Regulation
Cryptocurrency titans bank on Donald Trump victory to overhaul SEC
With the 2024 U.S. presidential election looming, cryptocurrency industry executives are expecting significant changes in regulatory oversight if Donald Trump returns to the White House. The cryptocurrency industry is unhappy with the current administration’s strict approach, led by the Securities and Exchange Commission (SEC) under Chairman Gary Gensler. This has raised hopes among cryptocurrency advocates that a Trump presidency could usher in a more lenient regulatory environment.
How Donald Trump’s Victory Could Reshape Cryptocurrency Regulation
Michael Selig, a partner at Willkie Farr & Gallagher LLP, suggests that a Trump administration could “reset and rethink the SEC’s regulatory policy on cryptocurrencies.” This could potentially end ongoing enforcement actions and investigations launched under the Biden administration. This sentiment reflects a broader expectation within the crypto community that Trump’s return could lead to a reduction in regulatory pressure.
Under President Joe Biden, the SEC has stepped up its oversight of the cryptocurrency industry, particularly after the collapse of the FTX exchange in late 2022. The regulator has filed numerous enforcement actions against exchanges and broker-dealers, alleging violations of securities laws.
Gensler has argued that many cryptocurrencies are considered securities and should therefore comply with SEC registration requirements. This position has sparked controversy within the industry.
Despite some agreements, major disputes involving major players such as RippleThe dispute between Coinbase, Kraken, and Binance remains unresolved. The SEC also recently closed investigations into Ethereum and Binance USD (BUSD), a dollar-backed stablecoin issued by Paxos. However, the debate over whether specific tokens should be classified as securities persists.
A prominent example is the SEC’s lawsuit against Ripple Labs Inc., which alleges that Ripple conducted an unregistered securities offering through the sale of XRP tokens, raising more than $1.3 billion.
Although a federal judge ruled last July that XRP sales to retail investors did not constitute investment contracts, the outcome of the case remains uncertain. However, Ripple CEO Brad Garlinghouse recently indicated that a resolution could be reached. He noted, “We expect a resolution very soon.”
SEC Reform After Trump Victory?
The prospect of Donald TrumpDonald Trump’s victory has fueled speculation about a potential SEC shakeup. Austin Campbell, a blockchain consultant and adjunct professor at Columbia Business School, noted that a new administration could quickly change the SEC’s leadership.
“Remember, if Trump is elected, Republicans can immediately change the chairman of the committee,” Campbell said. He predicted that change could lead to the resolution of many pending cases, ending “the highly variable decisions that increase confusion.”
Some experts, however, caution against assuming that a Trump presidency would automatically lead to a sea change in enforcement practices. Emily Meyers, general counsel at Electric Capital, a venture capital firm, argues that securities enforcement cases are generally “apolitical” and are not subject to significant personnel turnover in the event of a political change.
“It’s unlikely that any pending cases will be dropped, especially those that are already pending in federal court,” Meyers added, according to a Bloomberg report. Instead, she suggests that a new administration focus on different types of enforcement cases rather than dismissing existing ones.
Will Hester Pierce Replace Gary Gensler?
Similarly, Ji Kim, legal and policy director at the Crypto Council for Innovation, also weighed in. He believes that while the Trump administration could change the regulatory landscape, such changes would depend on the new leadership and composition of SEC commissioners.
“If President Trump were re-elected and Chairman Gensler were to resign, we could see the current standard of regulation by enforcement change,” Kim said. He added: “However, it would depend on the leadership and composition of the commissioners – nothing is guaranteed.”
Meanwhile, Representative French Hill believes that SEC Commissioner Hester Pierce The SEC commissioner said in a recent interview that Gary Gensler could replace Gary Gensler after Trump wins. “If the president changes, the SEC chairman will change accordingly,” he added. Pierce, however, stopped short of making predictions about who would succeed Gensler.
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