The cryptocurrency industry is hoping that the U.S. presidential election will produce a president who is more flexible on digital assets, thus ending long battles with Wall Street regulators, according to Bloomberg.
Former President Donald Trump has courted the $2.5 trillion cryptocurrency sector, even inviting his supporters to a Bitcoin-focused fundraiser on July 27.
Although the Republican candidate criticized cryptocurrencies while in office, his recent comments have been more positive, and lawyers expect that if he wins, the US Securities and Exchange Commission will stop aggressively pursuing the digital assets space.
Re-Set
“The Trump administration is likely to seek to rethink and reset the SEC’s crypto regulatory policy,” said Michael Selig, a partner at law firm Wilkie Farr & Gallagher. “This will include resolving the enforcement actions and ongoing investigations conducted by the previous administration.”
Under President Joe Biden, the Securities and Exchange Commission has intensified its investigations into the sector, especially after the collapse of the NTX cryptocurrency exchange in 2022.
The agency has filed dozens of lawsuits over cryptocurrencies, often accusing exchanges and broker-dealers of not properly registering under securities law.
SEC Chairman Gary Gensler maintains that most cryptocurrencies are securities and therefore must be registered with the agency, though many crypto companies argue that their tokens are not securities or say the registration requirements are unclear.
The SEC has settled some cases, but lawsuits involving companies including Kraken, Coinbase and Binance are still tied up in court.
The SEC has closed some of its investigations, including one into Ethereum and another into Binance-branded BUSD, issued by New York-based Paxos.
The mixed results have left open the question of whether or not tokens are securities, and the SEC’s lawsuit against Ripple Labs and its executives could help put that to rest.
an offer
The SEC believes Ripple conducted an unregistered securities offering by selling XPR tokens, raising more than $1.3 billion. In what many saw as a setback for the SEC, a federal judge ruled in July that the cryptocurrency’s sales to retail investors on exchanges did not amount to investment contracts.
Bloomberg quoted Ripple CEO Brad Garlinghouse as saying he expected a solution to be reached “very soon.”
The SEC filed the lawsuit in 2020, while Trump was still in office, and has not offered specific details about his views on crypto regulation, but several lawyers and industry executives said they expect less enforcement activity if he is re-elected.
Securities enforcement cases are typically “apolitical,” and there is little employee turnover as a result of political changes, Emily Myers, general counsel at venture capital firm Electric Capital, told Bloomberg.
“It is unlikely that any ongoing cases, especially those already argued in federal court, will be dismissed,” she added. “It is more likely that the new administration, or even a second Biden administration, will bring fewer or different new crypto enforcement cases to court.”
