Gensler OUT! Trump’s Crypto Czar IN? Major Shakeup Coming to the U.S. SEC

The U.S. Securities and Exchange Commission (U.S. SEC) announced that the regulator’s 33rd Chair, Gary Gensler, will step down from his post on January 20, 2025, or the inauguration day of President-elect Donald Trump. 

• Meanwhile, Trump has expressed that his team is considering appointing a White House executive that will focus solely on cryptocurrency-related policies. 

What’s the significance: These two big moves will clearly benefit the crypto industry not just in America but around the globe—from mass adoption to crypto market.  

Gensler Out

In a press release, the U.S. SEC said that Gensler’s resignation will be effective at 12:00 p.m.

• Gensler assumed the office on April 17, 2021, in the aftermath of the GameStop market events.
• It should be remembered that one of Trump’s promises upon winning the presidency was to fire Gensler and allegedly replace him with a crypto-friendly official.

“He led the agency through a robust rulemaking agenda to enhance efficiency, resiliency, and integrity in the U.S. capital markets. He also oversaw high-impact enforcement cases to hold wrongdoers accountable and return billions to harmed investors.”

U.S. Securities and Exchange Commission

According to the Commission, under Gensler’s leadership, the U.S. SEC has” 

• Adopted critical enhancements to the $28 trillion U.S. Treasury markets.
• Made the first significant updates to the $55 trillion U.S. equity market in nearly 20 years.
• Adopted amendments regarding Form PF, the confidential reporting form for certain SEC-registered investment advisers to private funds.
• Adopted a number of changes regarding corporate governance, including updating the rules for when corporate insiders can sell their shares, for when executives have to give back compensation based on erroneously reported financials, and for disclosure of executive pay versus performance.
• Adopted rules to enhance disclosure around public company issuers’ cyber and climate risks, as well as for those companies seeking to go public via a special purpose acquisition company.
• Adopted rules requiring certain broker-dealers and investment advisers to notify customers of data breaches that might put personal information at risk.
• Enhanced transparency to the markets by regularly publishing aggregate, anonymized data regarding registered investment funds, private funds, and investment advisers.
• Negotiated a Statement of Protocol with Chinese market authorities to allow the PCAOB to fully inspect and investigate, for the first time, the auditors of China-related companies listed in the United States. 
• Received more than 145,000 tips, complaints, and referrals and awarded approximately $1.5 billion to whistleblowers; and filed more than 2,700 enforcement actions and obtained approximately $21 billion in penalties and disgorgement orders.
• Recovered more than $250 million for harmed investors through examination of investment advisors, investment companies, and broker dealers, among others.

“The Securities and Exchange Commission is a remarkable agency. The staff and the Commission are deeply mission-driven, focused on protecting investors, facilitating capital formation, and ensuring that the markets work for investors and issuers alike. It has been an honor of a lifetime to serve with them on behalf of everyday Americans and ensure that our capital markets remain the best in the world. I thank President Biden for entrusting me with this incredible responsibility. The SEC has met our mission and enforced the law without fear or favor.”

Gary Gensler, Outgoing Chair, U.S. SEC

Since Gensler assumed office, multiple crypto-related cases have been filed that cause FUD to the industry. 

