Crypto Industry Wants Trump to Win and Call Off the SEC

(Bloomberg) — The cryptocurrency industry is hoping the upcoming U.S. presidential election will bring someone more lenient on sanctions to the White House, thus ending a long-running feud with Wall Street’s top law enforcement official.

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Former President Donald Trump has recently cozyed up to the $2.5 trillion crypto industry, even inviting supporters to a Bitcoin-focused fundraiser on July 27. Although the Republican candidate criticized cryptocurrencies while in office, his recent comments have been more positive, and advocates expect that if he wins, the U.S. Securities and Exchange Commission will stop pursuing the digital asset space so aggressively.

“A Trump administration would likely attempt to reset and rethink the SEC’s crypto regulatory policy,” said Michael Selig, a partner at Willkie Farr & Gallagher LLP. “Such a reset would naturally involve resolving ongoing enforcement actions and investigations initiated by the previous administration.”

Under President Joe Biden, the SEC has stepped up its efforts against the industry, particularly after the collapse of cryptocurrency exchange FTX in 2022. The regulator has filed dozens of enforcement cases, generally accusing exchanges and brokerages of failing to properly register under securities laws.

SEC Chairman Gary Gensler argues that most cryptocurrencies are securities and therefore must register with the agency. Many crypto companies argue that their tokens are not securities or say the registration requirements are unclear.

The SEC has settled some matters, but cases involving firms like Kraken, Coinbase and Binance are still in court. The SEC has also closed some of its investigations, including one into Ethereum and BUSD, a Binance-branded cryptocurrency issued by New York-based Paxos.

The various results left open the question of whether the tokens were securities. The SEC’s lawsuit against Ripple Labs Inc. and its executives could help settle the matter.

The SEC alleged that Ripple conducted an unregistered securities offering through the sale of XRP tokens, raising more than $1.3 billion. In what many saw as a setback for the SEC, a federal judge ruled last July that sales of XRP to retail investors on exchanges did not amount to investment contracts.

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Ripple Chief Executive Officer Brad Garlinghouse predicted a solution “very soon” in an interview with Bloomberg Television on Wednesday.

The SEC filed the lawsuit in 2020 while Trump was still in office, and Trump has not offered specific details about his views on crypto regulation. But several industry lawyers and executives said they expect less enforcement activity if he is re-elected.

“Remember, if Trump gets elected, Republicans can immediately change who the president is,” said Austin Campbell, an assistant professor and blockchain consultant at Columbia Business School. “What that means in practice is that many of these cases — rushed through with very variable degrees of quality and producing very variable decisions that lead to increasing confusion — could all be resolved instead of moving forward.”

Of course, it’s not certain that Trump will win the election or what his actual policy stance will be. Biden is leading in recent polls amid speculation that he could step aside to allow another Democrat to replace him on the ballot. It’s unclear whether that will happen, who it will be or how a different candidate would fare against Trump.

Some experts, however, do not predict that the SEC will drop the ongoing lawsuits or reach a settlement even if Trump wins.

Emily Meyers, general counsel at venture capital firm Electric Capital, said securities enforcement cases are generally “apolitical” and have a low rate of turnover due to political changes.

“It’s unlikely that ongoing cases, especially those already being argued in federal court, will be dropped,” Meyers said. “It’s more likely that a new administration or even a second Biden administration will bring fewer or different types of new crypto enforcement cases.”

Ji Kim, chief legal and policy officer at lobby group the Crypto Innovation Council, has a similar view.

“If President Trump is re-elected and Chairman Gensler resigns, we could see the current regulation-enforcement norm change,” he said. “But it will depend on the leadership and the makeup of the commissioners — nothing is guaranteed.”

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