President Donald Trump’s campaign to exclude Democrats from American regulatory work has created an unusual situation in the two agencies that will have the most say over how the federal government handles cryptocurrencies: a handful of Republican cryptocurrency advocates are completely in charge of both.
The U.S. Securities and Exchange Commission just said goodbye to its only Democratic commissioner, Caroline Crenshaw, last week, eliminating routine opposition to her current policy initiatives. Crenshaw had often warned the agency about its shift toward digital asset adoption, including opposition to bitcoin exchange-traded funds (ETFs) as a danger to investors. It adopted a consumer protection stance that regularly extends to those who invest in cryptocurrencies.
“I think it’s safe to say that they are speculating, reacting to promoter hysteria, fueling the desire to gamble, laundering the trade to drive up prices, or, as one Nobel laureate has put it, betting on the popularity of politicians who support or will personally benefit from the success of cryptocurrencies,” Crenshaw had said in a speech last month. Whether or not that vocal opposition within the agency has an effect on the SEC’s regulatory direction, it’s over, and the regulator is led by Trump-nominated chairman Paul Atkins and two commissioners who had promoted crypto interests, Hester Peirce and Mark Uyeda.
At its sister agency, the Commodity Futures Trading Commission, the new year begins with a new leader, as Trump nominee Mike Selig won confirmation late last month to be sworn in as president on December 22. Acting chair Caroline Pham took the opportunity to leave for an industry position at MoonPay, leaving Selig alone on the five-member commission.
While that may be a good situation for a pro-cryptocurrency policy, as Selig moves forward with his yet-to-be outlined agenda without needing input or debate from other commissioners, the absence of a bipartisan slate of commissioners at the CFTC and SEC has become a sticking point for cryptocurrency legislation in the US Senate.
One of the remaining points of debate over the bill that could establish a crypto regulatory regime in the US is Democrats’ demand that their party’s vacancies in the two agencies be filled. It’s unclear how much Republicans are willing to give on the issue. For his part, Trump has been unilluminating.
When asked recently if he would be willing to submit Democratic nominations, he responded with a question: “Do you think they would nominate Republicans if it were up to them?”
The historical answer is that presidents of both parties have routinely made nominations from both parties, often in packages negotiated in Congress that result in multiple confirmations at once.
“There are certain areas that we do look at and certain areas where we share power, and I’m open to that,” Trump concluded, leaving the matter in uncertain waters.
Both agency heads have been careful not to conflict rhetorically with Trump’s preference not to allow new Democrats to take on regulatory roles, and new CFTC chief Selig said in his confirmation testimony that he would welcome bipartisan input at the agency, but that it is outside his control.
Atkins noted upon Crenshaw’s departure that she had “listened carefully, substantially engaged and addressed every day with the purpose of safeguarding investors and strengthening our markets.”
For now, both the SEC and CFTC have made progress on crypto policy. In the final weeks of Pham’s interim presidency, he pushed several policies, launched leveraged spot cryptocurrency trading on the CFTC-registered Bitnomial platform, and established a CEO advisory panel. And Atkins has called digital assets the top policy priority of his agency, which abandoned cryptocurrency enforcement actions and issued a series of policy statements to clarify its stance in favor of the digital asset industry in areas as diverse as mining, memecoins, staking and custody.
Both Republican-led agencies have made clear that they intend to implement crypto rules with or without input from the law Congress is working on.
If Congress manages to pass the crypto market structure bill and the new law directs agencies toward a list of new rules and duties, drafting those permanent regulations would currently be in the hands of Republican commissioners alone.
Read more: Most influential: Paul Atkins
