On November 14, Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC), reflected on his leadership experience in a speech and hinted at a possible resignation. The election of Donald Trump as president could have a significant impact on the cryptocurrency industry, as he will have the ability to appoint a new SEC chairman who may adopt a different approach to cryptocurrencies than the current chairman. The new SEC leadership may suspend enforcement actions solely targeting registration violations, release updated guidance on determining when crypto assets are sold as securities, propose new crypto regulations, utilize exemptions, and update statements for special purpose broker-dealers. Cryptocurrency market participants should be prepared to engage with the new SEC leadership to ensure that the industry's perspectives are considered.

Introduction: On November 14, Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), delivered a speech at the 56th Annual Securities Regulation Conference of the American Bar Association, reflecting on his experience leading the agency's team. He stated, "I am deeply honored to work with them, serve the people, and ensure that our capital markets continue to be the best in the world... I am proud to work day in and day out alongside my colleagues at the SEC to protect American families in the financial markets." This sounded very much like a farewell public speech. Some sources have indicated that Gensler may resign, similar to past SEC leaders. However, he may also decide to continue serving as a commissioner. Body: Given Donald Trump's promise to create a government supportive of cryptocurrencies during his campaign, his election as president could significantly impact the cryptocurrency industry. Trump would be able to appoint a new SEC chairman, who might decide to adopt a different approach to cryptocurrencies than the current chairman, Gary Gensler. Under Gensler's leadership, the SEC has initiated multiple enforcement actions against members of the crypto industry, accusing them of violating federal securities laws, including actions taken solely for failing to register as broker-dealers, clearing agencies, or national securities exchanges under the Securities Exchange Act of 1934. However, the SEC has yet to propose rules specifically for crypto assets, instead suggesting that existing statutory and regulatory requirements may apply to crypto assets. Practitioners in the crypto industry have voiced their disagreement and reported that their attempts to engage with the SEC on crypto-related issues have not been successful. However, with a new SEC chairman soon to be appointed, this approach may change, and members of the crypto industry should begin preparing to engage with the SEC once the new leadership is confirmed. Under new leadership, the SEC could take various approaches, including: Halting enforcement actions solely targeting registration violations: The SEC has taken several enforcement actions against cryptocurrency companies solely for violating registration requirements under the Securities Act or the Exchange Act, without any allegations of fraud or other misconduct. The new SEC leadership may choose to suspend further enforcement actions targeting registration violations until a clear framework for regulating crypto assets and intermediaries in crypto asset transactions is established. Issuing updated guidance on when crypto assets are sold as securities: It has been over five years since SEC staff released the "Framework for 'Investment Contract' Analysis of Digital Assets," which describes when digital assets are offered and sold as "investment contracts" (and therefore securities). Since then, the crypto industry has undergone significant changes. For instance, many crypto projects have matured and become more decentralized, and proof-of-stake consensus has become widespread. However, the SEC has not issued additional guidance. The SEC could update the framework to account for changes in the industry over the past five years and explain why certain crypto assets (like Bitcoin and Ether) are not offered and sold as securities. New guidance could also address the issue of asset-backed stablecoins, which are now one of the most prominent uses of crypto assets. Proposing crypto-specific rules: The SEC might introduce tailored rules that consider the differences between crypto assets and traditional securities. Thus far, despite differing opinions and legal challenges from industry members, the SEC has fundamentally refused to acknowledge the distinctions between crypto and traditional securities in its rulemaking. Instead, the SEC broadly applies securities rules and indicates in proposed and adopted versions that these rules will also apply to "crypto asset securities." In some cases, these rules were finalized due to concerns from industry members about their application to crypto assets and whether the SEC was adhering to the Administrative Procedure Act. Exercising its exemption authority: The SEC could utilize the general exemptions granted by Congress under Section 28 of the Securities Act and Section 36 of the Exchange Act to provide tailored relief based on the requirements of these acts, which may pose challenges to crypto market participants due to the differences between crypto assets and traditional securities. The SEC could also issue additional no-action letters, declining to take enforcement action against companies engaging in certain crypto asset activities as a temporary measure until crypto-specific rules can be proposed or adopted. Updating the special purpose broker-dealer statement: The SEC could update its temporary no-action position from 2020 to allow "special purpose broker-dealers" to execute trading and custody functions for "digital asset securities," making it more applicable to today's crypto industry and extending the deadline to February 2026. Currently, there are only two registered special purpose broker-dealers, and due to the SEC's lack of guidance on key issues, the scope of activities they are allowed to conduct and the assets they are permitted to engage with remain unclear, such as when crypto assets are offered and sold as securities. An update might make that guidance more effective. Given that Republicans control both the Senate and the House of Representatives, Congress may also have the opportunity to pass cryptocurrency legislation. However, even so, the SEC still has the potential to play a role in cryptocurrency regulation. Recently, bipartisan support in the House for the "21st Century Financial Innovation and Technology Act" and the "Lummis-Gillibrand Responsible Financial Innovation Act" has opened space for the SEC and the Commodity Futures Trading Commission in the regulation of digital assets. Therefore, it is crucial for cryptocurrency market participants to consider discussing these relevant topics with the new SEC leadership, given that Trump's campaign has placed a focus on cryptocurrencies. The SEC may adopt a different approach to cryptocurrencies, and market participants should be prepared to engage with the new SEC leadership to ensure that the industry's perspectives are taken into account.

Gary Gensler may resign, and Trump's election as president could have an impact on the cryptocurrency industry.