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A pro-crypto SEC has the potential to reshape crypto markets
With the Trump transition team considering several candidates for the head of the SEC, following the announced resignation of Gary Gensler, crypto investors and policy advocates would be well served to begin considering what a pro-crypto SEC might mean for the sector. Specifically as Paul Atkins, a former commissioner between 2002-2008, and Brian Brooks (previous acting comptroller of the currency), and former SEC General Counsel Robert Stebbins emerging as leading candidates, the prospect of a more pro-crypto SEC is emerging as a real possibility.
Additionally, former SEC chairperson Jay Claton has publicly expressed optimism for favorable regulations from the crypto industry under the incoming Trump administration, including a likelihood for crypto legislation with the removal of executive and administrative barriers. Even if the optimism and hopes for a strongly pro-crypto SEC does not come to pass, a tempering of the aggressive regulatory-by-enforcement approach taken under outgoing chair Gary Gensler would represent a tailwind for crypto. Setting aside the positive, albeit still in early stages, discussions of establishing strategic bitcoin reserves at the state and/or federal level (which would be outside the purview of the SEC), there are several items investors and policy advocates should watch moving forward.
Improved Tokenization Options
One of the most damaging effects of the antagonistic regulatory approach taken by the SEC has been that crypto entrepreneurs and institutions have faced obstacles when seeking to establish and grow crypto-native businesses. Notwithstanding individual examples such as Prometheum that have received exemptions from the SEC, the market landscape for organizations seeking to offer what are perceived as traditional products and services has been antagonistic at best.
No matter which individual is at the head the of SEC under the second Trump administration the reality is that the landscape and approach toward crypto products and services will be more accessible versus under chairperson Gensler. A note of caution that should be included in any optimistic expectations for a pro-crypto SEC is that the policies enacted might not play out precisely as crypto investors or advocates might expect. Specifically, since discussions of a bitcoin reserve have continued to dominate crypto discourse at the media level, investors should be cautious when setting expectations for comprehensive administrative action.
Easing Regulatory Concerns
One of the largest benefits and upsides of a pro-crypto SEC is that the regulatory outlook and approach would be less antagonistic versus what has been in place under the current SEC chairperson. Especially for entrepreneurs and policy advocates seeking to establish U.S. crypto-based firms in the U.S., having the ability to chart out plans over the near to medium term is an essential part of the capital raising and deployment process. Given the reality that the SEC has actively and publicly waged a campaign against crypto entrepreneurs even a moderation of legalistic tactics would provide a tailwind to the sector.
In addition to easing concerns about regulatory over-reach, an SEC that is actually approachable and open to discussions with the crypto sector about launching businesses and tokens would – virtually by default – provide a boon to the space. Following the bull run in cryptoassets after the election of President Trump, this multi-trillion dollar asset class is set to play a leading role in financial markets moving forward; an SEC open to these discussions (even if no overt policy is enacted) will help attract capital to the U.S. to foster these efforts.
Crypto Advisory Council
One of the most pro-crypto indications that have emerged from the Trump transition team is that the Trump White House plans to establish a formal crypto advisory council. Setting aside the speculation around strategic bitcoin reserves and other speculative initiatives, the fact is that prioritizing crypto at the federal level will have several benefits. First, it indicates – along with the possibility of a pro-crypto SEC – that the U.S. is officially open and amendable to crypto investors and entrepreneurs. Second, having a thriving crypto ecosystem will also be beneficial to other emerging sectors such as AI and GenAI, both of which are essential to leadership in technology-augmented industries moving forward.
Not directly connected to the SEC, and fully respecting the fact that the SEC operates with its own agenda and mission, focusing on crypto at the both the regulatory and executive level will enable more comprehensive communication.
Regardless of which individual is set to lead the SEC starting in 2025, crypto investors and advocates should be cautiously optimistic and prepared for substantive conversations as well as positive progress.