KEY POINTS
- TD Cowen researchers said it is likely a new SEC chair will reassess existing cases
- Crypto legislation with bipartisan support is more likely now that GOP has flipped the Senate
- They reiterated the importance of broader AML/BSA compliance in crypto if the industry wants legislative progress
The cryptocurrency industry has faced multiple lawsuits from the U.S. Securities and Exchange Commission over the last few years, but multinational investment bank TD Cowen believes the tides will likely change under a Trump administration.
President-elect Donald Trump has vowed support for Bitcoin and the broader crypto sector.
No Crypto Enforcement Actions Under Trump?
TD Cowen researchers wrote Monday that they believe "crypto enforcement will likely be placed on hold once Trump names a new SEC chair, which he can do on Jan. 20 regardless of whether Gary Gensler resigns his seat as an SEC commissioner."
The projection comes months after Trump promised to "fire" Gensler during his keynote speech at the Bitcoin Conference 2024.
Under Gensler's leadership, the SEC slapped lawsuits and Wells Notices on crypto firms it accused of violating securities laws by offering tokens and other services the financial regulator designated as securities.
Advocacy group the Blockchain Association reported that as of Nov. 1, 2024, SEC enforcement cost the crypto industry at least $429 million.
TD Cowen researchers claim that the possible hold-off on enforcement actions targeting the crypto sector "doesn't mean it will be the Wild West for crypto without any SEC oversight."
Instead, they believe that a new chair will reassess existing cases the financial regulator initiated against crypto firms "and look for ways to provide more clarity on how crypto companies can comply with existing laws."
Bipartisan Legislation More Likely
Bills focused on providing a regulatory framework for the crypto industry with bipartisan support are also more likely under Trump, TD Cowen researchers said. The crypto community has helped elect the "most pro-crypto Congress" in U.S. history, as some industry executives put it. Republicans have also reclaimed the Senate, raising hopes for crypto bills to move faster.
On the other hand, the researchers don't expect crypto-centric legislation to be the first priority of Congress or the Trump government. "Crypto will not be an initial priority for Team Trump given the focus on extending the tax cuts and tackling tariffs and trade," they said.
A Warning to Stop Blocking AML/BSA Oversight
The researchers also warned that continuously rejecting "any government oversight" on concerns related to AML/BSA (anti-money laundering—Bank Secrecy Act) compliance will only further delay political work toward delivering crypto bills.
"We continue to believe that this is a losing argument for the crypto space that hurts the industry politically. We believe crypto market structure legislation would become more likely if there was a broad crypto sector embrace of AML/BSA compliance," they emphasized.
Notably, the outgoing administration, Gensler included, has repeatedly said the broader crypto industry is non-compliant with AML-related and security concerns.
