The 29th Annual Milken Institute Global Conference kicked off live in Beverly Hills in May of 2026. This year, we present a RealClearMarkets exclusive interview with Dr. Piwowar.
Dr. Michael Piwowar, is Senior Advisor at the Milken Institute. He is also Executive Director of The Psaros Center for Financial Markets and Policy at Georgetown University.
Previously, He was the executive vice president of Milken Institute Finance and served as a commissioner at the US Securities and Exchange Commission (SEC) from August 15, 2013, to July 6, 2018. He was first appointed to the SEC by President Barack Obama and was designated acting chairman of the commission by President Donald Trump from January 23, 2017, to May 4, 2017.
He received a BA in foreign service and international politics from Pennsylvania State University, an MBA from Georgetown University, and a PhD in finance from Pennsylvania State University.
I interviewed him on the sidelines of Global Conference 2026. We discussed the regulation of digital assets and the new Trump Accounts.
Introduction:
Altenbach: Thank you for joining us. We’re going to talk about the regulation of digital assets today, a timely subject.
Altenbach : Could you tell us a bit about your senior advisory role to the Milken Institute and your new position?
Piwowar: I was full-time at the Milken Institute for over seven and a half years, after leaving the Securities and Exchange Commission. The Milken Institute conducts research in three areas: finance, health, and philanthropy. And I had the great opportunity to lead the finance pillar.
I recently joined the Psaros Center for Financial Markets and Policy at Georgetown University, where I am now the Executive Director.
I was fortunate to have the Milken Institute ask me to stay on as a Senior Advisor.
Digital Asset Regulations:
Altenbach:
You’ve written extensively on digital assets and submitted formal testimony to Congress on digital-asset market structure, oversight, and regulation. In June of last year, you testified before the House Agriculture Committee at a hearing titled “American Innovation and the Future of Digital Assets: From Blueprint to Functional Framework.”
What were the core issues you addressed, and what views did you present?
The Clarity Act
Piwowar:
I testified before the House Agriculture Committee, which oversees the Commodity Futures Trading Commission. Under the proposed Clarity Act, the CFTC—along with the Securities and Exchange Commission—would be given jurisdiction over large parts of the digital-asset ecosystem.
I appeared before the committee as an expert on the SEC. My role was to help lawmakers think through what is perhaps “the central challenge in digital-asset regulation: how to divide responsibility between the SEC and the CFTC in a way that is logical, durable, and workable in practice.”
That meant answering questions like: “Where should the jurisdictional boundary sit? What types of assets and market activity are best overseen by which agency? And how do you draw those lines in a market that is evolving rapidly?”
The Clarity Act reflects a serious, thoughtful effort to bring order to a market that has long operated in regulatory limbo. I also offered recommendations and technical suggestions as lawmakers continued refining the legislation. Since then, the bill has passed the House and is now before the Senate.
Piwowar:
At this stage, both the Senate Agriculture Committee and the Senate Banking Committee are reviewing the legislation. They’re considering potential revisions, some of which may reflect different institutional priorities, and depending on how substantial those changes are, the bill could be sent back to the House.
Altenbach:
To clarify, your testimony focused on the subject matter covered by the Clarity Act—which has not yet become law—but did not extend to the Genius Act?
The Genius Act
Piwowar:
That’s correct. The Genius Act has already passed Congress and been signed into law.
“It addresses stablecoins, which are a specific category of digital assets that are designed to maintain a stable value by being backed by fiat currency—most commonly the U.S. dollar—and reserves such as U.S. Treasuries.”
Altenbach:
That framework does not apply to Bitcoin.
Piwowar:
Right. Bitcoin falls outside the Genius Act’s scope. If you go back to the original Satoshi Nakamoto white paper, it envisioned Bitcoin as a “peer-to-peer electronic cash system.” The focus was on payments, not speculation.
