The crypto industry rejoiced at Donald Trump’s presidential election victory, anticipating a swift end to the Securities and Exchange Commission’s legal crackdown once he retakes the oath of office. But according to former SEC officials and lawyers interviewed by CoinDesk, some of whom now represent crypto clients, extricating the agency from its enforcement quagmire may prove to be a gradual process.
While a Trump-appointed chair could effectively prevent future crypto enforcement actions, unwinding existing court battles is more complicated. Turning the SEC ship might stretch well into 2025, the lawyers say – potentially even longer. And when change does come, it may not take the form of dramatic case dismissals.
A Contentious Crypto Legacy
The SEC’s highest-profile crypto fight is arguably its ongoing lawsuit against Ripple Labs, the first major case accusing a company of operating as an unregistered securities exchange. Ironically, that case was filed in the waning days of SEC Chair Jay Clayton’s tenure – a Trump appointee himself.
The reality is that the SEC’s current approach to crypto really began under the last administration.
Ladan Stewart, Partner at White & Case and Former SEC Enforcement Lawyer
Under Chair Gary Gensler, the agency has maintained that many tokens qualify as securities using the legal standard known as the Howey test. This view has raised existential questions for major crypto exchanges about whether they can continue operating in the U.S. without registering with the SEC.
Limits on Swift Change
Casting off Gensler’s enforcement legacy won’t be as simple as crypto advocates might hope. Dismissing active court cases requires a majority vote by the agency’s commissioners, not just a new chair’s decree. And Republicans won’t gain that majority on day one.
If Republican Commissioner Mark Uyeda becomes acting chair in January as expected, he would still face a 2-2 partisan deadlock until a third Republican is confirmed by the Senate – a process that can take months. Democratic Commissioner Caroline Crenshaw can stay until the end of 2025 unless replaced sooner.
We’re not going to see registration-only cases.
Ladan Stewart, Speculating on the SEC’s Next Steps
Distinguishing Between Fraud and Technicalities
Rather than blanket dismissals, some predict the SEC might seek to settle certain technical violation cases while maintaining its fight against alleged fraudsters. Coinbase’s chief legal officer, Paul Grewal, said he expects the agency to swiftly distinguish between these categories, even if the process isn’t instantaneous.
The industry’s future is largely at stake in the United States.
Patrick Daugherty, Former SEC Lawyer Now Representing Crypto Clients at Foley & Lardner
The Road Ahead
While the crypto industry may need to temper its expectations for the speed and extent of changes to the SEC’s enforcement stance, a new chair will undoubtedly reshape the agency’s approach over time. The question is how much and how fast.
In the interim, major decisions hang in the balance for crypto exchanges and token projects facing lawsuits and investigations. According to experts, each case must be carefully reevaluated based on its own merits to chart a path forward. The future of crypto regulation in America remains unwritten.
