The next SEC chief should stop pursuing cryptocurrencies

Coinbase CEO criticizes SEC for saying the next president should stop all “frivolous” lawsuits against crypto companies and apologize to Americans.

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

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He published a graphic with several 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 Hinman materials became the basis of Ripple Labs' defense in the SEC lawsuit.

Timeline of the war between Coinbase and SEC

The conflict between Coinbase and the SEC has been going on for several years. In late March 2023, Coinbase received notification from the SEC that the regulator planned to take enforcement action due to 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 a lack of obligation to respond promptly to such requests. In June 2023, the regulator filed his lawsuit against Coinbase, which included Coinbase, Inc. and Coinbase Global, Inc., but did not name Armstrong or other executives.

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

SEC statement

Since then, the confrontation 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 could soon lose his job

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

Given Gensler's controversial stance on digital assets, this situation is exciting for 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 leadership of the SEC may lead to a new stage in the development of the American cryptocurrency market, especially given the current director's critical attitude towards digital assets. Market participants expect more constructive interaction with new leaders and the creation of a more transparent regulatory environment for the crypto industry.

<h2 class="wp-block-heading" id="why-the-crypto-community-hates-gensler”>Why does the crypto community hate Gensler?

When Gensler became SEC chairman, 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 notable impact on cryptocurrency issuers. In the United States there are still no clear rules to determine 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, it began to compile a “blacklist” of digital assets. In addition to Ripple (XRP), this list includes 68 other cryptocurrencies that the SEC has determined to be illegally issued securities. Interestingly, ethereum, the second largest coin by market cap, was not included in this list. The reasons for this are still unclear, while other cryptocurrencies, such as ethereum (eth), were included in the list.

<h2 class="wp-block-heading" id="trumps-new-sec-head-could-make-the-u-s-a-crypto-paradise”>Trump's new SEC chief could make the US a crypto haven

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

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Gallagher served as SEC Commissioner from November 2011 to October 2015 and has served in various capacities, 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 could be the right person to lead the SEC if Trump wins. First, he has experience 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.