The problem with Bitcoin is price volatility. Bitcoin’s price can swing dramatically—sometimes within minutes. That volatility may be attractive to traders and investors, but it makes Bitcoin poorly suited for everyday payments. If you’re trying to send money across the world, you don’t want the value changing materially between the moment you send it and the moment it’s received.
That challenge gave rise to stablecoins. The basic idea was simple: why not create a digital token whose value is anchored to the U.S. dollar and backed by highly liquid, low-risk assets such as Treasuries?
“Stablecoins solved the volatility problem, and in doing so, they became something of a ‘killer app’ for blockchain-based payments.”
The Genius Act establishes a regulatory framework for these instruments. Congress ultimately decided to place stablecoins under the jurisdiction of the banking regulators. Conceptually, you can think of stablecoins as resembling either a money market fund that does not pass through interest to holders or a full-reserve bank that does not pay interest on deposits.
Piwowar:
Where the debate continues is elsewhere in the digital-asset universe. The Clarity Act—sometimes referred to as the Digital Asset Market Structure Act—is what I often describe as the “everything-else bill.”
“The Genius Act deals with stablecoins, which are, frankly, ‘nice and boring.’ They’re designed for stability and utility. The Clarity Act, by contrast, addresses everything else: thousands, and potentially millions, of different digital tokens, many with vastly different economic characteristics.”
Bitcoin still has the largest market capitalization, followed by Ethereum, Cardano, Solana, and others. Determining how those assets should be regulated, and by whom, is at the heart of the Clarity Act.
The U.S. Senate Request for Information on Digital-Asset Market Structure
Altenbach:
Beyond your House testimony, there was significant activity last year in the Senate as well. The Senate Banking Committee issued a request for information on digital-asset market structure. How did your team respond? What were the issues?
Piwowar:
The issues were very similar. Working with my colleagues at the Milken Institute and our FinTech Advisory Council, we submitted a response to help the Senate Banking Committee consider next steps on the Clarity Act.
At a high level, the same fundamental question keeps resurfacing: how to draw the jurisdictional line between the SEC and the CFTC. Some categories are relatively straightforward. Others sit in the gray area, and it's those areas that most of the complexity lies.
One of our key recommendations was that Congress should “lean on the expertise of the agencies.” Congress excels at setting broad policy principles. But when it comes to highly technical, market-specific details, regulators are usually better positioned to work through them.
Piwowar:
That matters because, historically, the SEC and CFTC have not always worked seamlessly together. Regulatory turf battles have been a feature of the U.S. financial regulatory system for decades.
What’s notable today, however, is that under the current commissions, there is close to “100% alignment” between the two agencies on where regulatory boundaries should fall in digital assets.
Institutional overlap has also helped. CFTC Chairman Michael Selig previously served as the chief counsel to the Crypto Task Force, led by SEC Commissioner Hester Peirce, and as a law clerk to former CFTC Commissioner Chris Giancarlo. He brings firsthand experience from both agencies, which makes coordination far easier.
Piwowar:
Finally, based on my experience working on major legislative efforts such as Dodd-Frank and the JOBS Act while on the Senate Banking Committee staff, I offered a pragmatic recommendation.
Where Congress can identify relatively straightforward provisions, it should hard-wire them directly into the statute and make them self-effectuating. That means they become law immediately, without requiring prolonged agency rulemaking—a process that can take months or even years.
“For the more difficult, nuanced issues, Congress should rely on the SEC and CFTC to work through them via the notice-and-comment rulemaking process. That combination—clarity in statute where possible, flexibility through expert rulemaking where necessary—is how you arrive at regulation that is both durable and functional.”
Tokenized Real Estate
Altenbach: Let’s talk about tokenized real estate. How will it ultimately be regulated? It appears that developers and investors alike are left in regulatory limbo regarding which agencies have jurisdiction over tokenized real estate deals. How's this going to play out? Who's going to have jurisdiction?
