Regulation
Donald Trump and Crypto Take Aim at SEC as Biden Allies Raise Alarm
Former U.S. President and Republican presidential candidate Donald Trump looks on during his campaign event, in Racine, Wisconsin, U.S., June 18, 2024.
Brendan McDermid, interviewed by Reuters
The presumptive Republican presidential nominee promised to loosen cryptocurrency regulation if elected in November and “get out of the way of innovation,” one person in the room told CNBC. When he finished, Trump invited audience members to weigh in.
Stuart Alderotylegal officer of blockchain giant RippleHe explained that the company has spent more than $100 million to defend itself from the lawsuit filed by the Securities and Exchange Commission.
Alderoty’s comment was meant to serve as an example of how the SEC’s regulatory actions under Chairman Gary Gensler have hampered his company and the industry at large, according to a guest and a person familiar with the matter, who spoke on condition of anonymity to describe a private meeting.
As Alderoty spoke, a second cryptocurrency industry executive whose company is also battling the SEC was also in the audience: Paul Grewal, chief legal officer of Monetary base.
In 2020, before President Joe Biden took office, the SEC Charges Ripple and Its Founders of violating securities laws by acting as an unregistered broker of digital currency tokens, which the SEC regulates as securities. In 2023, the regulator filed a similar complaint against Coinbase, the largest U.S. cryptocurrency exchange.
The cases are ongoing, and both firms have denied violating securities laws. Alderoty’s comments at Trump’s fundraiser have not been previously reported, but he has made similar remarks elsewhere.
This frustration with Gensler’s regulatory agenda has taken on a political tone this year, as cryptocurrency investors seek to exert more influence in Washington, D.C.
Trump has exploited this frustration in recent months, turning from a crypto skeptic to a crypto advocate. Early signs are that the shift is gaining Trump support among the small but vocal crypto community.
Some in the industry side with trump They’re going beyond just complaining about Gensler. Instead, they’re trying to shape the agency in a potential future Trump administration, starting from the top.
Cryptocurrency investors have floated several names in recent weeks as potential candidates for SEC commissioner if Trump is elected to a second term, according to three people familiar with the conversations.
Among those names are two former chairs of the Commodity Futures Trading Commission during the Trump administration: J. Christopher Giancarlo and Heath Tarbert.
Christopher Giancarlo, former chairman of the U.S. Commodity Futures Trading Commission (CFTC), speaks during a House Agriculture Committee hearing in Washington, DC, U.S., Tuesday, June 6, 2023.
Ting Shen | Bloomberg | Getty Images
Another name that came up was Dan Gallagher, who served as SEC commissioner during Barack Obama’s two terms in office and now works as chief legal officer at the investment platform Robinhood.
Gallagher said he was honored to have been proposed as a possible SEC chairman in the Trump administration.
“I have had the privilege of serving in a variety of roles at the SEC, including commissioner,” he said in a statement to CNBC.
“I care deeply about the agency, and my hope for the new SEC chairman is that he will advance market access and ensure that the United States remains at the forefront of financial innovation,” he said.
In this June 14, 2011, photo, Daniel Gallagher, nominee for Commissioner of the Securities and Exchange Commission, listens during a Senate Banking Committee hearing on Capitol Hill in Washington.
Andrew Harrer | Bloomberg | Getty Images
The fourth name that has been raised with people close to Trump is that of Paul Atkins, according to three people familiar with the conversations.
As SEC commissioner under former President George W. Bush, Atkins on the contrary the agency’s policy of imposing large fines on companies that violate securities laws. He later played an influential role on Trump’s 2016 transition team, where he helped shape Trump’s laissez-faire approach to financial regulation.
“It’s a mess right now down there,” the SEC’s Atkins said in an interview with CNBC. “I think there’s a lot of work to be done. There needs to be a turnaround.”
Atkins had not heard from Trump or his team about a possible role at the agency, she said. Asked whether she would take a job at the SEC if Trump won, she said, “Who knows?”
If Trump is elected, SEC policy and cryptocurrency policy in general could be influenced by more than just the committee’s chairmanship.
At least 16 former Trump administration officials are now lobbying for the cryptocurrency industry, according to OpenSecrets data.
If Trump takes office, they would likely be the leading candidates for key positions at the SEC, the Commodity Futures Trading Commission, and the Federal Trade Commission, all of which could exert influence over cryptocurrency regulation.
While the cryptocurrency industry may be pressuring Trump and Republicans to prepare for a potential SEC overhaul, crypto investors aligned with Democrats need to be more careful about how they approach those in power.
Gensler was one of Biden’s early nominees in 2021, and his approach to cryptocurrency has helped set the tone for the administration’s broader policy, despite the SEC’s independence from the White House.
Over the past three years, Gensler hasn’t softened his criticism of digital currencies. If anything, he’s harsher than ever.
“This is an industry where the leaders from a couple of years ago are either in prison, about to go to prison, or awaiting extradition,” Gensler said of cryptocurrencies in a recent Bloomberg interview.
The idea that Biden is against cryptocurrencies and Trump is for them has worried some Biden allies, prompting them to reach out directly to senior White House officials, according to people familiar with the matter.
Venture capitalist John Doerr hosted a meeting at his home in Woodside, California, on June 14 with White House chief of staff Jeff Zients.
There were more than a dozen cryptocurrency enthusiasts there to talk to Zients, according to a person with direct knowledge of the meeting. Tech investor Ron Conway called in to the meeting.
Some of the guests spoke to Zients about Trump’s growing appeal to cryptocurrency holders. They blamed the surge in support in part on Gensler’s public statements and policies on cryptocurrency, the person said.
The group argued to Zients that Gensler should not be the sole public face of the Biden administration’s cryptocurrency policy, as his statements could sway cryptocurrency holders to support Trump over Biden.
An SEC spokesperson did not respond to CNBC’s request for comment.
John Doerr, senior partner at Kleiner Perkins Caufield & Byers, speaks at the TechCrunch Disrupt SF 2015 conference in San Francisco, California, on Tuesday, September 22, 2015.
David Paul Morris, Author of Getty Images
Doerr and Conway have supported Democrats, including Biden, for more than a decade. Do hosted a fundraiser for Biden in February. Conway donated $600,000 to the pro-Biden political action committee Future Forward, according to Federal Election Commission records.
Both Doerr and Conway also have investments in cryptocurrency. Conway’s venture capital firm, SV Angel, lists Monetary base as part of its portfolio, while Doerr’s Kleiner Perkins firm has been investing in crypto assets for years, including recently participating in a $2 million seed funding round backing the cryptocurrency data analysis start, Skew.
A White House spokeswoman defended the president’s handling of cryptocurrencies and said administration officials are meeting with a range of industry-related stakeholders.
“President Biden has launched the first comprehensive approach to support innovation in digital assets while protecting consumers and investors from the risks associated with new technologies,” said White House Press Secretary Robyn Patterson.
The White House did not respond to warnings about its treatment of the cryptocurrency industry, nor to subsequent requests for comment about Zients’s meeting at Doerr’s home.
Conway and Doerr did not respond to requests for comment.