Will Crypto Regulations Under Trump Bring Clarity to the Industry?

The U.S. Securities and Exchange Commission (SEC) is preparing for a major shift in its approach to crypto regulations. This takes place as President-elect Donald Trump returns to the White House.

Republican commissioners Hester Peirce and Mark Uyeda, both known for their crypto-friendly views, are expected to spearhead efforts to overhaul the SEC’s crypto policies as early as next week, according to sources familiar with the matter.

Peirce and Uyeda will hold the majority among politically appointed SEC commissioners starting Jan. 20. This change positions them to lead the agency while Trump’s nominee for SEC chair, Paul Atkins, awaits Senate confirmation.

Atkins, a former SEC commissioner and cryptocurrency advocate, is expected to reverse the crackdown on digital assets pursued by outgoing SEC Chair Gary Gensler.

Ongoing Crypto Regulation and Enforcement Actions Under Review

An initial task for the SEC under the new leadership will be to assess ongoing enforcement matters concerning cryptocurrencies.

In his term, Gensler initiated 83 enforcement actions related to crypto. These included cases against major crypto projects like Coinbase, Kraken and Ripple among others. The majority of these cases related to the SEC’s argument about the fact that many coins are securities. They also believe these are subject to federal securities laws.

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But the new commissioners who are about to come on board are planning to suspend some of these cases. These would especially be those cases that are not fraud related. The industry participants have long maintained that the tokens are commodities not securities. Also adding that the lack of guidance from the regulator has been detrimental to business.

Some of the enforcement actions may be completely dropped, according to the people familiar with the discussions. The following was also revealed,

“This review process will seek to bring as much certainty as can be to the companies while at the same time safeguarding investors from being screwed.”

Plans for New Rules and Industry Feedback

Peirce and Uyeda will also consider proposing new rules for the cryptocurrency sector in the near future while assessing the current enforcement actions.

These rules are expected to help companies understand which digital assets are securities under the U.S. laws. The SEC will also likely solicit input from the public and the crypto community, to guarantee that any regulations under development pertain to major issues in the sub-sector.

Another area that will require attention by the new leadership is the spate of accounting standards that were put in place during Gensler’s reign.

These guidelines rendered it expensive for any publicly traded company to hold cryptocurrencies on behalf of its clients, denying institutions an entry point into the market. The new SEC team is expected to repeal these rules to encourage more people to embrace digital assets.

In his campaign, President-elect Trump has shown his support towards the cryptocurrency industry and even calls himself the “crypto president”. It has been claimed that Trump may sign executive orders telling the regulators to update their stance on digital assets and blockchain.

Crypto Market Reacts to Policy Changes

The possibility of a better regulatory environment has already boosted the morale of the cryptocurrency market. Bitcoin, the world’s most popular cryptocurrency, hit $100,000 in December amid expectations of policy shifts under the Trump government.

The cryptocurrency industry has been calling for greater regulatory certainty for many years. Some people insist that clear rules will help create new business opportunities and at the same time meet the requirements of federal laws. As the two leaders of the SEC, Peirce and Uyeda, the regulator looks ready to tackle these issues.

Industry and investors are optimistic that the revamp will finally provide much needed guidance on the legal framework governing digital assets.