Crypto Firms Advocate for SEC Leadership Reforms and a More Rational Regulatory Approach

Key takeaways

• With an incoming pro-crypto administration in the US, crypto firms are pushing for leadership changes at the SEC and other federal agencies.
• Crypto firms, including Coinbase and Ripple, urge the new administration to remove digital asset policies from the courts.
• Ripple's CLO Stuart Alderoty believes a change in the SEC's leadership will give rise to a more rational approach to crypto regulation.

Crypto Firms Seek a More Rational Regulatory Approach

With Donald Trump back in the White House and a Senate teeming with Republicans, crypto firms are already advocating changes within federal government agencies.

Among these are Ripple and Coinbase, two of the largest financial supporters of pro-crypto candidates during the election campaigns.

Ripple, which has long been entangled in a legal battle with the SEC, wants the new administration to eliminate regulation by enforcement. The company wants digital asset policy issues removed from courts and leadership changes within federal agencies like the SEC.

Ripple's chief legal officer, Stuart Alderoty, made this call in a recent interview with Cointelegraph. Alderoty believes changing some of the SEC's leaders could pave the way for a fresh perspective on digital asset policies.

The Ripple CLO said: The SEC is a bureaucracy, but policy is people, and people is policy. So hopefully, if you change some of the leadership at the SEC, we can start seeing a more rational approach to what they have been pursuing."

Coinbase's chief legal officer, Paul Grewal, shared similar concerns after Trump's election victory on November 6. Grewal urged the SEC to change its approach to digital assets regulations.

Grewal wants the SEC to stop suing crypto and instead start trying to understand the industry to make better rules.

Is Gensler's Removal as SEC Chair Due?

These calls for SEC leadership change align with Trump's promises of removing the commission's chairman, Gary Gensler, on his first day as president.

Notably, the SEC has maintained a hawkish stance on crypto oversight under Gensler's leadership. Over the past few years, the regulator has brought enforcement actions against many crypto companies. Most of these cases were about the classification of cryptocurrencies as securities.

One of the longest-running SEC lawsuits is its case with Ripple. The watchdog initiated this litigation in December 2020, alleging that Ripple violated securities laws through sales of its native token, XRP.

Ripple has spent notable amounts defending itself against these charges. In May last year, the company's CEO Brad Garlinghouse said they could spend up to $200 million by the time the case is over.

The SEC must have also spent a lot of resources in pursuing these cases against crypto firms. Ripple's Alderoty echoed this sentiment in his recent interview.

He said the SEC has spent an awful lot of time and money bringing enforcement cases" due to its notion that certain crypto assets are securities and should be under its oversight.

However, Alderoty believes determining which assets are securities is a policy or legislative issue and should be handled out of court.

Meanwhile, once sworn in as president, Donald Trump will have the authority to remove Gensler. However, while the president can decide who chairs a federal agency, the replacement process is a bit complex. The Senate needs to approve any replacement before it becomes official.

Gensler's tenure as SEC chair is expected to end in 2026. Some speculate that SEC Commissioner Hester Peirce could be a possible replacement once Gensler leaves office.

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