The cryptocurrency sector has poured millions of dollars into U.S. presidential and congressional campaigns, yet its most significant potential gain may come from the anticipated departure of Gary Gensler, the current chairman of the U.S. Securities and Exchange Commission (SEC). Gensler, a former Goldman Sachs banker, has spearheaded rigorous regulatory actions against the digital asset industry, filing numerous lawsuits against various crypto companies, including notable entities like Coinbase Global Inc. (COIN, Financial) and DRW Holdings LLC.
Donald Trump's decisive victory is likely to lead to a relaxation of crypto-related enforcement upon taking office. Trump has previously pledged to dismiss Gensler on the first day of his second term during a Bitcoin-related conference in Nashville. The SEC has often claimed courtroom victories that affirm their stance that decades-old securities regulations are applicable to the burgeoning digital asset sector, even imposing substantial fines on key industry players.
In April, the SEC secured a $4.5 billion fine and restitution against stablecoin issuer Terraform Labs and its founder Do Kwon. Although the SEC has not yet released its enforcement report for the 2024 fiscal year, a study by Cornerstone Research indicates a 50% increase in such cases from the previous year, totaling 46 cases.
The next SEC chair is expected to introduce new regulatory guidelines to amend current securities laws, potentially easing compliance for digital asset companies that have been criticized by Gensler for violating these regulations. This shift aims to balance enforcement control. With the Republican Party maintaining a stronghold in the Senate, the prospect of bipartisan cryptocurrency legislation supporting these objectives appears more promising.
Jack Inglis, CEO of the London-based Alternative Investment Management Association, asserts that the Trump administration and new Congress are likely to adopt a more constructive approach toward crypto regulation. This initiative acknowledges the need to integrate cryptocurrencies into the broader financial services framework while considering technological differences from traditional finance, paving the way for more tailored regulatory approaches across various areas.