• His leadership continued U.S. SEC’s battle against Ripple over $1.3 billion and ‘ongoing’ XRP sale that started in 2020.
  • In July 2023, the U.S. District Court of the Southern District of New York ruled that the sale of Ripple’s XRP tokens on cryptocurrency exchanges and via algorithms are not “investment contracts.”
  • Worth Reading: Case digest of U.S. SEC versus Ripple by Atty. Raf Padilla
• In 2022, The U.S. SEC also hosted an investigation into cryptocurrency wallet and exchange Binance over the 2017 initial coin offering of its native token, $BNB.
  • Binance Founder and then CEO Changpeng “CZ” Zhao questioned this move. 
  • On December 2023, a court imposed a $150 million civil monetary penalty on Zhao, and Binance is required to disgorge $1.35 billion in ill-gotten transaction fees, along with a $1.35 billion penalty to the CFTC, as part of the settlement.
  • Zhao and Binance also acknowledged guilt and consented to pay a $4.3 billion penalty to the U.S. SEC for violating the Bank Secrecy Act.
• In February 2023, crypto exchange Kraken agreed to pay a $30 million settlement to settle charges of offering an unregistered sale of securities through its staking-as-a-service program.
• In the same month, the regulator also warned blockchain firm Paxos to face a lawsuit filed for issuing their stablecoin Pax Dollar ($USDP) and Binance USD ($BUSD) tokens.
• Also in the same month, nearly a year after the Terra mishap, the regulator sued Terraform Labs and its co-founder and CEO Do Kwon for “orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.”
• Gensler also said in the same month that “everything other than bitcoin” is a security, and the U.S. SEC has the necessary legal tools to regulate them.
• Months after, in June 2023, the U.S. SEC named 12 cryptocurrencies as securities, which are $BNB, $SOL, $ADA, $FIL, $ALGO, $ATOM, $BUSD, $MATIC, $SAND, $MANA, $AXS, and $COTI. 
• On the same time frame, the regulator further filed a lawsuit against cryptocurrency exchange giants Binance and Coinbase.
• In August 2023, the U.S. SEC filed a lawsuit against Richard Schueler, also known as Richard Heart, and his three entities, Hex, PulseChain, and PulseX after Heart allegedly raised over $1 billion through the unregistered offer and sale of crypto asset securities to retail investors in the U.S. and abroad.
• On November 1, 2023, PayPal disclosed in its quarterly earnings report that it had received a subpoena from the U.S. SEC’s Division of Enforcement requesting documentation related to its USD stablecoin, $PYUSD.
• The U.S. SEC also alleged SafeMoon creator Kyle Nagy, CEO John Karony, and CTO Thomas Smith for withdrawing assets worth $200 million from the project and misappropriating investor funds.
• On a good note, the U.S. SEC approved the listing and spot trading of two cryptocurrencies—$BTC and $ETH. 
• In April 2024, the U.S. SEC issued a Wells Notice to Uniswap Labs, which signals an impending enforcement action against the company, the developer of Uniswap decentralized exchange and the $UNI token.
• In June 2024, leading Ethereum developer ConsenSys shared that the U.S. SEC has decided to end its investigation into Ethereum 2.0 without pressing any charges, emphasizing that selling $ETH is not considered a securities transaction, providing reassurance to developers and users of Ethereum.
• In August 2024, Abra, a cryptocurrency trading and lending platform, settled with the regulator over charges related to unregistered securities offerings and operating as an investment company with no proper licenses.
• In September 2024, eToro agreed to pay $1.5 million to settle U.S. SEC charges for operating as an unregistered broker and facilitating trades of certain crypto assets classified as securities.

Who is Gary Gensler Before Becoming a U.S. SEC Chair? Gensler earned his undergraduate degree in economics in 1978 and his MBA from The Wharton School, University of Pennsylvania, in 1979.

• He first worked at Goldman Sachs, where he became a partner in the Mergers & Acquisition department, headed the firm’s Media Group, led fixed income & currency trading in Asia, and was co-head of Finance, responsible for the firm’s worldwide Controllers and Treasury efforts.
• From 2017-2019, Gensler served as chair of the Maryland Financial Consumer Protection Commission.
• Gensler also became the Chair of the U.S. Commodity Futures Trading Commission, during the Obama Administration, and lead reform of the $400 trillion swaps market. 
• He also was senior advisor to U.S. Senator Paul Sarbanes in writing the Sarbanes-Oxley Act (2002) and was undersecretary of the Treasury for Domestic Finance and assistant secretary of the Treasury from 1997-2001.
• In recognition for his service, Gensler was awarded the Alexander Hamilton Award, the U.S. Treasury’s highest honor. He is also a recipient of the 2014 Frankel Fiduciary Prize.
• Before joining the SEC, Chair Gensler was professor of the Practice of Global Economics and Management at the MIT Sloan School of Management, co-director of MIT’s Fintech@CSAIL, and senior advisor to the MIT Media Lab Digital Currency Initiative. 

Crypto Czar In

First reported by Bloomberg, Trump’s team is purportedly talking to industry executives, including Coinbase CEO Brian Armstrong and former Coinbase executive Brian Brooks, to decide whether a White House role that will focus on crypto policies is needed.

• Role: The position that is being considered is expected to connect Trump, Congress, and federal agencies including the US Securities and Exchange Commission and Commodity Futures Trading Commission (CFTC), to communicate the president’s plans for the crypto industry. 
• However: Bloomberg clarified that it is unclear if the role will be a White House staff position or a “crypto czar” similar to Elon Musk becoming an “efficiency czar.” 
• Consequently, Trump is also being urged to appoint Summer Mersinger, a Republican CFTC commissioner who called out the government to take a more accommodating stance on crypto, to chair the CFTC. 

This article is published on BitPinas: Gensler OUT! Trump’s Crypto Czar IN? Major Shakeup Coming to the U.S. SEC

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