Original title: What Gary Gensler Could Still Do Against Crypto in His Remaining Days as SEC Chair
Original author: Veronica Irwin, unchainedcrypto Original translation: Shan Ouba, Jinse Finance
Despite being deeply unpopular in the crypto industry, SEC Chair Gary Gensler still has the ability to initiate multiple actions before leaving office, but reports suggest these measures may be quickly revoked.
After Donald Trump won the U.S. presidential election, the crypto market rebounded significantly. Investors are full of expectations that the self-proclaimed 'crypto-friendly' president will lead the country for four years, combined with the Republican control of the Senate and possibly the House of Representatives, which gives the crypto industry confidence for the next four years. Currently, the biggest political concern in the blockchain community is what actions Gensler will take in the 75 days before Trump is sworn in on January 20.
Trump has promised to immediately remove Gensler from his position upon taking office, and experts are divided on whether Gensler will deliver a 'devastating blow' to the crypto industry during the remainder of his term or choose to 'lay down arms'. However, most experts agree that Trump's successor will have the authority to halt existing investigations, lawsuits, and even new rule-making.
'Any enforcement action he initiates can be revoked,' said Jonathan Padilla, CEO of Web3 marketing tools company Snickerdoodle Labs and an active Democrat. 'Any new rules can also be overturned by a new chair or new Congress.' Padilla stated, 'Basically, everything can be revoked within 100 days.'
Despite Trump's multiple promises to 'fire' Gensler on the first day of the new administration due to Gensler's hostile attitude towards the crypto industry and 'enforcement-style regulation', Trump may not be able to legally remove Gensler from the SEC commissioners entirely. However, he could demote Gensler to an ordinary commissioner, significantly reducing his authority. Typically, SEC chairs appointed by the president voluntarily resign when a new administration takes office; however, when Fox News reporter Eleanor Terrett asked Gensler if he planned to resign before Trump's inauguration, the SEC spokesperson declined to comment.
The SEC did not immediately respond to inquiries regarding this article.
Possible Actions by Gensler
Trump may appoint a new chair with a completely different stance, which might prompt Gensler to impose stricter regulatory measures on the crypto industry in his final days. Jack Chewinski, Chief Legal Officer of Variant Fund, warned that 'when new leadership takes over federal agencies, crypto policy will change immediately and significantly.' He stated on the X platform that 'before that, the current administration may be busy completing rule-making and initiating enforcement actions.'
However, some, like Padilla, speculate that Gensler may quietly ride out the remainder of his term. Sources familiar with the SEC indicate that Gensler's staff may slow down the execution of any actions he wishes to take, undermining his ultimate influence.
If Gensler decides to take significant action, he has several options. For example, he could unilaterally initiate new investigations into companies believed to be violating securities laws, potentially manifested through issuing new Wells notices or subpoenas. If Gensler can gain the support of other Democrat-appointed commissioners, he may also file lawsuits against some companies that have already received Wells notices, such as the crypto gaming company Immutable, the NFT platform OpenSea, and the stock and crypto trading platform Robinhood.
However, Gensler does not have enough time to resolve any new legal lawsuits or complete new rule-making before January 20, as both processes typically take months. Once the new SEC chair is in office, they will have the authority to suspend such lawsuits or abandon them.
Gensler also has the power to further advance rule-making that has already been proposed and completed the public comment process. For instance, he could finalize the SEC's update on the definition of 'exchange', expanding registration requirements for market makers (including some crypto businesses).
However, supporters of the crypto industry may also sue over these new rules. At the same time, Congress can use the Congressional Review Act to overturn these rules as long as Congress acts within 60 days of the session beginning. Therefore, if Gensler passes new rules before January 20, the upcoming Congress's early session will be occupied.
For rules not overturned by Congress within 60 legislative days, the new SEC chair can also gradually repeal them. However, this will be a longer process, as the SEC will need to follow the public comment process of the Administrative Procedure Act to formulate new rules to repeal those approved by Gensler.
Although rare, there is indeed a historical precedent for the SEC to take action during the transition between a newly elected president and their inauguration. For example, the Trump administration filed a lawsuit against Ripple on December 22, 2020 (just before his term was about to end), even though the SEC was less politicized at the time, and this move may not have been related to the differing attitudes of the incoming SEC chair under Biden.
Sources say that the SEC's enforcement actions are rarely so strongly influenced by political factors, and speculation about how Gensler will handle crypto affairs in his final moments is unprecedented. A source experienced in dealing with SEC lawsuits explained: 'This reflects Gary's anti-crypto stance during his term. The SEC's enforcement strategy has never been as constrained by presidential elections as it is today.'
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