SEC Chairman Gensler Announces January 20th Departure Date

TLDR

• Gary Gensler will fully leave the SEC on January 20th when Trump takes office
• Many SEC crypto lawsuits may “quietly go away” with settlements after Gensler’s departure
• Lawsuits could end with “neither admit nor deny” language and defendants paying fees
• Rumors suggest SEC Commissioner Hester Peirce may oversee crypto matters temporarily
• Gensler’s tenure saw numerous enforcement actions against major crypto companies like Binance, Coinbase, and Ripple

SEC Chair Gary Gensler has announced his complete departure from the Securities and Exchange Commission, effective January 20th, 2024, coinciding with President-elect Donald Trump’s inauguration.

This decision marks the end of a tenure characterized by aggressive enforcement actions against cryptocurrency companies.

The announcement clarifies that Gensler will not only step down from his position as chairman but will also leave his commissioner role entirely, despite his term originally extending to 2026. This complete exit represents a notable shift in SEC leadership during a crucial period for cryptocurrency regulation.

On January 20, 2025 I will be stepping down as @SECGov Chair.

A thread

— Gary Gensler (@GaryGensler) November 21, 2024

During his time as chairman, which began in April 2021, Gensler oversaw numerous enforcement actions against major players in the cryptocurrency industry.

The SEC filed lawsuits against several prominent exchanges including Binance, Coinbase, Kraken, and others, alleging they operated as unregistered securities brokers and clearinghouses.

Gensler’s tenure also saw the historic approval of spot bitcoin and ether exchange-traded products, though this came after initial opposition and followed a court ruling against the agency. The approval represented a departure from the SEC’s decade-long resistance to such financial products.

Legal experts are now speculating about the future of pending SEC enforcement actions. Pantera’s chief legal officer, Katrina Paglia, suggests many securities lawsuits against crypto companies might reach settlements after Gensler’s departure.

Speaking at the North American Blockchain Summit, Paglia indicated these cases could conclude with “neither admit nor deny” language and financial settlements.

The transition period may see SEC Commissioner Hester Peirce temporarily overseeing crypto matters until a permanent chair is appointed. Industry insiders anticipate this could lead to the issuance of no-action letters, which would indicate the SEC’s decision not to recommend enforcement actions against certain entities.

During Gensler’s leadership, the SEC’s enforcement division was particularly active in the crypto sector. According to the SEC’s Office of the Inspector General, crypto-related complaints made up 18% of all tips and referrals in the last fiscal year, despite crypto markets representing less than 1% of U.S. capital markets.

The search for Gensler’s successor is ongoing, with several candidates under consideration. Names being discussed include former SEC attorney Teresa Goody Guillén and former Acting Comptroller of the Currency Brian Brooks, who briefly led Binance.US.

In the interim period after Gensler’s departure, the commission will have equal representation from both parties, with two members each from Republican and Democratic parties. This balance could delay major policy shifts or enforcement decisions until a new chair is confirmed by the Senate.

The timing of Gensler’s departure announcement coincided with a federal court ruling in the Fifth Circuit that challenged the SEC’s authority to expand the definition of a “dealer” in a case brought by crypto industry advocates.

Looking ahead, industry observers anticipate potential changes in the SEC’s approach to crypto regulation. Some Wells notices – formal warnings of potential enforcement actions – may be withdrawn, and the agency might reduce resources allocated to certain investigations.

The SEC’s press release acknowledged Gensler’s contribution to building upon previous enforcement initiatives, including those started under former Chair Jay Clayton’s administration. Gensler described the SEC as a “remarkable agency” in his farewell statement, emphasizing its mission of protecting investors and facilitating capital formation.

For the cryptocurrency industry, which has faced intense regulatory scrutiny under Gensler’s leadership, the transition period could bring changes to the regulatory landscape. However, any major policy shifts will likely require the confirmation of a new SEC chair and the establishment of a clear majority on the commission.

As the January transition approaches, both the crypto industry and traditional financial markets are closely watching for signals about the future direction of SEC policy and enforcement priorities under new leadership.

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