Former US President Donald Trump erupted in cheers at a Bitcoin conference on Saturday when he promised to fire cryptocurrency skeptic Securities and Exchange Commission (SEC) Chairman Gary Gensler if re-elected.
“Wow, I didn't know he was that unpopular,” the Republican presidential candidate yelled over cheers.
Trump, who once derided cryptocurrencies as a “scam,” has charmed the industry and raked in big checks from donors in the hopes of quickly ending Gensler's crypto crackdown.
Under Gensler, a Democrat appointed by President Joe Biden, the SEC has brought dozens of cryptocurrency enforcement actions, including against major exchanges Coinbase, Binance and Kraken, levying hundreds of millions of dollars in fines.
A Trump victory could change that virtually overnight: He could appoint a crypto-friendly commissioner to push through an industry wish list that includes tougher regulatory guidance, safe zones for new tokens and the rollback of enforcement actions that allegedly limit Americans' crypto storage options.
“What I would most like to see from the new administration is that it will appoint individuals with an appreciation and understanding of cryptocurrency to key positions,” said Christine Smith, CEO of the Blockchain Association, an industry group.
A Gensler spokesman declined to comment.
Gensler cited Supreme Court decisions that have said most crypto tokens function like securities and should be similarly tightly regulated, a position that lower courts have largely supported.
Crypto companies argue that tokens are commodities and have sought new legislation to clarify their status, but that could take years if Congress remains divided.
Gensler's term expires in 2026, but President Trump could appoint another commissioner to replace him as acting chair. A leading candidate is cryptocurrency advocate Hester Pierce, the longer-serving of the SEC's two Republican commissioners.
According to industry executives, the industry is pushing for full-time positions for crypto enthusiasts Brian Brooks and Chris Giancarlo, who served in the first Trump administration.
The acting chairman could immediately revoke 2022 SEC guidance that would have required public companies to record crypto assets they hold on behalf of others as liabilities because they are too risky. Banks have struggled with the policy because strict capital regulations require them to hold cash to cover liabilities.
Cryptocurrencies have a market capitalization of about $2.5 trillion, according to CoinGecko, but executives say they could become even more popular if consumers could store their cryptocurrencies with a trusted lender.
“We believe it will be repealed on day one of the Trump administration,” said Cody Carbone, chief policy officer at the Digital Commerce Chamber, a digital asset group.
The industry also wants a safe harbor from SEC registration rules for the issuance and trading of crypto tokens, an idea Pierce proposed in 2020.
“We need to find viable ways to ensure both that token offerings are conducted outside the legal shadow and that token buyers have access to the information they need,” Pierce told Reuters in an email.
Smith said such a framework would be “very positive.”
Giancarlo, who earned the nickname “Crypto Dad” during his time as chairman of the Commodity Futures Trading Commission, declined to comment on whether he would be interested in becoming SEC chairman under the Trump administration.
He said regulators have discretion to create interim regulatory regimes that better serve the public and investors until Congress acts, and he also supported a cryptocurrency safe harbor.
“This will be the perfect place to begin this new era of innovation,” Giancarlo said.
Brooks did not respond to a request for comment.
Brian Hughes, a senior adviser to the Trump campaign, said in a statement that former President Trump is ready to remove “obstacles and unnecessary burdens” to cryptocurrencies.
Political impasse?
But the new chairman's power will depend on the political weighting of the five-member committee that votes on rules, enforcement and other key issues, which is held by a 3-2 majority by Gensler and two other Democrats who are also critical of cryptocurrencies.
The president can replace the SEC chairman with another commissioner, but Gensler is likely to serve out his term. Even if Gensler resigns, the four remaining commissioners will initially be evenly split, making it difficult to select a new chairman.
For example, Pierce said he expects major proposed changes to the safe harbor program and enforcement actions will be put to a vote in committee, suggesting approval may have to wait until Republicans have a majority.
Giancarlo said he wanted to suspend enforcement actions in cases where there was no harm, manipulation or fraud to investors.
“I think the right approach would be to pause it, have federal agencies work with Congress to immediately begin developing rules, and then give innovators time to comply,” Giancarlo added.
