Key points:

  • Donald Trump has promised to fire SEC Chairman Gary Gensler, who is known for his strict approach to cryptocurrency regulation, if re-elected.
  • The cryptocurrency industry is pushing for tokens to be recognized as commodities.
  • If elected, Trump could appoint a new SEC chairman who supports cryptocurrencies.

At a Bitcoin conference on Saturday, former US President Donald Trump promised that if he is re-elected, he will remove Gary Gensler, the chairman of the Securities and Exchange Commission known for his skepticism of cryptocurrencies, from his post.

The announcement drew enthusiastic responses from the audience. Trump, who previously criticized cryptocurrencies as a “fraud,” is now showing support for the industry and receiving significant financial donations from sponsors, hoping for an end to Gensler’s hard-line policies on cryptocurrencies.

Crypto enthusiasts vs SEC

Under Gensler, a Biden-appointed official, the SEC has taken numerous enforcement actions against cryptocurrencies, including taking action against major exchanges like Coinbase, Binance, and Kraken, levying hundreds of millions of dollars in fines.

Crypto enthusiasts expect Trump to appoint a crypto-friendly chairman to implement the industry’s wishes, including loosening regulations that he believes limit Americans’ ability to hold cryptocurrency, creating a “safe haven” for new tokens, and ending enforcement actions. Gensler, citing a Supreme Court decision, has argued that most crypto tokens should be considered securities and strictly regulated as such, a position that has been echoed by lower courts.

Cryptocurrency companies have insisted that tokens should be classified as commodities, calling for new laws to clearly define their status. However, implementing such legislative changes could take years, especially if Congress remains divided.

While Gary Gensler’s term ends in 2026, Trump, if elected, could replace him with another commissioner, appointing him as acting chair. One likely candidate for the job is Hester Peirce, a cryptocurrency advocate who is one of the SEC’s two longest-serving Republican commissioners.

Who do crypto investors support?

The cryptocurrency industry is backing the candidacies of Brian Brooks and Chris Giancarlo, both of whom served in the first Trump administration. The acting SEC chairman could immediately repeal guidance adopted in 2022 that requires public companies to report crypto assets held on behalf of others as liabilities because of their risk. Banks have challenged the policy because strict capital requirements force them to hold cash to cover such liabilities.

Cryptocurrencies, which have a market cap of about $2.5 trillion, could become more popular if consumers could store them with reputable lenders, according to leaders of the Chamber of Digital Commerce, a digital asset group.

The industry is also pushing for a “safe harbor” from SEC registration rules for issuing and trading crypto tokens, which Peirce proposed in 2020. Brian Hughes, a senior adviser to Trump’s campaign, said the former president intends to remove “obstacles and unnecessary burdens” on cryptocurrencies.