Crypto Enforcement Likely to be Lighter Touch Under Trump
In the US, cryptocurrency enforcement is likely to take a backseat as regulatory priorities shift under Republican President-elect Donald Trump. Experts say that while large financial fraud cases will still be prosecuted, less resources will be devoted to policing crypto crimes — a significant shift in approach.
Justice Department Redirects Resources
Scott Hartman, U.S. Attorney’s Office in Manhattan co-chief of the securities and commodities task force, had made sure to emphasize the priorities that are probably shifting. “We have 16 prosecutors in the securities and commodities unit, and I hope there are no more cuts,” Hartman said. This development serves as a harbinger of Trump’s larger plans to divert resources towards immigration enforcement, a core aspect of his campaign, away from cryptocurrency fraud cases.
High-Profile Cases
Hartman’s remarks follow a spate of high-profile crypto-related cases, which included the conviction of the founder of FTX, Sam Bankman-Fried. Despite these high-profile rulings, Hartman said regulators such as the SEC and CFTC would now take matters at the forefront of crypto oversight, and the Department of Justice would scale down its involvement with the industry.
New Leadership and Its Consequences
Trump will install Jay Clayton, the former chair of the U.S. Securities and Exchange Commission, as U.S. attorney for Manhattan. He was more lax on crypto cases while in office than his successor, Gary Gensler. On Gensler’s watch, the SEC has cracked down on the major platforms including Coinbase and Binance, something Trump openly has criticized.
The announced plan by Trump to remove Gensler further puts into uncertainty the fate of such enforcement actions. To industry observers, this may perhaps be a welcome change for crypto businesses frustrated with Gensler’s aggressive “regulation-by-enforcement” approach.
CFTC’s Role in Crypto Regulation
Meanwhile, the Commodity Futures Trading Commission (CFTC) has expanded its focus on cryptocurrencies, with nearly half of its cases in 2023 involving digital assets. However, CFTC enforcement director Ian McGinley suggested this trend might slow, with future actions primarily targeting fraud and market manipulation.
Industry Demands for Clear Regulations
Meanwhile, the SEC faced growing pressure for not having clear rules on cryptocurrencies. Seven states have faulted its approach as overly punitive in nature and urged a shift away from that toward a rule-based regulatory system.
What’s Ahead for Crypto Regulation?
Although the enforcement may lighten up, there will be a difference in regulatory oversight under Trump’s administration. The crypto sector is in conservative optimism regarding policies keeping a balance between innovation and the motive to combat fraud and manipulation.
