH TO THE SPACE. ED: WE COULD HAVE ASKED THE SEC CHAIR HIS UNDERSTANDING OF THE RELATIVE POLICY PLATFORMS OF VICE PRESIDENT KAMALA HARRIS.

AND FORMER PRESIDENT TRUMP WHEN IT COMES TO CRYPTO AND THE FUNDAMENTAL DIFFERENCES BETWEEN THEM. WE WILL NOT GET THAT ANSWER, BUT DO YOU HAVE THAT CLEAR UNDERSTANDING OF WHAT EITHER OUTCOME MIGHT MEAN FROM A POLICY PERSPECTIVE? >> I AM QUITE HAPPY BOTH CANDIDATES ARE PAYING ATTENTION TO PARTICIPANTS IN THE ECOSYSTEM. THEY BOTH HAVE ADVANCED POLICY AGENDAS AND LET US KNOW THEY ARE PAYING ATTENTION TO THE SPACE. INSTEAD OF EVALUATING POLICIES DURING A CAMPAIGN, WHAT WE ARE LOOKING TO SEE AND PARTICIPATE IN AND EVALUATE IS THE INACTION OF POLICY ITSELF AND ACTION RATHER THAN CAMPAIGN PROMISES AND IT LOOKS TO US AS THOUGH BOTH CAMPAIGNS HAVE AN INTENTION TO PARTNER WITH THE INDUSTRY TO STUDY AND APPLY A

THOUGHTFUL APPROACH AND NOW HAVE TO LOOK AT THE REST OF THE CANDIDATES AND POTENTIAL ADMINISTRATIONS' BEHAVIOR TO DECIDE WHETHER OPTIMISM IS DESERVED. I THINK THERE IS REASON TO BE OPTIMISTIC REGARDLESS OF THE OUTCOME OF THE ELECTION. >> THAT CONVERSATION WAS ABOUT THE CONTEXT OF RISKS CRYPTO POSES TO THE FINANCIAL SYSTEM RATHER THAN HOW WE USE UNDERLYING TECHNOLOGY WITHIN THE FINANCIAL SYSTEM, MODERNIZING GLOBAL FINANCE. DO YOU THINK WE SHOULD GO BACK TO TALKING ABOUT THAT A LITTLE BIT? >> I THINK SO. HE ALSO SPOKE ABOUT HIS CONCERNS ABOUT THE STABILITY OF TECHNOLOGIES AND AS HE IS THINKING ABOUT THAT OR AS THE NEXT TO TAKE HIS SEAT IS THINKING THE SAME, THEY SHOULD LOOK TO HELP BITCOIN GET

SUPPORT THROUGH GENERATIVE AI. FOR EXAMPLE, ENERGY STABILITY, SO THE STABILITY OF THE GRID AND DEMAND THAT APPLICATIONS WILL HAVE FOR ENERGY WILL REQUIRE ROBUSTNESS OF SUPPLY. AND BITCOIN CAN HELP FACILITATE THAT. WE KNOW BITCOIN IS AN OFF-TAKER OF ENERGY IN THE SAME WAY THAT AI IS, BUT THE DIFFERENCE IS BITCOIN IS PRICE RESPONSIVE. THAT MEANS THAT COIN CAN OFFTAKE ENERGY AT LOW PRICES WHEN THERE IS LOW DEMAND AND SHUT OFF IN PEAK TIMES, SO IT WILL NOT CONTRIBUTE TO PEAK TIMES IN THE GRID, WHICH MEANS IT WILL NOT DESTABILIZE THE GRID AND CAN ALLOW HEALTHY GROWTH OF RENEWABLE GENERATION IN A WAY THAT CONTRIBUTES ALSO TO THE LLM ECOSYSTEM STABILITY. CAROLINE: IT IS INTERESTING THAT PROOF OF

WORK AND STATE IS SOMETHING OTHER PARTS OF HAD TO DEAL WITH. MORE BROADLY, EVERYONE IS WAITING. DOES IT REMAIN AS AN ASSET CLASS OR AREA TO INVEST IN IF YOU ARE WORRIED ABOUT INFLATION AND THAT IS WHY YOU GET INTO GOLD AND CRYPTO? OR DOES WHAT YOU ARE INVESTING IN AND UP BEING OF SERVICE TO SOCIETY? >> GREAT QUESTION. THERE ARE TWO THINGS HAPPENING IN TERMS OF ADVANCEMENT OF ECOSYSTEM. WE HAVE SEEN BITCOIN IS A STORE OF VALUE AND HAS MATURED. THE BITCOIN ETF HAS REACHED OVER 20 MILLION IN AGGREGATE ASSETS AND LESS THAN IT -- LESS THAN A YEAR'S TIME, WHICH EXCEEDS WHAT GOALS DID ON THEIR LAUNCH. THE ETF LAUNCH WAS ONE OF THE MOST SUCCESSFUL IN HISTORY, SO

BITCOIN AS A STORE OF VALUE HAS SECURED ITS PLACE IN HISTORY. IT IS ALSO HAPPENING IS YOU HAVE SEEN STABLECOINS FIND PRODUCT MARKET FIT INTERNATIONALLY AND WITHIN THE U.S. AT THE SAME TIME, STABLECOINS HAVE ACHIEVED THIS FIT COMING TO THE BITCOIN PAYMENT SYSTEM. THE NETWORK LAUNCHED PAYMENT CHANNELS THAT CAN HANDLE OTHER ASSETS, INCLUDING STABLECOINS, WHICH BRINGS THE MARKET THAT LIGHTNING NETWORK HAS MABEL TO ACHIEVE -- THE LIGHTNING NETWORK PROCESSES OVER $80 MILLION IN VALUE A MONTH. NOW STABLECOINS ARE COMING TO THE LIGHTNING NETWORK. WHEN WE ARE LOOKING AT WHAT THE KILLER APP IS FOR BITCOIN, WE ARE THINKING ABOUT BITCOIN AS A STORE OF VALUE. CAROLINE: WE THANK YOU VERY MUCH. THAT DOES IT FOR THIS EDITION OF BLOOMBERG TECHNOLOGY. ED:

JAMPACKED WITH INTERVIEWS. CHECK OUT THE POD.

SEC's Gary Gensler and an AI Future

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SEC's Gary Gensler and an AI Future

SEC's Gary Gensler and an AI Future

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