By Hannah Lang
(Reuters) – When former U.S. President Donald Trump promised at a bitcoin conference on Saturday that if re-elected he would fire Securities and Exchange Commission Chairman Gary Gensler, a cryptocurrency skeptic, the crowd roared with joy.
“Wow! I didn't know he was so unpopular,” the Republican presidential candidate shouted to applause.
Trump, who once derided cryptocurrencies as a “scam,” is courting the industry and raking in big checks from donors in hopes of quickly ending Gensler’s crackdown on crypto.
Under Gensler, a Democrat appointed by President Biden, the SEC has brought dozens of cryptocurrency enforcement actions, including against major exchanges Coinbase (NASDAQ:), Binance and Kraken, and imposed hundreds of millions of dollars in fines.
A Trump victory could change that virtually overnight. He could appoint a crypto-friendly president to advance the industry’s wish list, which includes a crypto-rise roadmap that he claims has limited Americans’ crypto custody options; a safe harbor for new tokens; and rolling back enforcement measures.
“The most important thing we want from a new administration is the nomination of people to key positions… who have an appreciation and understanding of cryptocurrencies,” said Kristin Smith, executive director of the Blockchain Association, an industry group.
A Gensler spokesman declined to comment.
Citing a Supreme Court ruling, Gensler says most crypto tokens behave like securities and should be strictly regulated in the same way, a position that lower courts have mostly backed.
Cryptocurrency firms argue that tokens are commodities and want new laws clarifying their status, though that could take years if Congress remains divided.
While Gensler’s term ends in 2026, Trump could replace him with another commissioner as acting chair. The likely candidate is Hester Peirce, a cryptocurrency advocate and the SEC’s longest-serving Republican commissioner.
The industry is lobbying cryptocurrency enthusiasts Brian Brooks and Chris Giancarlo, who both worked in the first Trump administration, to fill the permanent role, executives said.
An acting president could immediately rescind the SEC’s 2022 guidance requiring public companies to account for crypto assets they hold on behalf of others as liabilities because of their risk. Banks struggle with this policy because strict capital rules require them to hold cash to cover liabilities.
Cryptocurrencies, with a market capitalization of about $2.5 trillion according to CoinGecko, would become more popular if consumers could store them with trusted lenders, executives say.
“I think that will be repealed on day one of the Trump administration,” said Cody Carbone, policy director at the Chamber of Digital Commerce, a digital asset group.
The industry is also pushing for a safe harbor from SEC registration rules for the issuance and trading of crypto tokens, an idea Peirce floated in 2020.
“We need to find a viable way to ensure that token offerings can occur outside the legal shadows and that token purchasers have access to the information they need,” Peirce told Reuters by email.
Smith said such a framework would be “incredibly positive.”
Giancarlo, who earned the nickname “Crypto Dad” when he was chairman of the Commodity Futures Trading Commission, declined to comment on whether he would be interested in becoming SEC chairman under a second Trump administration.
Until Congress acts, regulators have the power to design an interim regulatory regime that best serves the public and investors, he said. He also backed a safe harbor for cryptocurrencies.
“It would be a great place to start a new era of engagement with this innovation,” Giancarlo said.
Brooks did not respond to a request for comment.
Trump campaign senior adviser Brian Hughes said in a statement that the former president is prepared to remove “unnecessary obstacles and burdens” for cryptocurrencies.
POLITICAL DEADLOCK?
But the new chairman’s power would depend on the political weight of the five-member commission that votes on rules, enforcement and other major issues. It is dominated 3-2 by Gensler and two other Democrats who are also critical of cryptocurrencies.
While the chairman can replace the SEC chair with another commissioner, Gensler could continue his tenure as commissioner. Even if he were to leave, the four remaining members would be evenly split at first, limiting the choice of a new chair.
Peirce said, for example, that he expected any safe harbor plan and major proposed changes to compliance litigation to be put to a vote in committee, suggesting that approval might have to wait until Republicans win a majority.
Giancarlo said he would like to see a pause in enforcement actions where there is no investor harm, manipulation or fraud.
“I think the right approach would be to pause it … while the agency immediately moves to drafting the rules in coordination with Congress and then give innovators time to comply,” Giancarlo added.
