30s Summary

Incoming US President Donald Trump may replace Gary Gensler as chair of the US Securities and Exchange Commission (SEC) following his inauguration on 20 January. The expectation is based on Trump’s promise to support the digital asset industry and remove Gensler, a statement that has won him backing from prominent crypto advocates like the Winklevoss twins and Marc Andreessen. The crypto industry has had a fraught relationship with Gensler due to his stance that existing regulations are sufficient and that many crypto operations violate federal security laws. Should Gensler step down, Trump’s choice of replacement is likely to be confirmed by the Republican-majority Senate.

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Donald Trump, soon to be President, has made loads of promises, one of which is to boot Gary Gensler out and appoint a new chair for the U.S. Securities and Exchange Commission (SEC). This could happen as speedily as Trump’s inauguration, which is coming up on the 20th of January.

To give you a sense of timeline, Gensler took over his new office about 11 weeks after his appointment by the present President, Joe Biden, on February 3, 2021. But here’s the twist: Gensler might decide to leave before Trump comes in, in which case, the Democrats would choose an interim chair.

So, how did Trump manage to get the likes of the Winklevoss twins, Marc Andreessen, and Ryan Selkis to back him? Well, he promised to be in the corner of the digital asset industry, pledging his support for their expansion and continued development. But, the promise that probably excited the crypto community the most was, “On day one, I will fire Gary Gensler.” Now, while he can’t exactly force Gensler to resign from the SEC, Trump can select a new interim SEC chair from the minute he’s inaugurated. He can also propose a new commissioner.

Now, considering the Republicans have scored big in the Senate, Trump’s choice stands a good chance of being accepted, in which case, the new chair could settle into the office in a few months. Gensler, for instance, was confirmed by the Senate on April 14 and took the oath of office on April 17, after Biden nominated him on Feb. 3, 2021.

But Gensler hasn’t exactly been the crypto industry’s best friend. He insists that the existing rules and regulations for the industry are adequate. But, those in the crypto sector don’t agree. A key point of disagreement is Gensler’s belief (which aligns with his predecessor’s, Jay Clayton, who was also appointed by Trump) that most operations related to cryptocurrency on centralized exchanges violate federal security laws.

This year’s approval of the spot Bitcoin and ether exchange-traded funds (ETFs) by the SEC doesn’t change the stance of the financial regulator towards the navigation of crypto companies through the murky waters of the legal and illegal – touching on whether all cryptos are securities or not.

And you guessed right: Gensler is leading this rush since he’s not a big fan of cryptocurrencies. For instance, he was quoted to say at NYU’s School of Law last month: “With all respect, the leading lights of this field in 202[4] are either in jail or awaiting extradition right now.”

Should Gensler choose to step down before Trump takes office, whoever Trump chooses would likely replace Commissioner Caroline Crenshaw who is up for renomination. And if Gensler decides to completely resign from the commission, his replacement would also go through the process of being nominated and confirmed.

Meanwhile, some cryptocurrencies that were named by the SEC as unregistered securities in various lawsuits against exchanges have seen an increase in their prices. This includes Filecoin (FIL), Algorand (ALGO), Polygon (POL–formerly MATIC), and Near (NEAR). This is probably due to the anticipation of a more relaxed regulatory regime under the Trump administration.