Piwowar: That's a great question. The heads of the agencies, Paul S. Atkins (SEC Chair) and Michael S. Selig (CFTC Chair), have both been very consistent, saying that “when they think about tokenization of existing assets, the tokenization of them doesn't change the underlying substance of what the underlying asset is.”
For example, “if you're tokenizing a stock, the tokenized stock remains a security, and the stock of a company remains a security. It doesn't magically become something else just because it's tokenized.”
Now, regarding real estate, if it's just a regular land title, it remains regulated as it is. Now, some real estate investments are securities. Real estate investment trusts, for example, and other forms of fractionalized ownership of real estate could be considered an investment contract under the federal securities laws.
In fact, whether those constitute securities is determined by the facts and circumstances, and the fact that they're tokenized doesn't change that.
Piwowar: A Supreme Court decision that the SEC has been using to determine whether digital assets are a security or not is the Howey Test.
The Howey Test is a U.S. Supreme Court-established legal standard used to determine if a transaction qualifies as an “investment contract” and thus a security subject to the federal securities laws and regulations.
There are four criteria, or prongs, of the Howey Test for determining whether a transaction is an investment contract. It has to meet all four of the following: Investment of money: An individual invests money or other valuable consideration. Common enterprise: The investment is made in a common enterprise where fortunes are tied to the promoter or other investors. Expectation of profit: There is a reasonable expectation of financial return (profits). Efforts of others: The profit is derived solely from the entrepreneurial or managerial efforts of others.
Piwowar: Howey was a 1946 Supreme Court decision involving real estate investments in which a management company handled all the work. And the question was, was that considered an investment contract?
“That's the lens the SEC has been using through which it determines whether a crypto asset is an investment contract.”
Piwowar: “The Howey test was created for a real estate case in the 1940s. It works fairly well for crypto assets today. When I testified before the House Agriculture Committee and made additional recommendations for the Senate Banking Committee, one of the things that I mentioned was that Congress could consider revising the definition of investment contract to give more clarity (pun intended) in the future, not just in digital assets, but whatever sort of innovations come in the future.”
Invest America Accounts:
Altenbach: Let’s talk about your research on Trump Accounts (formally known as Invest America Accounts). In March last year, you published a paper titled “The Economic Impact of Invest America Accounts.” The objective was to provide early wealth-building opportunities for children from birth, leveraging compounding. You used Monte Carlo simulations to model the accounts’ effect on wealth creation and reviewed academic research.
Could you share your findings and how Invest America Accounts compare to other early wealth-building proposals?
Piwowar: At the Milken Institute, we use discussions at our conferences and roundtables to guide our work. In the area of wealth building, we discussed ideas such as universal basic income, tax credits, and baby bonds, which are closest to Invest America Accounts. Baby bonds typically invest in treasury bonds for children from low-income households.
Invest America Accounts, founded by Brad Gerstner, checked all our boxes for early wealth-building.
Piwowar: The key difference is that Invest America Accounts invest in a low-cost, broad-based index of U.S. companies, like the S&P 500, instead of treasury bonds. The accounts are universal—every baby born in the U.S. is eligible. Some ask why not focus on low-income families, but we want economic mobility for everyone. “The idea is to invest in American companies and the next generation of America. The universality is important because circumstances at birth don’t always determine outcomes, and this approach gives every child a stake in the country’s economic future.”
Altenbach: So, the accounts are not means-tested, and every child gets the same opportunity?
Piwowar: Exactly. The accounts are designed to be simple and accessible to everyone.
The Power of Diversification and Compounding
Piwowar: “In finance, the only two free lunches are diversification and compounding, and this achieves both at low cost.” The Monte Carlo simulations examined the likely outcomes for $1,000 invested at birth, using historical returns projected forward. We randomized the results to see the average and expected returns. “The simulations showed that even with market volatility, the long-term trend is exponential growth due to compounding. For example, the value of the account more than doubles between ages 20 and 40, and continues to grow rapidly over a lifetime.”
