Former SEC official says Gary Gensler’s crackdown on crypto has ended
The SEC has lost its war on crypto. US crypto bigwigs expect a friendlier SEC under Donald Trump. Cases against US crypto companies will be scrapped.
Crypto in the US is about to be free from its biggest albatross ― relentless regulatory enforcement by the Securities and Exchange Commission.
That’s according to John Reed Stark, a 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 is not going to be bringing any fraud cases against cryptoverse participants at all in the coming years,” Stark said.
Under Gary Gensler, the current SEC chair, crypto firms in the US have come under intense scrutiny.
Gensler’s SEC has brought enforcement actions against major US crypto companies including Consensys, Coinbase, and Kraken. Others including Immutable and OpenSea have also come under investigation by the SEC.
These regulatory actions have been backed up by Gensler’s insistence that the crypto industry isn’t different from other capital markets. That means crypto can be regulated similarly to stocks and bonds under the same federal securities laws in the US which are almost a century old.
Gensler’s position on the matter has drawn criticism even from fellow Democrats. In September, Ritchie Torres, a Democrat from the Bronx in New York, berated the SEC chair for his vague interpretation of securities laws that potentially lumped NFTs and other cryptocurrencies with stocks and bonds.
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Stark said most of those cases will grind to a screeching halt except the ones that involve “egregious fraud.”
He also said the SEC would seek to finalise settlements already ruled upon by presiding judges.
As for Gensler, Stark said that he’d likely quit as chair of the SEC before Trump’s inauguration of the SEC.
Trump promised to fire Gensler on day one of his presidency but Stark argued that such a course of action was unnecessary.
“Trump doesn’t need to fire Gensler and can instead appoint one of the current Republican Commissioners as acting chair,” Stark said.
That would mean Gensler’s demotion to the position of commissioner.
Next SEC chair
Hester Peirce, the senior of the two Republican SEC Commissioners, would be the likely choice for acting head of the SEC, Stark said.
Peirce, beloved by the US crypto industry as “Crypto Mom,” reportedly said she’s not interested in heading the SEC beyond the expiration of her tenure next year.
Peirce’s Republican colleague Mark Uyeda is also rumoured Gensler replacement. Uyeda has criticised the SEC’s approach to crypto regulations as a “disaster for the whole industry.”
Robinhood’s chief legal officer Dan Gallagher is also a prominent contender for the SEC chair. Gallagher has experience with the SEC as he served as a commissioner between 2011 and 2015.
Other candidates considered for the job include former SEC Commissioner Paul Atkins and former head of the Commodity Futures Trading Commission Chris Giancarlo.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. To share tips or information about stories, please contact him at osato@dlnews.com.
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