Ashish Kumar
With Donald Trump’s US Presidential election win, SEC Chair Gary Gensler is expected to face intense scrutiny. However, the crypto community is watching closely and wondering if Gensler will press forward with enforcement actions or ease off in the few days before Trump walks into the White House.
The President-elect is likely to choose a pro-crypto SEC Chair, with Mark Uyeda as a leading candidate, though Hester Peirce has a slimmer chance. Trump has vowed to remove Gensler, but he can only demote him to a less powerful commissioner role. However, most SEC chairs resign after an administration change.
Crypto lawyer Jake Chervinsky notes that the new administration could bring drastic policy changes. Donald Trump, the self-proclaimed “crypto president” is expected to take office on January 20, 2025, with a Republican Senate and likely House. Till then the ball is still in the commission’s court.
Will the Gensler-led SEC crackdown continue?
Gensler’s last 75 days as the SEC chair could go two ways, it could be a crackdown or a retreat. Either way, Trump’s new SEC chair can halt investigations and rulemaking as soon as they’re appointed.
The crypto lawyer suggests that Trump’s top priority would be ending enforcement actions and reconsidering Department of Justice (DOJ) cases like Tornado Cash. However, it is going to be a litmus test for new leadership.
Gary Gensler’s final days as SEC Chair could still stir the pot for the digital assets industry. The outgoing SEC hierarchy may rush to finalize decisions or even initiate new cases. His approach has already kept crypto advocates on edge as they are perpetually braced for SEC lawsuits.
Jake Chervinsky also warned that Gensler could use this period to finalize several anti-crypto measures or even to accelerate enforcement actions. This could mean that more lawsuits, Wells Notices, or subpoenas could hit the industry soon.
Meanwhile, others believe that Gensler and the team may take it slow with some last-minute actions to run out the time without any major or new moves against crypto. Realistically, any new cases would face delays, and Democratic appointees may not support instant actions.
SEC actions during such transitions are rare but not unheard of. For instance, the lawsuit between the SEC and Ripple began in the Trump era. It was filed just before Biden’s inauguration, which could help the argument that the SEC’s priorities transcend administrations.
If Gensler decides to push ahead, he could finalize rulemaking on the SEC’s “exchange” definition update. This could widen registration mandates for market makers. However, Congress or a new SEC Chair could challenge the new parameters under the Congressional Review Act and other procedures.
Crypto executives push for clarity
Coinbase’s Chief Legal Officer, Paul Grewal expects to see “significant changes” to the SEC’s crypto caseload under a new Trump-appointed chair. Eleanor Terrett reported that Grewal believes that the new administration will take a fresh look at all the existing crypto cases Gensler’s regime started. They might have different parameters for launching legal action against scams and fraud.
Ripple CEO, Brad Garlinghouse, had already laid out the first 100-day checklist to get things moving. He mentioned that day 1 would be to fire Gensler without delay. He suggests appointing Giancarlo, Brooks, or Gallagher could be an upgrade for the SEC Chair.
In the end, he expects some clarity for the industry similar to XRP and Bitcoin, that Ether is not security.
Congress usually has 60 legislative days post-inauguration to review and possibly reverse any finalized rules. This time frame could tie up Congress early next year as it focuses on clarifying SEC rules rather than deliberating fresh crypto legislation.
Gensler still has the power to issue new enforcement actions. He could potentially target companies like Immutable, OpenSea, and Robinhood that have already received Wells Notices.