Altenbach: Did you find that even small amounts invested early improved outcomes for children?
Piwowar: Yes, our report ‘The Economic Impact of Invest America Accounts’ highlighted studies that showed pilot programs for children who saved and invested early had better financial literacy, were more likely to go to college and stay there, less likely to enter the criminal justice system, and their families did better.
Sometimes, “just exposing families to saving and investing basics made a difference.” “Being part of something bigger also helps. The accounts foster engagement, making children feel part of something larger than their family unit and exposing those from non-saving backgrounds to financial basics.”
Piwowar: Once these accounts are set up, children will have online access, which will encourage them to ask questions and become more financially literate.
About 40% of Americans aren’t invested in the stock market. “Invest America Accounts ensure everyone is invested from birth, which should have positive effects beyond finances. The hope is that by normalizing investment from an early age, we can close the wealth gap and improve financial outcomes for future generations.”
Returns and Contributions
Altenbach: Can you share some of the returns from your Monte Carlo simulation?
Piwowar: I don’t have the numbers offhand, but we modeled $1,000 invested until ages 20, 40, and 60. The returns grow much more than double due to compounding. The study only looked at the seed amount, not additional contributions. The exponential growth is striking—by age 60, the account could be worth many times the original investment, depending on market conditions.
Altenbach: Indeed, in your report, it reads: “Monte Carlo simulations suggest that the $1,000 accounts would grow in value, on average, to $8,000 after 20 years, $69,000 after 40 years, and $574,000 after 60 years.”
Altenbach: So it didn’t include further contributions?
Piwowar: Correct. Our analysis did not include further contributions. But one key feature of Invest America Accounts is that they allow philanthropists to contribute. Michael Dell, for example, contributed $6.25 billion to seed accounts for children born before the official start date.
Other philanthropists, including Ray Dalio, have also contributed. The Treasury and White House are seeking more donors to support entire states or cities. “Philanthropic contributions also compound, offering both social impact and financial growth. The idea is that anyone—family, friends, or philanthropists—can add to a child’s account, amplifying the benefits over time.”
Altenbach: How does the program ensure that these contributions are invested in a prudent manner?
Piwowar: The Treasury Department manages the accounts and ensures that all contributions are allocated in accordance with the program’s guidelines. The goal is to maximize participation and impact, especially for children who might not otherwise have access to investment opportunities.
Restrictions and Flexibility
Altenbach: The money isn’t spent right away—the beneficiary becomes wealthier.
Piwowar: Right. The funds can’t be touched until age 18. Early versions of the bill restricted use to education, home purchase, or starting a business, but these restrictions were removed for simplicity.
The accounts are not tax-advantaged like 529 plans; contributions are after-tax, “but the funds compound tax-free until distribution.” This avoids benefits accruing mainly to higher-income families and aims to level the playing field.
The flexibility means beneficiaries can use the funds for any purpose once they reach adulthood, empowering them to make choices that best suit their needs.
Altenbach: Are there any concerns about how the funds might be used once restrictions are lifted?
Piwowar: The hope is that financial education, combined with the experience of watching the account grow, will lead to wise decisions when the funds are distributed.
Potential Improvements and Legislative Challenges
Altenbach: What future modifications would you make?
Piwowar: We would have preferred automatic opt-in so that children would receive accounts with their Social Security numbers. Congress chose manual opt-in, so families must sign up. The Treasury will run a big awareness campaign, but some who need it most may be left behind. Automatic enrollment would have ensured that every child benefits, but the current approach still has the potential to reach millions.
Altenbach: Is funding secure for the long term?
Piwowar: Funding is only appropriated for four years due to Congressional budget scoring. I expect Congress will reauthorize funding, as temporary government programs often become permanent. The seed money is limited to this period, but the program itself can continue. The hope is that as the program demonstrates success, it will gain bipartisan support and become a permanent fixture in American economic policy.
