Next SEC Chief Should Stop Going After Crypto

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

Coinbase CEO Brian Armstrong has said that the new U.S. 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.

He posted a chart with various statements by 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 became the basis for Ripple Labs’ defense in the lawsuit with the SEC.

Timeline of the Coinbase v SEC war

The conflict between Coinbase and the SEC has been going on for several years. In late March 2023, Coinbase received a notice from the SEC that the regulator planned to take enforcement action due to 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 compel the commission to respond to a request for new rules to regulate cryptocurrencies. However, the SEC asked the court to dismiss the lawsuit, citing a lack of obligation to respond promptly to such requests. In June 2023, the regulator filed its lawsuit against Coinbase, which included Coinbase, Inc. and Coinbase Global, Inc., but did not name Armstrong and other executives.

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

SEC statement

Since then, the standoff between the SEC and Coinbase has escalated. The exchange has filed multiple motions for partial summary judgment. However, the conflict between the regulator and the platform remains unresolved.

Gary Gensler may soon lose his job

The crypto community and the SEC have been in tension for several years, and this standoff has intensified with Gary Gensler‘s appointment as head of the SEC. It actively discusses the possibility of his resignation after the presidential election in 2024. Although his term officially ends in January 2026, historically, it has been shared that SEC heads should leave their positions due to a change in presidential administration.

Given Gensler’s controversial stance on digital assets, this situation is exciting to crypto market participants. If Kamala Harris wins the election, a new head of the SEC can be expected. If Donald Trump wins, significant changes in regulatory policy towards the crypto industry are predicted.

The change in the SEC leadership may lead to a new stage in the development of the American cryptocurrency market, especially given the current head’s critical attitude toward digital assets. Market participants hope for more constructive interaction with the new leadership and creating a more transparent regulatory environment for the crypto industry.

Why crypto community hates Gensler?

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

The sanctions have had a particularly noticeable impact on cryptocurrency issuers. In the United States, 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 (BTC) can be considered illegally issued securities. Based on this, he began to compile a “blacklist” of digital assets. In addition to Ripple (XRP), this list includes 68 other cryptocurrencies that the SEC has found to be unlawfully issued securities. Interestingly, Ethereum, the second-largest coin by market cap, was not included in this list. The reasons for this remain unclear, while other cryptocurrencies, like Ethereum (ETH), were included in the list.

Trump’s new SEC head could make the U.S. a crypto paradise

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

Gallagher served as an SEC commissioner from November 2011 to October 2015 and has worked in various 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 might be 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.