Trump's election victory drove a surge in the cryptocurrency market, with investors betting that the Trump administration will implement policies favorable to the growth of the cryptocurrency industry. Meanwhile, the current SEC Chairman Gary Gensler announced yesterday (22) morning that he will resign on January 20 next year, further fueling market optimism.
Ripple price surge
As the SEC chairman is about to change, the long-standing Ripple case shows more favorable signs. Coingecko data shows that the price of Ripple (XRP) surged over 25% today to $1.39, reaching a new high since April 2021, with a 14-day increase of up to 151.6%.
Ripple price chart. Source: CoinGecko
Ripple Labs, the issuer of Ripple (XRP), has been embroiled in a lawsuit with the SEC since December 2020, with the SEC accusing Ripple of raising $1.3 billion through unregistered securities XRP since 2013.
The latest lawsuit progress is that Judge Analisa Torres reiterated this August the ruling from last July, stating that Ripple's sale of XRP to retail investors through exchanges did not violate securities laws. However, regarding the SEC's demand for a huge fine, after determining that Ripple's sale of XRP to institutions violated securities law, the judge decided to impose a fine of $125 million on Ripple, which is far lower than the SEC's requested $2 billion.
The judge also issued an injunction against Ripple, requiring Ripple not to violate securities laws again.
Recently, it has been reported that the SEC is seeking to appeal Analisa Torres' latest ruling on Ripple. However, with Gary Gensler set to step down, the next SEC chairman is expected to be more friendly towards cryptocurrencies, which may influence the direction of the Ripple case.
Which cryptocurrency companies targeted by the SEC are likely to benefit?
Currently, Trump has not officially announced his preferred candidate for the new SEC chairman, but according to five informed sources cited by the Washington Post, Trump’s advisors are considering nominating current regulatory officials, former federal officials, and executives in the financial industry who support cryptocurrency for this important position. If this information is accurate, the market is expected to see a more cryptocurrency-friendly SEC. This shift could significantly ease the previously stringent regulatory policies against the cryptocurrency industry and could even lead to softening, settlements, or dismissals of lawsuits against certain companies.
Here are several major cryptocurrency companies that may benefit from this change:
Binance
The SEC sued Binance and its founder Changpeng Zhao (CZ) last year for operating an unregistered securities exchange and amended the complaint in September this year, reiterating its allegations of violations of federal securities laws. If the regulatory environment relaxes, these allegations may receive more lenient treatment.
Coinbase
The SEC has accused Coinbase of operating as an unregistered securities exchange, broker, and clearing agency, illegally offering billions of dollars in securities trading since 2019, and allowing customers to earn rewards from securities products. These allegations may be re-examined or modified in the future.
Kraken
Kraken was sued by the SEC for not being registered as a broker, exchange, or clearing agency, with some transactions deemed investment contracts and classified as securities. If the new chairman adopts a more lenient attitude, these disputes may also be alleviated.
Additionally, current SEC Chairman Gary Gensler has stated that, aside from Bitcoin and Ethereum, most cryptocurrencies, including SOL, ADA, and MATIC, should be classified as securities. This position has been criticized for being overly arbitrary, especially in the context of unclear regulatory frameworks that force cryptocurrency companies to operate in a 'gray area.' If the new chairman takes a more inclusive regulatory stance, it could provide more room for these assets and companies to develop.
As January 20, when Gary Gensler resigns, approaches, market sentiment is becoming more optimistic. In the future, the SEC's policy direction may affect the entire cryptocurrency industry's landscape, creating a friendlier regulatory environment and new possibilities for industry innovation.
