Gary Gensler, President Joe Biden's pick to lead the Securities and Exchange Commission, said he would hope to oversee cryptocurrency regulation, the "gamification" of equity trading and board diversity if confirmed to lead Wall Street's chief regulator.
Gensler, who testified before the Senate Banking Committee on Tuesday, was grilled on whether he would scrutinize payment for order flow and game-like tactics used by some online brokerages use to help attract customers to their platforms.
Both subjects have received attention on Capitol Hill over the past two months after January's wild trading in GameStop, AMC Entertainment and other stocks.
Senators including Massachusetts Democrat Elizabeth Warren asked Gensler in the virtual hearing for his thoughts on Robinhood Markets, which operates one of the most popular online trading apps.
Those critical of Robinhood say the company tries to lure young or inexperienced customers to trade with features on its trading platform that mimic gaming apps, such as virtual confetti when they execute a trade.
The SEC nominee promised to analyze the rise of "gamification" of stock trading and intervene if necessary.
He also noted potential problems with the current structure of payment for order flow, a common practice on Wall Street whereby trading firms, like Citadel Securities, pay companies like Robinhood to send them their customers' orders for execution.
We will "look at market structure in the equity markets around payment for order flow when frankly just a couple – a handful – of financial firms are buying most of the retail flow in America," Gensler said Tuesday.
The ex-Goldman Sachs partner and former Commodity Futures Trading Commission chief also fielded questions about cryptocurrency, blockchain and bitcoin. As a professor at MIT's Sloan School of Management, Gensler teaches on digital currencies and blockchain.
Asked how the SEC should oversee such up-and-coming technologies, he replied that the responsibility could fall across the government depending on how assets like bitcoin are classified.
"To the extent that somebody is offering an investment contract or security that's under the SEC's remit, and they have exchanges that operate there, then we have to make sure there's investor protection," he said.
"If it's not that, and it's a commodity, as bitcoin has been deemed to be, then it's either a question for Congress ... or it's possibly a question for the Commodity Futures Trading Commission.," he added.
Other lawmakers, such as Committee Chairman Sen. Sherrod Brown, D-Ohio, asked Biden's pick to lead the SEC about how he thinks the regulator should prioritize climate change.
"Increasingly, investors really want to see tens of trillions of dollars of assets behind it," Gensler said of climate-friendly investments. "They want to see climate-risk disclosures. I think issuers would benefit from such guidance."
Ranking member Sen. Pat Toomey, R-Pa., asked for Gensler's thoughts on Nasdaq's push to increase diversity on corporate boards.
He and other Republicans have decried a recent plan submitted by the exchange operator to the SEC that would require the thousands of companies listed on its stock exchange to include women, racial minorities and LGBT individuals on their boards.
Toomey asked Gensler if he thinks boards should be "forced or pressured to comply with some sort of quota with respect to race, gender or sexual orientation."
Gensler replied by touting the benefits of diversity more broadly and among the ranks at the SEC.
"I think diversity in boards and diversity in senior leadership ... benefits decision-making and it's something that I'm committed to at the SEC and the leadership there," he said. "It's a positive step forward in the leadership of the SEC that, if confirmed, I'm going to take on."
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