Former President Donald Trump’s promise to fire SEC Chair Gary Gensler has ignited hope among crypto enthusiasts for a friendlier regulatory environment.
In a move that sent ripples through the cryptocurrency world, former U.S. President Donald Trump promised to dismiss SEC Chair Gary Gensler if re-elected. Speaking at a bitcoin conference on Saturday, Trump’s declaration was met with enthusiastic cheers, reflecting the crowd’s eagerness for regulatory change.
“Wow, I didn’t know he was that unpopular,” the Republican presidential nominee exclaimed over the jubilant crowd.
Once a critic of cryptocurrencies, dismissing them as a “scam,” Trump is now aligning with the industry, attracting substantial donations from those hoping for an end to Gensler’s stringent oversight.
Gary Gensler, a Democrat appointed by President Joe Biden, has spearheaded numerous crypto enforcement actions during his tenure at the SEC. His efforts have targeted major exchanges such as Coinbase, Binance, and Kraken, resulting in hefty fines amounting to hundreds of millions of dollars.
A Trump administration could herald a dramatic shift in the regulatory landscape. Trump has hinted at appointing a crypto-friendly SEC chair who would advocate for the industry’s interests. This agenda includes eliminating restrictive guidance that has limited Americans’ options for crypto custody, establishing a safe harbour for new tokens, and reducing enforcement actions.
“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,” said Kristin Smith, CEO of the Blockchain Association, an influential industry group.
Gensler maintains that most crypto tokens function like securities and should be regulated accordingly, a stance supported by lower court rulings. However, crypto firms argue that tokens are commodities and seek new legislation to clarify their status, though legislative changes could be delayed by a divided Congress.
Although Gensler’s term extends to 2026, Trump could replace him with another commissioner as acting chair if he wins the election. Hester Peirce, a long-standing Republican commissioner and crypto advocate, is a likely candidate for this interim role.
Industry leaders are also championing crypto enthusiasts Brian Brooks and Chris Giancarlo, both of whom served in Trump’s previous administration, for the permanent SEC chair position.
An acting chair could promptly 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. Banks face challenges with this policy since strict capital rules necessitate holding cash against liabilities. The market capitalization of cryptocurrencies, currently around $2.5 trillion according to CoinGecko, could grow significantly if consumers could store their digital assets with trusted financial institutions.
Additionally, the industry seeks a safe harbour from SEC registration rules for issuing and trading crypto tokens, a concept proposed by Peirce in 2020.
As Trump’s potential return to the White House looms, the crypto industry remains hopeful for a regulatory environment that fosters innovation and growth. The possibility of a new administration sympathetic to their cause has stirred excitement and anticipation among crypto enthusiasts and stakeholders alike.