Crypto Foe and SEC Chair Gary Gensler Will Quit When Trump Takes Office

Instead of continuing as the head of the primary U.S. securities regulatory body and additionally serving as a commissioner, he has chosen to fully depart, thereby eliminating his ability to advocate for his regulatory strategies, particularly those that have been characterized by a proactive approach towards cryptocurrencies.

According to a statement from the SEC, Gensler’s resignation takes effect at midday on January 20, coinciding with the inauguration of President-elect Trump.

In a statement, Gensler called the regulator “a remarkable agency.”

“The team and the commission are extremely dedicated, prioritizing investor protection, promoting capital growth, and ensuring that markets serve both investors and issuers equally. The team members embody genuine public servants,” he expressed. “It has been a privilege beyond measure to work alongside them, advocating for everyday citizens and maintaining our capital markets as the best globally.

The statement went on to thank President Joe Biden and Gensler’s fellow commissioners.

Under Gensler, who assumed office in April 2021, there have been a series of regulatory actions and rule-making initiatives that significantly impact the cryptocurrency sector. Contrary to expectations that he might adopt a lenient stance towards crypto, the regulator has actually intensified its enforcement efforts. While these were previously focused on crypto issuers, as was the case under former SEC Chair Jay Clayton during the Trump administration, Gensler’s team has expanded this to include legal action against cryptocurrency trading platforms.

During his term, Chairman Gensler of the SEC filed lawsuits against Binance, Binance.US, Coinbase, Kraken, Shapeshift, and other similar platforms. The lawsuits claimed that these entities functioned as unregistered broker-dealers and clearinghouses for securities.

Under Gensler’s supervision, the first exchange-traded products for bitcoin and ether were given approval in the U.S., following a ten-year effort by crypto companies to introduce these financial instruments. Initially, he was against them, but a court decision against the agency prompted him to cast his vote with the two Republican members of the commission, ultimately leading to the approval of the ETFs.

As a crypto investor, I’ve been keeping a close eye on the ongoing developments at the Securities and Exchange Commission (SEC), as the identity of the successor to Chairman Gensler remains undecided by President Trump. Several potential candidates have surfaced in the media, including Teresa Goody Guillén, a former SEC attorney now in private practice, and Brian Brooks, who previously served as Acting Comptroller of the Currency and briefly managed Binance.US. It’s worth noting that Trump’s current SEC chair, Jay Clayton, has been appointed as the next U.S. Attorney for the Southern District of New York – a role often associated with investigating corporate crimes within the Department of Justice. This transition could have significant implications for the crypto industry and regulatory landscape moving forward.

When Gensler is away, the commission will temporarily have two representatives from both parties, but it won’t yet form a three-member Republican group until Trump’s nominee is approved by the Senate. Until the Republicans secure a majority at the commission, any significant policy changes or enforcement decisions might be delayed.

According to the SEC’s statement, Gensler stated that his work is an extension of Clayton’s, which includes taking legal action over claims of unregistered securities offerings.

In the most recent fiscal year, information from the Securities and Exchange Commission’s Office of the Inspector General shows that 18% of their tips, complaints, and referrals pertained to cryptocurrencies. This is striking given that the crypto market makes up less than 1% of the total U.S. stock market. The press release also stated that numerous courts have supported the Commission’s efforts to safeguard investors, dismissing all claims that the SEC lacks authority to enforce regulations when securities are being traded, regardless of their form.

Yesterday, following a court decision by a judge within the Fifth Circuit, I found myself reflecting on a ruling that challenged the Securities and Exchange Commission’s (SEC) attempt to redefine a “dealer.” This legal action was instigated by crypto advocates, who argued that the SEC overstepped its bounds. The judgment was delivered hours before the SEC announced its new regulations on Thursday.