(Bloomberg) — Gary Gensler makes one final argument about how the SEC should be allowed to regulate cryptocurrency markets ahead of the new Trump administration and its enthusiasm for digital assets.
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In prepared remarks for a legal conference Thursday in New York, the chairman of the Securities and Exchange Commission reiterated that the agency should focus on the “rules of the road” that apply to crypto sales and intermediaries, such as brokers and exchanges, to promote appropriate disclosure. .
The experience of the Great Depression, when so many investors were wiped out and the economy collapsed, taught policymakers the importance of “disclosure provisions, because securities information creates a good public,” Gensler said at the Practicing Law Institute’s annual meeting. securities regulation conference.
Gensler reiterated that Bitcoin itself is not a security, a position taken by his predecessor during the first Trump administration, Jay Clayton.
“We have instead focused on some of the other 10,000 or so digital assets,” which total around $600 billion, or less than 20% of the crypto market when Bitcoin, Ether and stablecoins are excluded, he said. he declared.
Decreasing days
Gensler commented as time begins to run out on the current administration, and perhaps on its approach to crypto regulation. The next Republican administration at the SEC is unlikely to share his view that the digital assets industry is rife with non-compliance, or that participants must follow the same decades-old securities rules as exchanges and traditional issuers.
President-elect Donald Trump has pledged to create a crypto-friendly regulatory framework, establish a strategic Bitcoin stockpile, and make the United States the industry’s global hub. A former crypto skeptic, Trump changed tactics after digital asset companies spent heavily on the campaign trail to promote their interests.
The Heritage Foundation’s Project 2025 pledged to significantly reduce the size and powers of the SEC watchdog. While Trump has distanced himself from his political views on Project 2025, some of his allies, like Elon Musk, have pledged to undertake similar plans through the new Department of Government Effectiveness.
“Elections have consequences, and they should,” Gensler said. “I am proud to continue President Clayton’s leadership,” he said. “In reality, we didn’t differ much,” referring to the lack of disclosure from the industry and crypto intermediaries not separating their different lines of business.
Court cases
Gensler touted the SEC’s legal victories over crypto-related investment products. “The courts have approved our actions to protect investors and rejected all arguments that the SEC cannot enforce the law when securities are offered, regardless of their form,” he said.
However, far fewer crypto enforcement cases may soon make it to court. The agency’s two Republicans, along with whoever is nominated and confirmed to lead the agency, are likely to reverse what many in the industry see as a crackdown on companies that have failed to registered their platforms or tokens.
The two Republican commissioners have already discussed how to share control of the SEC portfolio until a final chair is confirmed, according to several people familiar with the matter. Some of the scenarios would see Mark Uyeda, the younger of the two, appointed as interim president by Trump, while Hester Peirce, affectionately known as “Crypto Mom” by digital asset fans, would hold all executive powers on matters specific to the cryptography, people. said, who requested anonymity to describe the private interviews.
All of these scenarios would be subject to Trump’s final decision. Representatives for Peirce and Uyeda declined to comment.
Other personnel changes are also underway, with some top Gensler officials planning to leave. Jessica Wachter, chief of the Division of Economic Analysis and Risk, and Haoxiang Zhu, chief of the Division of Trade and Markets, are leaving in December to return to teaching at the Wharton School of Business and the Massachusetts Institute of Technology , respectively.
Both universities confirmed that officials would return in January.
DERA plays a role in SEC rulemaking by providing, among other analyses, estimates of economic impact and compliance costs. Zhu’s division undertook a fundamental rethink of the market structure. Some of these efforts are leading to significant changes in global markets and could strengthen financial resilience in the next crisis, such as measures to centrally clear trades in U.S. Treasuries or shorten the stock settlement cycle.
Other major projects are unlikely to be finalized, including new best execution requirements for stock trading and the concept of submitting trade orders to auctions between exchanges and wholesalers like Citadel Securities and Virtu Financial Inc.
Wachter and Zhu did not respond to requests for comment. An SEC representative said the agency does not comment on personnel matters.
–With help from Sunil Jagtiani.
(Updates focusing on enforcement efforts and staff departures, starting in fourth paragraph.)
