In July, on the campaign trail, Donald Trump promised a crowd of bitcoiners that he would fire previous SEC chair Gary Gensler if reelected. “I didn’t know he was that unpopular,” said Trump, referring to the crowd’s rapturous response to the pledge. In November, after Trump won the election, the crypto industry got to help handpick the nominee to replace Gensler, landing on Paul Atkins, a former SEC commissioner who has expressed the view that crypto businesses have been treated unfairly in the US. (Atkins remains sidelined for now, pending confirmation.)
The argument advanced by the crypto industry—that it was subjected to wrongful lawsuits by a politically-motivated regulator—is likely to have struck a chord with Trump, says Anthony Scaramucci, founder of crypto-focused investment firm SkyBridge Capital and former communications director for Trump. “Trump is a big believer in lawfare,” says Scaramucci. “If you go to Trump saying you’re a victim of lawfare…he’s going to side with that.”
According to Stand With Crypto, a nonprofit pushing for bespoke crypto regulation in the US, more than 250 pro-crypto representatives were elected to Congress in 2024. The crypto industry claimed high-profile scalps in races in which it had invested most heavily: In Ohio, incumbent Democratic senator Sherrod Brown, depicted as an arch-villain in crypto circles, was unseated by Republican Bernie Moreno. Through Defend American Jobs, the crypto industry spent more than $40 million in support of Moreno.
Having witnessed the efficacy of the crypto lobbying machine, politicians concerned about the security of their own seats are potentially less likely to voice opposition to the industry in future, claims Scaramucci, which in turn increases the chances of crypto-specific regulation falling into place and crypto-focused legislation making it into law.
“The Democrats have gotten the life scared out of ‘em,” claims Scaramucci. “You have to have regulatory clarity. With the Trump administration, you’ll get that. You’ve got enough Democrats scared that will side with [Republicans] to create that.”
A Double-Edged Sword
The SEC’s retreat from its outstanding lawsuits against crypto businesses will be received as an early signal of the agency’s intent to work arm-in-arm with the industry to come up with a set of rules to govern crypto transactions and products.
That rulebook will clear up the question at the heart of the lawsuits: Which crypto assets should be classified as securities, the specific type of investment product over which the SEC has jurisdiction, and in what context?
“I think the industry sees regulators willing to work across the table from them,” says Coy Garrison, a former SEC attorney and partner at law firm Steptoe. “That’s the difference. Four years ago, the other side of the table was just the enforcement arm.”
But it’s a mistake to interpret the SEC’s withdrawal from the crypto-related cases as a total loosening of the leash, claims Garrison. “Sometimes, it’s easy for people to only see the top line,” he says. “The SEC is still going to be policing potential fraudulent activity within its jurisdiction relating to crypto.”