SEC Chair Gary Gensler Announces Resignation Effective January 20, 2025
This has been a busy week at the SEC.
Chair Gary Gensler announced his resignation, effective 12 pm ET on Jan. 20, 2025, coinciding with President-elect Donald Trump's inauguration. Gensler's precise departure time was noted as unusual.
Fellow Democrat Commissioner Jaime Lizárraga also announced his departure on Inauguration Day, citing family reasons due to his wife's battle with breast cancer.
On the legal front, Judge Reed O’Connor of the Northern District of Texas ruled that the SEC overstepped its authority regarding the Dealer Rule, which had been adopted by a 3-2 vote. Republican Commissioners Hester Peirce and Mark Uyeda dissented against this rule. The ruling is seen as favorable for hedge funds and crypto industries, protecting them from strict classifications as "dealers."
Changes at the SEC are anticipated before Trump returns to Washington. With two commissioner positions now available, it is likely that a Republican will become the next chair, while Lizárraga's position may go to a Democrat or Independent. Typically, Democrats would recommend candidates to Trump, though his administration has shown unpredictability in such matters.
Despite potential shifts toward a more pro-crypto stance, it remains uncertain whether any pending litigation will be dismissed. Even with a Republican majority, the SEC staff responsible for ongoing cases would need to request dismissals.
As we enter this new era at the SEC, it is noteworthy that Gensler's predecessor, Jay Clayton, initiated the Ripple case over XRP's security status in 2020 and conducted numerous other crypto-related enforcement actions. Clayton is now expected to lead prosecutions in the Southern District of New York, should Trump assume office again.
Although Clayton faced criticism for his enforcement actions, he is regarded favorably within the crypto industry. Trump's previous skepticism towards the industry raises questions about potential changes in stance moving forward.