Dodd-Frank Criticism
Altenbach: You worked on the Senate Banking Committee during the development of the 2010 Dodd-Frank Act, which created the Financial Stability Oversight Council, or FSOC—a federal body meant to monitor systemic risk, promote market discipline, and prevent “too big to fail.”
Yet in a 2014 speech, you were sharply critical of FSOC, calling it things like a “firing squad on capitalism” and an “unaccountable capital markets death panel.” On its face, FSOC’s mission seems noble. What went wrong? And have the deficiencies you identified been improved?
Piwowar: At the time, I was working on the Senate Banking Committee for the ranking member, Senator Richard Shelby, who ultimately voted against the bill.
Later, when I was at the Securities and Exchange Commission implementing Dodd-Frank, I voted for some rules and against others. So my views have always been nuanced.
As for the 2014 speech, I used colorful language deliberately to draw attention to an issue that wasn’t receiving much scrutiny.
If you asked people about Dodd-Frank, most would say it was about stopping “too big to fail” and responding to the global financial crisis. That’s true—"but the law also contained many provisions that had little to do with the crisis itself.”
More importantly, by 2014, FSOC members were going beyond their statutory mandate. It is a noble goal to identify threats to U.S. financial stability. But what was happening was that some prudential regulators—particularly banking regulators, who themselves failed to prevent the crisis—were using FSOC to expand their authority into areas outside their jurisdiction.
They were pushing into areas already regulated by the SEC, such as asset managers and investment advisers, as well as into areas traditionally regulated at the state level, such as insurance.
Piwowar: What they were attempting to do was apply bank-style “safety and soundness” regulation to non-bank market participants.
“For banks—especially large, systemically important ones—failure is not an option. But in capital markets, failure is an option, and that is by design.”
Asset managers, mutual funds, venture capital, and private equity operate under a disclosure-based regulatory regime. The SEC is not a merits regulator. It does not decide whether a company is “too risky” to go public or whether investors should be allowed to invest in it. Instead, it ensures transparency, allowing investors to make informed decisions.
Diversification plays a central role. When one asset fails inside a diversified portfolio, the impact is limited. That is fundamentally different from a bank failure, which can threaten the broader financial system.
“FSOC was moving toward subsuming capital markets under a banking-style regulatory framework. And this concern was not partisan.” There was bipartisan agreement at the SEC, including from Chair Mary Jo White, whom President Obama appointed.
At the time, the “Office of Financial Research—FSOC’s research arm—issued a report claiming large asset managers posed systemic risk. The report revealed a fundamental misunderstanding of how asset management actually works.”
The SEC released the report for public comment, and the response was overwhelmingly critical. The analysis was so flawed that FSOC ultimately pulled back. My speech, along with Chair White’s actions, helped focus attention on the issue and prevent inappropriate regulation of securities markets.
Piwowar: The FSOC was considering imposing bank-like capital and liquidity requirements on asset managers. The SEC already has liquidity rules for mutual funds to ensure they can meet redemptions. Adding another layer of bank-style regulation would have made many investment products uneconomic.
“The strength of the U.S. financial system is that we don’t rely solely on banks. We also have deep, liquid capital markets and derivatives markets. In capital markets, failure is allowed, and we have a long history of managing that successfully.”
What I wanted to avoid was the U.S. drifting toward a European-style, bank-dominated system. Europe has spent more than a decade trying to reform its capital markets to boost growth. Reports like the Draghi Report acknowledge that Europe needs deeper capital markets to support innovation and risk-taking.
My concern was that while Europe was trying to become more like the United States, FSOC was pushing the U.S. in the opposite direction, which would have reduced growth and ultimately made the system less safe.
Altenbach: Well, we covered a lot. Thank you for joining us. It’s been a pleasure.
Piwowar: Thank you for inviting me to speak to you.
Altenbach: You too.
