After enduring prolonged legal disputes with the U.S. Securities and Exchange Commission (SEC), the crypto industry interpreted President-elect Donald Trump’s victory as a turning point that would lift the heavy enforcement actions against them. The expectation was that Trump would subordinate SEC policies, notably those established under Chair Gary Gensler, easing regulatory pressure on the cryptocurrency sector.
However, experts suggest that unwinding Gensler’s regulatory legacy won’t happen overnight. According to former SEC officials and legal practitioners, resolving outstanding enforcement cases could be a protracted endeavor, likely extending into 2025 or beyond. Even with a pro-crypto shift in leadership anticipated, as Trump was a recent advocate for digital assets, the complexities surrounding ongoing legal matters will not be resolved rapidly.
One significant case involves the SEC’s litigation against Ripple Labs, arguing that the company functioned as an unregistered securities exchange. Legal analysts clarify that while changes in the SEC’s leadership could expedite future cases, restructuring the agency’s approach requires considerable time and deliberation.
The pressing questions concern whether current standards for identifying securities, primarily dictated by the Howey test, accurately encompass crypto tokens and determine whether these assets hold their securities classification on secondary trading platforms like Coinbase. Historically, the SEC has considered several crypto tokens to fall under securities legislation; thus, clarity on this definition is crucial for the industry’s ability to operate in the U.S.
Tension remains surrounding the SEC’s past actions, including approximately 80 enforcement actions initiated under Gensler, many of which were originally targeted by the previous administration. Observers predict a potential shift in focus for the SEC under a new, Republican-led commission, suggesting that cases deemed less severe or lacking consumer harm may transition to more favorable resolutions.
The current makeup of the SEC complicates immediate changes. While a new chairman could be appointed, the necessity of a commission majority means that decisive action such as dismissing cases or settling claims would require broader consensus.
Overall, the crypto industry is poised for a pivotal transition, as the outcome of existing enforcement actions and regulatory interpretations may either bolster or impede its future viability in the U.S. market.
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