With the amount of activity in the last 4 years, it is hard to remember when Gary Gensler was not the Chair of the SEC. Yet, if we cast our memory back to a time before he took office, we might recall that his appointment was initially met with great optimism based on talks he had given at MIT on the crypto industry.

However, it would not take long before Gensler started implementing his agenda, headlined by an aggressive regulation-by-enforcement approach against the crypto industry. This regulatory approach was driven by issuing Wells Notices to several crypto projects, refusing to provide regulatory clarity for industry operators, and expanding the department's oversight beyond its explicit mandate. However, these divisive tactics were constantly met with dissenting opinions from within his own department. Notably, “crypto-mom,” Hester Pierce, wrote against his aggressive crypto regulations, lack of clarity, and departmental overreach.

So, what can we expect with the reelection of President Trump, Gensler’s early retirement from the SEC, and the appointments of Paul Atkins and Mark Uyeda to take over the department?

This article will look at five predictions for the newly revamped SEC, post-Gensler.

1. An End to Regulation by Enforcement

The Gensler-run SEC will be remembered primarily for its hostility towards the crypto industry. While he inherited the XRP lawsuit from his predecessor, Jay Clayton, the Gensler SEC would define itself through its aggressive regulation-by-enforcement approach of punishing companies for not obeying rules that were never defined.

Notable tactics by the SEC were to impose the 1946 Supreme Court “Howey Test” decision liberally to modern crypto projects. It was used as justification for targeting $XRP, $LBRY, and notably $BUSD despite BUSD being a stablecoin and offering no expectation of profit (a defining characteristic of the Howey Test). Fortunately for the crypto industry, the SEC has had partial or outright losses in most cases it has brought against the industry. Including a July 2023 ruling in its case against XRP, an August 2023 ruling against a Grayscale Bitcoin ETF application, and a January 2024 ruling against Coinbase over refusing to provide clarity on crypto regulations.

With Gensler out of the equation and a new administration focused on deregulation, corporate tax incentives, and an affinity for attracting leading tech companies in AI and crypto, it is relatively safe to assume that the aggressive regulation-by-enforcement era of the SEC has ended.

2. Clarity for Crypto Exchanges

One of the defining characteristics of the Gensler SEC was its deliberate obfuscation of operating regulations for crypto exchanges. Even good actors like Kraken and Coinbase, who had previously gone out of their way to try to operate in good faith by requesting clear guidelines on the kinds of services they would be allowed to offer their clients, found themselves in the crosshairs of the aggressive regulator. 

These good actors believed they were operating in good faith when they began offering U.S. clients staking as a service in 2019. They were allowed to continue operating the service without notice from the SEC for three years before being served a fine of $ 30 million. The abruptness of the fine and the closer of the staking as a service shocked the industry and added a layer of uncertainty for crypto corporations operating within the U.S. Many viewed the uncertainty of the SEC’s regulations as a hindrance to operating within the U.S., and the industry began moving offshore.With the removal of Gensler and the installation of a more pro-crypto SEC Interim Chair (Mark Uyeda) and replacement nomination (Paul Atkins), stability has been reintroduced into the SEC and crypto corporations' ability to operate within the U.S. Based on Atkin's previous tenure as SEC Chair under the Bush administration (2002-2008) and his role as the co-chair of the Chamber of Digital Commerce’s Token Alliance, a crypto lobbying firm, we can expect a much different culture at the SEC when he takes over in 2025. Atkins has also been highly critical of the Gensler administration's lack of clarity.

3. Reducing ESG Oversight

Whilst in office, one of the areas the Gensler’s SEC oversaw was implementing a comprehensive ESG regulation. In 2022, they pushed for mandatory climate risk disclosures from all public companies. The approach was designed so that publicly listed companies would have to disclose their carbon emissions, climate-related financial risks on things like supply chain durations, and the mitigation steps they were taking to reduce their footprint.

These ESG regulations were viewed as an egregious overreach by the SEC into policies they were not associated with. They created additional administrative and financial burdens on public companies that had to analyze, report, and address climate mitigation strategies where they had not previously been required. 

With the establishment of the Department of Government Efficiency (DOGE) headed off by Elon Musk and the early steps they have taken to eliminate DEI policies across most government departments, it is difficult to imagine how these Gensler-era ESG regulations will survive.

4. Opening up Regulation on SPACs and IPOs

It was no secret that Gensler was highly critical of Special Purpose Acquisition Companies (SPACs) and IPOs. During his term, he targeted them directly by imposing stricter investor protections, tighter regulations, and increased transparency in the space.

In March 2022, Gensler proposed the SPAC disclosure rules, which forced greater transparency on the disclosure of conflicts of interest, dilution risks, and how projections were determined. During the same period, Gensler also pushed for greater oversight of Chinese companies listing in the U.S. and enhanced disclosure reforms on companies looking to IPO. The result was a massive decline in IPOs and SPACs during Gensler’s tenure as regulatory approval entered long review processes and companies began turning to private funding instead of going public.

The new administration's creation of DOGE will no doubt impact the SEC’s role as they look to remove regulatory hurdles and burdensome red tape for companies looking to IPO. The oversight of the review process will be streamlined by eliminating the extensive disclosure process, and we will see a return to a pre-Gensler era of public offerings.

5. Reducing the Role of the SEC

Gensler’s tenure at the SEC was marked by its frequent acts of overreach into other departments and governmental affairs. Regarding crypto regulation and enforcement, the SEC often extended its authority beyond its mandate into the CFTC, IRS, FTC, FDIC, and FinCEN.We have also seen how it went beyond its mandate to try to impose ESG regulations across public companies. 

If there is one major takeaway from what to expect a post-Gensler SEC will look like, it is that it will most likely have its mandate rolled back in the series of executive orders and congressional bills. A return to a structure more familiar to a pre-Gensler era with a predefined role that operates within.

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