Ex-SEC Official Says Gary Gensler’s Crypto Crackdown is Over

Former SEC official John Reed Stark says the U.S. crypto industry may soon be under a new wave of regulatory pressure, though it will mostly wind down as far as enforcement against crypto companies goes.

This is partly due to a presidential victory and the likely changes in leadership at the SEC. Crypto firms are under the microscope of current SEC Chair Gary Gensler, including heavyweights like Coinbase, Kraken, and Consensys.

Gensler said his approach was based on the idea that cryptocurrencies should be treated like traditional securities. Yet since he took this stance, a series of high profile enforcement actions have followed.

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But lawmakers, including some in his own party, have criticized Gensler’s regulatory approach. In September, Rep. Ritchie Torres lambasted Gensler’s wide sweeping of the securities law onto digital assets as a stifling of the industry innovation.

And Stark now thinks that the vast majority of crypto space enforcement actions that will die down, barring fraud or misconduct.

Gary Gensler Likely to Step Down

SEC leadership may see big changes with Trump taking office, thereby impacting how regulatory priorities for crypto will operate. Gensler, however, suggests he may step down as chair before Trump takes office.

Instead, Trump could appoint one of the current Republican SEC Commissioners, like Hester Peirce or Mark Uyeda as interim chair.

In the crypto world, Peirce, nicknamed ‘Crypto Mom,’ has been a strong critic of Gensler’s attitude to crypto regulation. But she is viewed as more industry friendly. She has said she is not in any rush to be SEC chairman after her current term.

Another Republican commissioner, Uyeda, has also criticized the SEC’s handling of crypto, saying it’s hurting the industry.

Other possible candidates for the prominent role include former SEC Commissioner Paul Atkins, Robinhood’s chief legal officer Dan Gallagher, or ex head of the Commodity Futures Trading Commission, Chris Giancarlo.

Among these candidates, each has a good amount of regulatory experience and could go further lenient with crypto enforcement.

Peirce or Uyeda May Signal Relief

Stark says while big changes will be expected, the SEC could continue to go after already advanced cases. In cases where rulings are in process, the agency would likely try to put the cases to final settlements.

But the number of enforcement actions against the crypto industry are expected to significantly drop. As SEC Chair Gensler has pushed an aggressive enforcement strategy, the regulator has held that cryptocurrencies fall under securities laws.

He suggests that Peirce or Uyeda would likely be less interventionist, creating more space for the industry, should they take over. This change could clear the way for U.S.-based crypto firms to emerge, despite having largely struggled with regulatory uncertainty as a main impediment.