Gary Gensler, the current head of the SEC, doesn’t exactly have the best reputation among crypto firms, thanks to his “regulation by enforcement” approach. The commission has filed numerous lawsuits against crypto companies, accusing them of selling unregistered securities.
And it seems the SEC isn’t planning to let up anytime soon. Cryptocurrencies have once again made it onto next year’s list of priorities. In a notice dated October 21, the SEC's Division of Examinations announced its 2025 Examination Priorities, which include crypto assets and their “related products and services.”
The Division of Examinations released its 2025 examination priorities. This year’s examinations will prioritize perennial and emerging risk areas, such as fiduciary duty, standards of conduct, cybersecurity, and artificial intelligence.
— U.S. Securities and Exchange Commission (@SECGov) October 22, 2024
For more: https://t.co/nNWwcXNeId pic.twitter.com/y4LWXS60Ys
2025 SEC Priorities
The introduction of spot crypto ETFs has shaken up the SEC’s examination priorities for 2025. After the SEC gave the approval to the first spot BTC exchange-traded products in January and followed up with spot ETH products in May, it's clear the regulator’s sights are set on crypto.
The upcoming reviews of registrants will focus on the offering, selling, recommending, advising, and trading activities involving crypto assets that are marketed as securities or related products, like Bitcoin spot or Ethereum exchange-traded products.
The SEC’s Division of Examinations is keeping a close watch on the growth of investments tied to crypto assets and related services. With the crypto market’s volatility, the Division plans to keep tabs on and, if needed, audit registrants offering crypto services.
Chairman Gary Gensler commented that the Division aims to “help participants understand the rules,” pointing out the need to protect investors and promote capital formation.
In particular, these examinations will look at whether registrants are:
- following their conduct standards when recommending or advising clients on crypto assets, with a special focus on understanding these products—especially in cases involving retail investors (including senior citizens) and retirement-related investments;
- regularly reviewing, updating, and improving their compliance practices (including crypto wallet reviews, custody practices, compliance with the Bank Secrecy Act, and risk assessments), disclosing risks, and ensuring operational resilience (like having plans for data integrity and business continuity) when necessary.
As Keith Cassidy, Acting Director of the Division of Examinations, put it:
Our 2025 examination priorities identify the key areas of potentially increased risks and related harm for investors. We hope registrants will evaluate their compliance programs in the areas we identified and make the necessary changes to protect investors and maintain fair and orderly capital markets.
Will Gensler's Departure Signal Change?
Could the SEC’s strict policies change, given that its leadership and government oversight might shift? Although Gensler’s term runs until June 2026, many experts speculate he might leave the SEC as early as January 2025, with the arrival of a new presidential administration.
At the Bitcoin 2024 conference in Nashville, the Republican presidential candidate Donald Trump laid out his crypto policy plans, which included firing SEC Chairman Gary Gensler “on day one” and forming a “presidential advisory board on Bitcoin and cryptocurrencies” if he wins in November.
BREAKING: Donald Trump to fire Gary Gensler and hire pro-Bitcoin administration. pic.twitter.com/KxUYoBM65s
— Jordan Harmon (@JordanHarmon) July 27, 2024
Trump stated:
The moment I’m sworn in, the persecution will stop, and the weaponization against your industry will end. I will appoint a new SEC chair who believes America should build the future, not block it.
Reportedly, Democratic Vice President Kamala Harris has also been considering potential replacements.
So, can things change? Absolutely. With Gensler potentially out the door in 2025 and new leadership on the horizon, changes in crypto regulation could actually be beneficial to the entire industry.
Kataryna Habeliia
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