Analysis: Crypto Players’ Wishlist for a Potential Second Trump Administration by Reuters

By Hannah Lang

When former U.S. President Donald Trump addressed a bitcoin conference on Saturday, he promised that if reelected, he would fire Securities and Exchange Commission (SEC) Chair Gary Gensler, a known skeptic of cryptocurrencies. The audience erupted with enthusiasm at this announcement.

"Wow, I didn’t know he was that unpopular," Trump exclaimed, amplifying the crowd’s excitement.

In a notable turnaround from his previous views, where he labeled cryptocurrencies a "scam," Trump is now actively engaging with the crypto industry and receiving significant donations from supporters who are eager for him to halt Gensler’s regulatory actions against crypto.

Under Gensler, who was appointed by President Biden, the SEC has pursued numerous enforcement actions against major players in the crypto market such as Coinbase, Binance, and Kraken, imposing substantial fines in the process.

A victory for Trump could dramatically alter the regulatory landscape almost immediately. He could appoint a SEC chair more aligned with crypto interests and pursue initiatives that the industry has long sought, including revising guidelines that restrict Americans’ options for crypto custody, establishing a safe harbor for new tokens, and rescinding various enforcement actions.

"The most critical aspect we hope to see from a new administration is the appointment of individuals who truly understand and appreciate the value of crypto," stated Kristin Smith, CEO of the Blockchain Association.

Gensler’s office declined to comment on the matter. He asserts that many crypto tokens are synonymous with securities and should be subject to stringent regulations based on a Supreme Court ruling, a stance that various lower courts have largely supported.

On the other hand, crypto firms argue that tokens should be classified as commodities and are advocating for clear legislation to define their status, though achieving this could take time given the current political climate in Congress.

Although Gensler’s term is set to end in 2026, a new administration could appoint a different commissioner to serve as acting chair. One possible candidate for this role is Hester Peirce, a pro-crypto advocate among the SEC’s Republican commissioners.

The industry is also promoting figures like Brian Brooks and Chris Giancarlo, who both served in Trump’s first term, for the position of permanent chair.

An acting chair could quickly abolish the SEC’s 2022 guidance that requires public companies to categorize crypto assets held on behalf of others as liabilities due to perceived risks, a regulation that has posed challenges for banks adhering to strict capital rules.

Executives believe that allowing consumers to securely store cryptocurrencies with trusted financial institutions would significantly boost market participation, which currently stands at approximately $2.5 trillion.

"I believe that guidance will be rescinded on Day One of a Trump administration," commented Cody Carbone, chief policy officer at the Chamber of Digital Commerce.

The crypto community is also advocating for a safe harbor provision to exempt crypto token issuances and trading from SEC registration requirements, an idea previously proposed by Peirce in 2020.

"We need to identify a workable solution to facilitate token offerings while ensuring purchasers have access to necessary information," Peirce explained in an email.

Smith believes that such a framework would be "incredibly positive" for the industry. Giancarlo, known affectionately as "Crypto Dad" during his tenure as chair of the Commodity Futures Trading Commission, refrained from commenting on whether he would be interested in leading the SEC under another Trump administration.

He did note, however, that until Congress takes action, regulators have the flexibility to create an interim regulatory atmosphere that could better protect the public and investors. He also expressed support for the proposed safe harbor.

"This would serve as an excellent foundation for a new era of collaboration with this innovative sector," Giancarlo stated.

Brooks did not respond to media inquiries. Meanwhile, Brian Hughes, a senior advisor to Trump’s campaign, indicated that the former president is prepared to eliminate "obstacles and unnecessary burdens" for the crypto industry.

However, the authority of a new SEC chair would largely hinge on the ideological balance of the five-member commission, which is currently led 3-2 by Gensler and two other Democrats who share his critical perspective on crypto.

While the president can appoint a new SEC chair from among the current commissioners, Gensler may remain in his position as commissioner. If he were to step down, the remaining four commissioners would be evenly divided, which could limit the effectiveness of any new chair.

Peirce mentioned that she anticipates any proposed safe harbor and major changes to enforcement policies would require votes from the commission, suggesting that approval might be delayed until Republicans regain majority control.

Giancarlo expressed his desire for a temporary halt to enforcement actions where no investor harm, manipulation, or fraud exists.

"I believe it would be prudent to pause enforcement while the agency collaborates with Congress to draft new regulations and gives innovators a chance to comply," he added.