Next SEC Chief Should Stop Going After Crypto

Coinbase CEO criticized the SEC, saying the next Chairman should stop all “frivolous” lawsuits against crypto companies and apologize to Americans.

Coinbase CEO Brian Armstrong said the new US Securities and Exchange Commission (SEC) chairman should stop all “frivolous” lawsuits against crypto companies and apologize to American citizens. Armstrong also accused the regulator of inconsistency in defining crypto assets.

The next SEC chairman should drop all frivolous lawsuits and apologize to the American people.

This will not undo the damage done to the country, but it will begin the process of restoring confidence in the SEC as an institution. pic.twitter.com/kWVx73vYMs

— Brian Armstrong (@brian_armstrong) 29 October 2024

He published a table with various statements from SEC officials on this topic, including a quote from former Commissioner William Hinman, who said in 2018 that digital assets cannot be clearly classified as securities. This statement and other materials from Hinman formed the basis of Ripple Labs’ defense in its lawsuit with the SEC.

Timeline of Coinbase and SEC battle

The conflict between Coinbase and the SEC has been going on for several years. In late March 2023, Coinbase received notice from the SEC that the regulator planned to pursue enforcement action for possible violations of securities laws. This warning concerned some crypto assets on the platform, such as Coinbase Earn, Coinbase Prime and Coinbase Wallet.

In April 2023, Coinbase filed a lawsuit against the SEC to force the commission to respond to its request for new rules to regulate cryptocurrencies. However, the SEC asked the court to dismiss the case, citing that it had no obligation to promptly respond to such requests. In June 2023, the regulator issued a series of lawsuits, including Coinbase, Inc. and Coinbase Global, Inc., but did not name Armstrong and other executives.

“The SEC also charged Coinbase with failing to register the offering and sale of its crypto-asset-as-a-service staking program.”

SEC notification

Since then, the dispute between the SEC and Coinbase has escalated. The Exchange filed multiple motions for partial summary judgment. However, the dispute between the regulator and the platform is still unresolved.

Gary Gensler may lose his job soon

The crypto community and the SEC have been in tension for several years, and this tension has intensified further with the appointment of Gary Gensler as head of the SEC. The possibility of resignation after the presidential election in 2024 is being actively discussed. Although their term of office officially ends in January 2026, it has been shared that historically YSK presidents must leave their positions due to the change in presidential administration.

This is exciting for crypto market participants, given Gensler’s controversial stance on digital assets. If Kamala Harris wins the election, a new president of the SEC can be expected. If Donald Trump wins, significant changes in regulatory policy towards the crypto industry are anticipated.

The change in SEC leadership could lead to a new stage in the development of the American cryptocurrency market, especially considering the current leader’s critical attitude towards digital assets. Market participants hope to engage more constructively with the new leadership and create a more transparent regulatory environment for the crypto industry.

Why does the crypto community hate Gensler?

When Gensler became chairman of the SEC, the crypto industry faced increasing pressure from the regulator. However, not all of the measures taken by the commission are justified.

The sanctions had a particularly noticeable impact on cryptocurrency issuers. Since there are still no clear rules for determining the status of digital assets in the United States, the SEC is acting on its own assumptions.

According to Gensler, all cryptocurrencies other than Bitcoin (BTC) can be considered illegally issued securities. Based on this, he began compiling a “blacklist” of digital assets. This list includes Ripple (XRP) as well as 68 other cryptocurrencies that the SEC has identified as illegally issued securities. Interestingly, Ethereum, the second largest coin by market cap, was not included in this list. While the reasons for this remain unclear, other cryptocurrencies such as Ethereum (ETH) were also included in the list.

Trump’s new SEC chairman could turn the US into a crypto haven

In July, rumors began circulating about who could be chairman of the SEC if Trump wins the 2024 presidential election. Dan Gallagher is considered the first candidate. According to members of the crypto community, he could replace current SEC chairman Gary Gensler, whose policies did not suit crypto investors.

There are rumors that Dan Gallagher could replace Gensler in the Trump administration.

Gallagher served as Robinhood’s Chief Legal Officer and an SEC commissioner during Obama’s tenure.

Like this post if you think Gallagher would be pro-crypto if elected. pic.twitter.com/rtaelTaOy6

— Lark Davis (@TheCryptoLark) July 2, 2024

Gallagher served as SEC commissioner from November 2011 to October 2015, holding a variety of positions including advising Commissioner Paul Atkins and Chairman Christopher Cox. He also represented the SEC in the liquidation of Lehman Brothers.

There are several reasons why Dan Gallagher is the right person to lead the SEC if Trump wins. First, he has experience serving in multiple positions at the commission, making him familiar with the SEC’s internal processes and policies. Second, Gallagher has experience working in a Republican administration that supports Trump.