What happened?
As the Trump administration prepares to take office, SEC Chairman Gary Gensler and CFTC Chairman Rostin Behnam announced their resignations. The leadership changes may bring alterations to the regulatory strategy for the cryptocurrency market, and Trump's nominated pro-crypto candidates may take a different approach.
Gensler criticized the cryptocurrency industry as 'full of bad actors' and emphasized that the current market is too reliant on sentiment rather than fundamentals; Behnam called on Congress to fill the regulatory gap, stressing the need for comprehensive regulations to address the challenges posed by the entry of the cryptocurrency industry into traditional financial institutions.
The future regulatory strategy in the U.S. may focus on the 'regulatory sandbox' model, providing a testing environment for cryptocurrency companies. Meanwhile, the advancement of cryptocurrency-related legislation is expected to take several months, with subsequent rule-making possibly lasting up to a year, highlighting the urgency of coordinating legislation and enforcement.
Cryptocurrency market 'full of bad actors': The impact and unfinished business during the SEC chairman's tenure.
The U.S. political landscape is about to undergo a new round of power transitions. With the Trump administration's inauguration approaching, several regulatory agencies' leaderships, including that of SEC Chairman Gary Gensler and CFTC Chairman Rostin Behnam, are announcing their resignations.
Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC), who is set to step down on January 20, reiterated his criticisms of the cryptocurrency market in an interview with Bloomberg TV, describing the industry as currently being 'full of bad actors.'
Gensler pointed out the concerning non-compliance in the cryptocurrency industry and compared his regulatory work with that of former Chairman Jay Clayton. He stated, 'We build on the foundation laid by Clayton and others before him. I take pride in our achievements, but there is still much work to be done.'
During Gensler's tenure, the SEC took a tough stance on the cryptocurrency market, deeming most cryptocurrencies to fall under the category of securities and urging cryptocurrency companies to register. About 100 enforcement actions were taken against the cryptocurrency industry, an increase from the 80 actions during Clayton's era.
However, critics within the cryptocurrency industry argue that existing rules are too applicable to traditional financial institutions, making it difficult for cryptocurrency companies to comply.
When discussing market characteristics, Gensler believes that the market now resembles 'Bitcoin versus other cryptocurrencies' and criticizes the cryptocurrency market for being overly reliant on sentiment rather than fundamentals.
CFTC Chairman warns: The regulatory gap in cryptocurrency needs to be filled by Congress.
The soon-to-be outgoing Chairman of the U.S. Commodity Futures Trading Commission (CFTC), Rostin Behnam, delivered his final public speech at the Brookings Institution in Washington, reiterating his call for regulation of the cryptocurrency industry.
Behnam mentioned that cryptocurrency-related legislation may take 6 to 10 months to complete, and the subsequent rule-making could take another year. He emphasized that as the cryptocurrency industry gradually penetrates traditional financial institutions, the lack of a comprehensive regulatory framework could pose future risks.
During Behnam's tenure, enforcement actions were taken against multiple cryptocurrency companies, including the now-bankrupt FTX exchange. Additionally, he supports several cryptocurrency bills proposed by legislators, including a bill co-sponsored by Senators Debbie Stabenow and John Boozman, which attempts to bring digital commodity trading under the jurisdiction of the CFTC.
A successor to replace Behnam has not yet been appointed, but the new interim chairman will play a key role in adjusting the regulatory direction.
How will the new leadership respond to challenges? Regulatory 'sandbox' may become a future trend.
With the transition of power in the U.S. presidency, the changes in leadership of regulatory agencies will bring new variables to the regulation of the cryptocurrency industry.
According to foreign media reports, the Trump administration plans to nominate Paul Atkins, an advocate for cryptocurrency innovation, to take over as SEC chairman, and may adopt a more crypto-friendly policy.
Behnam suggested that the new CFTC chairman might adopt a 'regulatory sandbox' model to provide a controlled testing environment for cryptocurrency companies, reducing their fear of enforcement and regulation.
However, both Behnam and Gensler share the common viewpoint that maintaining the status quo will not resolve the issues.
Behnam criticized the current legislative progress as 'imperfect but still in the right direction,' while Gensler believes that both the SEC and CFTC need to continue pushing for more enforcement actions to regulate the industry.
References: cointelegraph, theblock, theblock
More reports
National-level buying coming in 2025! Fidelity: The risk of the nation not buying Bitcoin is greater than buying it.
Is Telegram softening? In 2024, it provided more than 2,000 user data to the U.S. Is the spirit of 'pursuing freedom' still alive?