Key Takeaways
- Long-time crypto critic Gary Gensler has announced that he will step down from his role as the chairman of the U.S. Securities and Exchange Commission (SEC) ahead of Trump’s inauguration.
- Gensler, who was appointed to lead the agency by President Biden in 2021, has been accused by crypto companies of leading a “regulation by enforcement” agenda against them.
- During his term, the SEC brought legal action against major crypto firms, including Coinbase, Binance, Kraken, and Grayscale. The agency is trying to classify crypto tokens as securities to bring it under its oversight, a claim disputed by industry players who are calling for a whole new regulatory approach for the asset class.
- President-elect Donald Trump has promised to enact crypto-friendly policies and is expected to appoint a new SEC Chairman who will support growth and innovation in the sector.
Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC), will step down from his position as head of the agency on January 20, paving the path for President-elect Donald Trump to nominate a new chief for regulating the crypto and financial markets.
Gary Gensler Announces Decision To Step Down As SEC Chair Ahead of Trump’s Inauguration
The former Goldman Sachs banker, appointed by President Joe Biden to a five-year term in 2021, had faced significant opposition from the crypto sector after enforcing several regulatory actions against firms, suing them for billions of dollars alleging fraud and money laundering.
Among his top targets were leading cryptocurrency exchanges Coinbase, Kraken, and Binance.
Gensler’s enforcement actions turned him into a public enemy for crypto firms and investors. He also faced criticism from Trump, who while on the campaign trail in July, speaking at the Bitcoin 2024 conference in Nashville, promised to fire Gensler on “day one” if elected President.
Trump, who himself was once a crypto skeptic, widely embarrassed the industry during his campaign, promising to turn the U.S. into a “crypto capital” and mining all the remaining Bitcoins in the country. He also launched a decentralized finance (DeFi) business called World Liberty Financial, which aims to bridge the gap between traditional and crypto finance.
However, it looks like Trump won’t get the chance to fire Gensler as he has decided to leave the SEC on the same day the 45th and 47th President is scheduled to be inaugurated.
Gensler’s Term As The SEC Chairman Made Him Public Enemy of The Crypto Sector
Gensler took office a few months after the GameStop frenzy in 2021. His stakes rose after bringing lawsuits against crypto exchanges, accusing them of violating federal securities laws by selling unregistered securities in the form of crypto tokens, among other charges.
There were several high-profile disputes with the crypto industry, such as the legal battle with crypto asset manager Grayscale to block the listing of its Bitcoin ETFs. Grayscale managed to secure a court victory that ultimately paved the way for the launch of spot Bitcoin ETFs in the U.S.
In a press release on Thursday, the SEC said that under Gensler’s tenure, the agency brought actions against crypto intermediaries for “fraud, wash trading, registration violations, and other misconduct”.
Despite Gensler’s enforcement agenda, it was during his time that the financial watchdog approved spot Bitcoin and Ethereum exchange-traded funds (ETFs), which gave mainstream investors a regulated way to access the crypto market indirectly through their brokerage accounts. The spot Bitcoin ETFs have been a major success, attaining total inflows of nearly $30 billion from 12 funds that have been available in the market for less than a year.
The investment products tracking the market performance of BTC have already surpassed gold ETFs in assets under management, which has been available for over two decades.
Gensler’s regulatory actions and Trump’s promise to embrace the sector resulted in crypto companies pouring money into his campaign, turning it into the largest corporate campaign donor in 2024.
Who Could Replace Gary Gensler At SEC?
Trump’s reelection has brought new-found hope to the sector, with several crypto-friendly lawmakers making it into Congress. The President-elect’s landslide victory earlier this month has led to Bitcoin surging to record highs amid growing optimism around the future of crypto regulation in the U.S.
Prediction markets are betting on several front-runners to be the next SEC chairman, including the former acting U.S. Comptroller of the Currency Brian Brooks, former SEC Commissioner Paul Atkins, crypto attorney Teresa Goody Guillen, and former SEC Commissioner Dan Gallager.
SEC commissioners technically serve five-year terms, and Gensler’s term would officially end in 2026, but he is leaving the agency to make it easier for the Trump administration to work on its financial policies. In addition to Gensler, the terms of two of the other four commissioners are also expiring in the coming months.
