What else can the SEC chairman do for the cryptocurrency industry as his term comes to an end?

Original Title: What Gary Gensler Could Still Do Against Crypto in His Remaining Days as SEC Chair

Original Author: Veronica Irwin, unchainedcrypto

Original Translation: Shan Ouba, Jinse Finance

Despite widespread dissatisfaction from the crypto industry, SEC Chair Gary Gensler still has the ability to initiate several actions before his departure, although reports suggest these measures may soon be reversed.

The crypto market rebounded significantly after Donald Trump won the U.S. presidential election. Investors were filled with anticipation that the self-proclaimed "crypto friend" would lead the nation for four years, and with the Republican Party controlling the Senate and potentially the House, the crypto industry was optimistic about the next four years. Currently, the biggest political concern for the blockchain community is what actions Gensler might take in the 75 days before Trump is inaugurated on January 20.

Trump has promised to immediately remove Gensler from his position upon taking office, and experts are divided on whether Gensler will deliver a "devastating blow" to the crypto industry during his remaining term or choose to "lay down arms." However, most experts agree that Trump's successor will have the authority to halt ongoing investigations, lawsuits, and even new rule-making.

"Any enforcement action he initiates can be reversed," said Jonathan Padilla, CEO of Web3 marketing tool company Snickerdoodle Labs and an active Democrat. "Any new rules can also be overturned by the new chair or new Congress." Padilla stated, "Basically, everything can be reversed within 100 days."

Although Trump has repeatedly promised to "fire" Gensler on the first day of the new administration due to Gensler's hostile attitude toward the crypto industry and "enforcement-style regulation," Trump may not be able to legally remove Gensler from the SEC commissioners entirely. However, he could demote Gensler to a regular commissioner, significantly reducing his authority. Typically, SEC chairs appointed by the president voluntarily resign when a new administration takes office; however, when Fox News reporter Eleanor Terrett asked Gensler if he planned to resign before Trump took office, the SEC spokesperson declined to comment.

The SEC did not immediately respond to inquiries regarding this article.

Possible Actions by Gensler

Trump could appoint a new chair with a completely different stance, which might prompt Gensler to impose stricter regulatory measures on the crypto industry in his final days. Jack Chewinski, Chief Legal Officer at Variant Fund, warned, "When new leadership takes over federal agencies, crypto policy will change immediately and significantly." He stated on the X platform, "Before that, the current administration may be busy finalizing rule-making and initiating enforcement actions."

However, others, like Padilla, speculate that Gensler may quietly finish out his remaining term. Sources familiar with the SEC's internal situation indicate that Gensler's staff may slow down any actions he wishes to take, undermining his ultimate influence.

If Gensler decides to take significant action, he has several options. For example, he could unilaterally initiate new investigations against companies deemed to have violated securities laws, potentially manifested through the issuance of new Wells notices or subpoenas. If Gensler can gain the support of other Democratic-appointed commissioners, he may also file lawsuits against some companies that have already received Wells notices, such as the crypto gaming company Immutable, the NFT platform OpenSea, and the stock and crypto trading platform Robinhood.

However, Gensler does not have enough time to resolve any new legal lawsuits or complete new rule-making before January 20, as both processes typically take months. Once the new SEC chair takes office, they will have the authority to suspend or abandon such lawsuits.

Gensler also has the power to further advance rule-making that has already been proposed and completed the public comment process. For example, he could finalize the SEC's update on the definition of "exchanges," expanding the registration requirements for market makers (including some crypto businesses).

However, supporters of the crypto industry may also file lawsuits against these new rules. Meanwhile, Congress can use the Congressional Review Act to overturn these rules as long as it acts within 60 days of the session's start. Therefore, if Gensler passes new rules before January 20, the initial congressional time of the next government will be occupied.

For rules not overturned by Congress within 60 legislative days, the new SEC chair can also gradually revoke them. However, this will be a longer process, as the SEC will need to follow the public comment process under the Administrative Procedure Act to create new rules to repeal those approved by Gensler.

Although uncommon, there is indeed a historical precedent for the SEC taking action during the transition between a newly elected president and their inauguration. For example, the Trump administration filed a lawsuit against Ripple on December 22, 2020 (just as his term was about to end), despite the SEC being less politicized at the time, and this move may not have been unrelated to the differing stance of the incoming SEC chair under Biden.

Sources indicate that the SEC's enforcement actions are rarely so strongly influenced by political factors, and speculation about how Gensler will handle crypto matters in his final moments is unprecedented. An insider experienced in dealing with SEC litigation explained, "This reflects Gary's anti-crypto stance during his term. The SEC's enforcement strategy has never been as constrained by presidential elections as it is today."