Gary Gensler, the U.S. Securities and Exchange Commission Chair and a frequent critic of the cryptocurrency industry, has announced that he will be departing the agency on the day Donald Trump is inaugurated as president in January. This move means he will not only be stepping down as the head of the main U.S.
securities regulator but also leaving his position as a commissioner, thereby relinquishing the opportunity to defend the regulatory policies he has implemented, including his aggressive stance towards cryptocurrency. According to the SEC, Gensler's resignation will take effect at noon on January 20, coinciding with President-elect Trump's swearing-in ceremony.
In a statement, Gensler expressed his admiration for the regulator, describing it as 'a remarkable agency' with staff who are 'deeply mission-driven' and focused on protecting investors and ensuring the markets function effectively for both investors and issuers. He also took the opportunity to thank President Joe Biden and his fellow commissioners for their support during his tenure.
During his time in office, which began in April 2021, Gensler oversaw numerous enforcement actions and rulemaking initiatives that directly impacted the crypto industry. Despite initial hopes for a more lenient approach to cryptocurrency regulation, Gensler's SEC expanded its enforcement efforts, targeting not only crypto issuers, as was the case under his predecessor Jay Clayton, but also filing lawsuits against crypto trading platforms. The SEC, under Gensler's leadership, sued several major exchanges, including Binance, Binance.US, Coinbase, and Kraken, alleging that they were operating as unregistered securities brokers and clearinghouses.
Furthermore, Gensler played a role in the approval of the first spot bitcoin and ether exchange-traded products, a development that came after a decade of efforts by crypto companies to introduce these products to the U.S. market.
Initially opposed to the idea, Gensler eventually voted in favor of the ETFs following a court ruling against the agency. With Gensler's departure, the commission will be left with two members from each party, preventing a Republican majority until Trump's nominee is confirmed by the Senate. This balance may necessitate a wait for significant policy shifts or enforcement decisions. In his statement, Gensler highlighted the progress made during his tenure, including the lawsuits related to registration violations, which he noted built upon the work of his predecessor.
The SEC's press release also underscored the significance of crypto-related cases, citing that 18 percent of the SEC's tips, complaints, and referrals in the last full fiscal year were related to cryptocurrency, despite the crypto market comprising less than 1 percent of the U.S. capital markets. The release also pointed out that court after court has supported the Commission's actions to protect investors, rejecting arguments that the SEC lacks the authority to enforce the law in cases involving securities offerings, regardless of their form.
However, the announcement of Gensler's resignation came shortly after a federal judge in the Fifth Circuit ruled that the SEC's attempt to expand the definition of a 'dealer' exceeded its authority in a lawsuit brought by crypto lobbyists.