The SEC after Gary Gensler: What’s next for economic and crypto policies in 2025?

With Gary Gensler’s resignation from the US Securities and Exchange Commission (SEC) set for January 20, 2025, the regulatory landscape for both traditional financial markets and the cryptocurrency sector is on the cusp of a major shift. Here’s the “silent” addendum: the SEC might warm up to crypto more than we expect.

Gensler’s departure marks the end of an era that saw the SEC ramp up enforcement efforts against the crypto industry. His tenure, which was marked by aggressive regulatory actions, will now give way to a new regime under President-elect Donald Trump. The appointment of Paul Atkins, a figure seen as more crypto-friendly, sets the stage for the commission’s new era. 

The question remains: What does this transition mean for the future of crypto regulation in the US?

Gensler’s departure: A bitter goodbye to the crypto “Grinch”

Gary Gensler’s time at the SEC has been nothing short of turbulent, especially in the eyes of the cryptocurrency community. From the start, Gensler and his tough stance on crypto initiated a series of enforcement actions against prominent crypto companies, including Binance and Coinbase, accusing them of violating securities laws. 

His actions were not limited to regulatory notices. Billions of dollars in fines and lawsuits followed, even for the likes of crypto community favorite and Tesla CEO Elon Musk. It’s safe to say no one from the community is sad that he’s leaving.

The House of Representatives even said his leadership makes the SEC a “rogue agency.”

GARY GENSLER LITERALLY SHAKING when asked if #eth is a security or a commodity and refusing to answer the question pic.twitter.com/GD9lg6cOaT

— Tyler Strejilevich (@TylerSCrypto) April 18, 2023

However, Gensler’s resignation doesn’t come solely due to pressure from the crypto industry. While President-elect Trump had promised to fire Gensler on “day one,” he lacked the authority to do so. Gensler’s five-year term runs until 2026. 

However, it is customary for SEC chairs to resign with a change in administration. His departure has been framed as part of the broader political dynamics surrounding the incoming pro-crypto Trump administration.

In a statement announcing his resignation, Gensler defended his record, emphasizing the SEC’s mission to enforce laws and hold wrongdoers accountable. Yet, many in the crypto sector will remember Gensler’s tenure for its focus on enforcement rather than regulatory clarity.

Gensler pushed the crypto industry as far as he could 

The SEC’s regulatory approach under Gensler led to significant friction with the cryptocurrency community. Just months ago, Crypto.com took legal action against the SEC. 

Today, https://t.co/pFc4Pz9nFR filed suit against the SEC to protect the future of crypto in the U.S.: https://t.co/kXxyhF7zFe

— Kris | Crypto.com (@kris) October 8, 2024

The company, along with others such as Robinhood and Uniswap, accused the SEC of overreaching in its enforcement of unregistered securities laws. Some argued that the agency’s broad application of securities laws to digital assets lacks proper authority.

Advocacy groups and state officials alike have also expressed their frustration with what they saw as an undiplomatic regulatory regime. A group of 18 state attorneys general, including Kentucky, Florida, and Texas, filed a lawsuit against the SEC, accusing the agency of unconstitutional overreach. 

These attorneys general argue that the SEC’s aggressive stance on crypto infringes upon states’ rights to regulate their own economies, disrupting an industry that has been rapidly growing in both influence and value.

At the heart of this dispute is Gensler’s insistence that most cryptocurrencies, aside from Bitcoin and Ethereum, qualify as securities. His stance has created a murky regulatory environment for businesses operating in the space. 

The lawsuit challenges the SEC’s expansive interpretation of its jurisdiction and argues that the agency’s enforcement actions are harming the very citizens they purport to protect.

A new era under Paul Atkins: What’s next for the SEC? 

With Gensler’s resignation, all eyes turn to Paul Atkins, Trump’s selection to take the helm of the SEC. Atkins, a former SEC commissioner under President George W. Bush, is seen as a stark contrast to Gensler. He is known for his pro-market and pro-innovation stance, and his appointment has been welcomed by many in the crypto industry.

Atkins has long been an advocate for deregulation in certain sectors, and industry leaders see his understanding of crypto as an asset. Brad Garlinghouse, CEO of Ripple Labs, and Cameron Winklevoss, co-founder of Gemini, both praised Atkins’ appointment, as they believe the pro-crypto lawyer is the best choice to lead the financial industry forward. 

“We’ll see an SEC that has clearly different priorities than that of the Gensler SEC,” said Alison Mangiero, executive director of the Proof of Stake Alliance, in an interview with The Block.

Atkins is expected to take a more hands-off approach to regulation, focusing on fraud and ensuring investor protection without overburdening the industry with excessive red tape. 

For many in the crypto sector, this means fewer enforcement actions against companies not involved in fraudulent activities and a shift away from the type of “novel cases” that Gensler’s SEC pursued, often to establish legal precedents.

One key area where change could be immediate is in the approval of crypto-related exchange-traded funds (ETFs). Under Gensler, the SEC approved spot Bitcoin ETFs but held back on other digital assets, including Solana and XRP. 

With Atkins at the helm, there is speculation that the SEC could approve additional crypto ETFs or revisit the issue of staking in ETFs.

The future of crypto regulation looks bright, but is it? 

Atkins’ confirmation could mark the beginning of a new regulatory era for the crypto industry, one that emphasizes clarity over enforcement. However, it is still uncertain how the SEC will handle some of the ongoing rulemaking processes, such as Regulation ATS, which could require decentralized projects to register with the agency. 

The new leadership at the SEC will have to balance the need for investor protection with the desire to foster innovation.

In the meantime, crypto companies are bracing for the final months of Gensler’s tenure. If you are asking whether the regulatory landscape will change, the answer is yes. But if you’re asking when it will, your guess is as good as ours.

The community insists Atkins will help the industry adopt a more sensible approach that encourages development and investment without overregulating.

As Gensler prepares to leave the SEC and Trump’s administration succeeds “lukewarm on crypto matters” Biden, the crypto sector looks toward a future that, for the first time in years, seems more favorable for financial innovation.