Key Notes
- Republican SEC commissioners Mark Uyeda and Hester Peirce are leading efforts to provide new regulatory guidance.
- Gary Gensler’s departure could signal a shift in the SEC’s stance, with potential freezes or dismissals of crypto lawsuits.
- There is growing debate over whether cryptocurrencies should be considered commodities or securities, with calls for the SEC to clarify.
The U.S. Securities and Exchange Commission (SEC) would soon end its war on crypto as the Donald Trump administration takes charge on January 20th. Under the supposed leader of crypto-friendly Paul Atkins, the securities’ regulator is gearing up for a crypto overhaul, reported Reuters.
Sources familiar with the matter told Reuters that the Republican SEC Commissioners Mark Uyeda and Hester Peirce are initiating the process of crypto regulatory guidance or rules clarifying the matters related to crypto securities.
Gary Gensler War on Crypto to End Soon?
SEC Chair Gary Gensler has already announced that he will be stepping down from his position by January 20, as the Trump administration takes charge. During his last four years at the office, Gensler brought a total of 83 crypto-related enforcement actions, according to Reuters.
This includes continuing the long-going XRP lawsuit as well as introducing lawsuits against other crypto firms like Coinbase and Kraken. In several instances, the SEC argued that crypto tokens function like securities, meaning companies and their products should adhere to SEC regulations, despite allegations of fraud.
Two sources familiar with the matter stated that in the first few days of the Trump administration, the SEC will review some existing crypto lawsuits and may freeze certain litigations that do not involve fraud allegations. Some of these cases could eventually be dismissed.
This would also supposedly put an end to the long-going Ripple vs. SEC lawsuit, as the SEC would soon be filing an opening brief today ahead of the January 15 deadline. In the hope of a positive development, the XRP price has already gained over 15% in the last 24 hours, shooting to $3.0 for the first time since 2018.
Digital Assets Are Commodities and Not Securities
Many defendants argue that cryptocurrencies resemble commodities rather than securities, and there is uncertainty about when SEC rules apply. They have urged the SEC to create new regulations to clarify when a token should be considered a security.
As per the previous reports, the SEC is likely to reverse the accounting guidance and repeal the controversial SAB 121 accounting rule that has made it prohibitively expensive for certain listed companies to hold crypto tokens on behalf of third parties. Sources suggest President-elect Trump plans to issue an executive order directing regulators to review their crypto policies.
Despite a strong headstart, chances are high that reaching an agreement on crypto regulations could take months. This is because of the nature of complex enforcement actions depends on the definition of security, and addressing them takes time.
Dismissing numerous enforcement actions would be unprecedented and could create a risky precedent by politicizing the enforcement process, according to Philip Moustakis, a partner at Seward & Kissel and former SEC attorney.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
