- The SEC has lost its war on crypto.
- US crypto bigwigs expect a friendlier SEC under Donald Trump.
- Lawsuits against US crypto companies will be dropped.
In the United States, crypto is about to be freed from its biggest albatross: relentless regulatory enforcement by the Securities and Exchange Commission.
That’s according to John Reed Stark, former head of the SEC’s Office of Internet Enforcement.
In an X Spaces on Thursday, Stark declared an end to the SEC’s war on crypto given Donald Trump’s victory in the US presidential elections.
“The SEC will not bring any fraud charges against cryptoverse participants in the coming years,” Stark said.
Under the leadership of current SEC Chairman Gary Gensler, crypto companies in the United States have come under increased scrutiny.
Gensler’s SEC has initiated enforcement actions against major US crypto companies, including Consensys, Coinbase and Kraken. Others, including Immutable and OpenSea, have also been investigated by the SEC.
These regulatory measures were underpinned by Gensler’s insistence that the crypto sector is no different from other capital markets. This means crypto can be regulated in the same way as stocks and bonds under the same nearly century-old federal securities laws in the United States.
Gensler’s stance on the issue has drawn criticism even from fellow Democrats. In September, Ritchie Torres, a Democrat from the Bronx in New York, chastised the SEC chairman for his vague interpretation of securities laws that potentially confused NFTs and other cryptocurrencies with stocks and bonds.
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Stark said most of these cases will come to a screeching halt, except for those that involve “blatant fraud.”
He also said the SEC would seek to finalize settlements already ruled by the presiding judges.
As for Gensler, Stark said he would likely step down as SEC chairman before Trump inaugurates the SEC.
Trump promised to fire Gensler on the first day of his presidency, but Stark argued such a move was unnecessary.
“Trump does not need to fire Gensler and can instead appoint one of the current Republican commissioners as acting chairman,” Stark said.
That would mean Gensler’s demotion to commissioner.
Next SEC Chair
Hester Peirce, the senior of the SEC’s two Republican commissioners, would be the likely choice to lead the SEC on an interim basis, Stark said.
Peirce, beloved by the US crypto industry as ‘Crypto Mom’, reportedly said she is not interested in leading the SEC beyond her term expiring next year .
Peirce’s Republican colleague Mark Uyeda would also be Gensler’s replacement. Uyeda criticized the SEC’s approach to crypto regulation, calling it “a disaster for the entire industry.”
Robinhood’s chief legal officer, Dan Gallagher, is also a leading candidate for SEC chairman. Gallagher has experience in the SEC, having served as commissioner between 2011 and 2015.
Other candidates being considered for the position include former SEC Commissioner Paul Atkins and former Commodity Futures Trading Commission head Chris Giancarlo.
Osato Avan-Nomayo is our DeFi correspondent based in Nigeria. It covers DeFi and technology. To share tips or story information, please contact him at osato@dlnews.com.
