The Next SEC Chairman Should Stop Going After Crypto Companies
Date: 2024-10-30 Author: Gabriel Deangelo Categories: IN WORLD
Coinbase CEO Brian Armstrong said the next chairman of the U.S. Securities and Exchange Commission (SEC) should stop pursuing “futile” lawsuits against crypto companies and apologize to American citizens. Armstrong also accused the regulator of being inconsistent in determining the status of crypto assets.
He presented a chart with various statements by SEC officials, including one by former Commissioner William Hinman, who argued in 2018 that digital assets cannot be clearly classified as securities. This thesis and other materials from Hinman became the basis for Ripple Labs’ defense in their lawsuit against the SEC.
A Timeline of the Coinbase vs. SEC Conflict The standoff between Coinbase and the SEC has been going on for several years now. In late March 2023, Coinbase received a notice from the SEC that the regulator intended to take action against potential 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 a request for new rules to regulate cryptocurrencies. However, the SEC asked the court to dismiss the lawsuit, citing no duty to promptly respond to such requests. In June 2023, the regulator filed its own lawsuit against Coinbase, which includes Coinbase, Inc. and Coinbase Global, Inc., but does not involve Armstrong and other company executives.
Since then, the standoff between the SEC and Coinbase has only intensified. The platform has filed several motions for partial judgment, but the conflict remains unresolved.
Gary Gensler's Future Relations between the crypto community and the SEC have become strained with the appointment of Gary Gensler as the head of the commission. Many are discussing the possibility of his resignation after the US presidential election in 2024. Although his official term does not expire until January 2026, historically, SEC heads often leave their positions when the presidential administration changes.
Since Gensler has had a controversial relationship with the crypto market, crypto investors are hoping that the new SEC chairman will be more constructive in engaging with the industry and creating a transparent regulatory environment.
Reasons for the Crypto Community's Discontent with Gensler Since Gensler was appointed as the SEC chairman, the crypto industry has faced increased pressure from the regulator. SEC sanctions have had a particularly significant impact on crypto issuers. In the US, there are still no clear rules for determining the status of digital assets, so the SEC is guided by its own assumptions.
According to Gensler, all cryptocurrencies except Bitcoin are illegally issued securities. He even began compiling a “blacklist” of crypto assets, which included 68 cryptocurrencies, including Ripple’s XRP, which the SEC considered illegally issued securities. However, the list did not include Ethereum, the second-largest cryptocurrency, which raises many questions among market participants.
Trump’s New SEC Head Could Create a “Crypto Paradise” In July 2024, rumors began to circulate about who could lead the SEC if Donald Trump wins the presidential election. Former SEC Commissioner Dan Gallagher is being considered among the candidates. According to the crypto community, his policies could significantly improve the regulator’s attitude towards the crypto industry.
Gallagher served at the SEC from 2011 to 2015, including as an adviser to Commissioner Paul Atkins and Chairman Christopher Cox. He has experience in a Republican administration that supports Trump, making him a favorite candidate for the SEC chairmanship among cryptocurrency advocates.
Gallagher could be the leader who brings long-awaited changes and creates conditions for more favorable regulation of the crypto market in the United States.
