In a bold pitch to the cryptocurrency community, former US President Donald Trump has promised a dramatic shift in regulatory policy if he is re-elected. Speaking at a bitcoin conference, Trump vowed to dismiss Gary Gensler, the current Chair of the Securities and Exchange Commission (SEC) and a known critic of the crypto industry, igniting enthusiastic applause from attendees.
“Wow, I didn’t know he was that unpopular,” Trump quipped as the crowd erupted in cheers.
This newfound alliance between Trump and the crypto world marks a stark contrast to his previous stance, where he dismissed cryptocurrencies as a “scam.” Now, as the Republican presidential nominee, Trump is capitalizing on the industry’s growing influence, drawing substantial financial support from donors who are eager for an end to Gensler’s stringent regulatory measures.
Gensler, appointed by President Joe Biden, has led the SEC in taking aggressive action against the crypto sector, with a series of high-profile enforcement cases against major exchanges like Coinbase, Binance, and Kraken. These actions have resulted in hundreds of millions of dollars in fines, creating an environment of uncertainty and fear within the industry.
A Trump victory could potentially reverse this course almost immediately. The former president has the power to appoint a more crypto-friendly SEC chair, a move that could significantly reshape the regulatory landscape. The industry’s wishlist includes rolling back guidance that limits Americans’ crypto custody options, establishing a safe harbor for new tokens, and curbing enforcement actions.
Kristin Smith, CEO of the Blockchain Association, an industry group, emphasized the importance of appointing regulators who understand and appreciate cryptocurrency. “The most important thing we want out of a new administration is the nomination of individuals to key positions … that have an appreciation and an understanding of crypto,” Smith stated, according to Reuters.
Gensler has consistently defended his stance, citing a Supreme Court ruling that categorizes most crypto tokens as securities, thus requiring strict regulation. His viewpoint has received backing from lower courts, despite ongoing debates within the industry, which argues that tokens should be classified as commodities. However, achieving this reclassification would likely require new legislation, a process that could take years given the current political divide in Congress.
While Gensler’s term as SEC chair extends until 2026, Trump could replace him with another commissioner in an acting capacity, with Hester Peirce, a known crypto advocate and the longest-serving Republican commissioner at the SEC, being a likely candidate.
Industry insiders are also pushing for the appointment of Brian Brooks and Chris Giancarlo, both of whom served during Trump’s first administration and are strong proponents of cryptocurrency, for the permanent role of SEC chair.
An acting chair could quickly rescind the 2022 SEC guidance that requires public companies to account for crypto assets held on behalf of others as liabilities due to their riskiness. This policy has been particularly challenging for banks, which are required to hold cash against liabilities under strict capital rules.
Cryptocurrencies, with a market capitalization of approximately $2.5 trillion according to Coingecko, would likely see increased adoption if consumers could store them with trusted financial institutions, industry executives argue.
“I believe that’ll be rescinded Day One of the Trump administration,” Cody Carbone, chief policy officer at the Chamber of Digital Commerce, asserted.
The industry is also advocating for a safe harbor from SEC registration rules for issuing and trading crypto tokens, a concept first proposed by Peirce in 2020.
“We need to look for a workable way to ensure both that token offerings can occur outside of the legal shadows and that token purchasers have access to the information they need,” Peirce said in an email to Reuters.
Smith echoed this sentiment, calling such a framework “incredibly positive,” as noted in the Reuters report.
Chris Giancarlo, who earned the nickname “crypto Dad” during his tenure as the Chair of the Commodity Futures Trading Commission, declined to comment on his interest in becoming SEC chair under a potential second Trump administration. However, he emphasized the need for regulators to craft an interim regulatory framework that better serves both the public and investors, while also supporting the concept of a crypto safe harbor.
Brian Hughes, a senior adviser to Trump’s campaign, indicated that the former president is prepared to eliminate “obstacles and unnecessary burdens” for the crypto industry.
The extent of a new SEC chair’s power would depend on the political makeup of the five-member commission, which currently leans 3-2 in favor of Gensler and two other Democrats who are also critical of cryptocurrencies. Even if Trump succeeds in replacing Gensler, the commission’s balance could initially limit the new chair’s influence, especially if Gensler remains as a commissioner.
