Crypto bulls are happy because of the news: Gary Gensler will resign Chair of the U.S. Securities and Exchange Commission (SEC) on January 20, 2025.

This impending departure marks a pivotal moment for the cryptocurrency industry. Gensler’s tenure was characterized by rigorous enforcement actions and a cautious approach toward digital assets. His exit, coinciding with President-elect Donald Trump’s inauguration, is anticipated to bring significant changes to the regulatory landscape.

Let’s take a look at five major consequences for the crypto industry, and also analyze the list of potential candidates for Gensler’s role.

Anticipation of a More Crypto-Friendly Regulatory Environment

As long as Gary Gensler has been at the SEC, the agency has had strict rules about the cryptocurrency industry. His approach, which was based on the idea that most cryptocurrencies were securities, got companies like Coinbase and Binance into legal trouble.

By making it unclear what the rules were, these enforcement actions often slowed down the industry's growth and new ideas. Gensler's departure could mean a big change in how the U.S. government works with the crypto sector, according to many crypto fans.

The administration of President-elect Donald Trump has said it wants to take a pro-crypto stance. Trump's promise to make the U.S. the "crypto capital of the planet" suggests that rules will be loosened a lot. This change is meant to spur new ideas and bring businesses to the U.S., reversing the trend of businesses looking for friendlier jurisdictions abroad.

If the SEC's leaders were friendlier to cryptocurrencies, they might change how they are categorized and regulated. One way to make these changes would be to look at the Howey Test again, which is used to see if an asset is a security. The new government could also try to get laws passed that make it easier to tell the difference between utility tokens, securities, and commodities, which are all types of crypto assets.

This expected change is in line with global trends. For example, the UAE and Singapore have put in place systems that balance new ideas with protecting investors. If the U.S. does the same, it might become a world leader again in the crypto space.

Surge in Cryptocurrency Market Confidence

The news that Gensler is going to resign has already had a positive effect on the cryptocurrency markets. Bitcoin's rise to almost $100,000 shows how optimistic investors are about less government interference. This rise isn't just based on speculation; it's a sign of a larger belief that the market may enter a period of stability and growth with the SEC possibly being less strict.

Institutional investors have been hesitant to fully invest in cryptocurrencies for years because of the uncertainty that comes from enforcement actions. Gensler's strict approach made people afraid of sudden crackdowns, which made people less likely to make long-term commitments.

Investors will likely think that crypto investments are less risky now that he is gone.

It's also likely that small investors will feel more comfortable entering the market. Many people have avoided crypto because the laws aren't clear, and they're afraid they'll lose money if the rules change quickly. A regulatory environment that is clearer and more helpful could bring in new players, which would help the market grow.

Also, people who work in the industry think that Bitcoin ETFs may finally be approved under the new leadership, after being put off for a long time under Gensler. People think that these ETFs will make it easier for regular investors to get into the crypto market. This could bring billions of dollars into the ecosystem and boost confidence even more.

Potential Reversal of Ongoing SEC Enforcement Actions

A big part of Gensler's time as chairman has been the SEC's actions against well-known crypto companies like Ripple and Coinbase.

The main question in these cases has been whether the companies' tokens are securities under U.S. law. In particular, Ripple's long legal battle has been a flashpoint in the larger debate over how to regulate cryptocurrencies.

People think that these cases might be looked at again or even dropped now that Gensler has stepped down. The new administration might put an emphasis on encouraging new ideas over punishing people for alleged past wrongdoing. This could help companies like Ripple get out of court faster, so they can get back to working on growth and development.

Gensler's departure could also mean a change in how the SEC enforces laws in general. Instead of going to court, the agency might take a more cooperative approach and work with crypto firms to set up compliance frameworks. The industry has long complained about not having enough guidance and a regulator that is too hostile. This would be a nice change for them.

If the SEC changes its ways, it might make other companies less likely to be aggressive and more likely to expand their operations in the U.S. This could lead to more jobs and better technology.

Prospects for Regulatory Clarity and Innovation

One of the main complaints about Gensler's time as SEC chair is that there aren't any clear rules for the crypto industry. Companies and investors are having a hard time because there aren't any clear rules. They aren't sure if what they're doing is legal. Sounds a bit absurd, isn’t it?

Setting up a comprehensive regulatory framework that balances oversight with new ideas is likely to be a top priority for the new administration. Determining the legal status of cryptocurrencies, making clear rules for Initial Coin Offerings (ICOs), and setting standards for decentralized finance (DeFi) platforms could be important areas to focus on.

Also, making regulations more clear could encourage innovation by making it easier for new businesses to follow the rules. Companies would be able to put their money and time into development instead of legal defense, which would speed up the progress in blockchain technology.

The U.S. could also get more venture capital money for crypto projects, which would make it an even more important place for innovation around the world.

Increased Political Influence of the Crypto Industry

People have long said that the crypto industry doesn't care about politics, but things have changed a lot in the last few years.

Companies and leaders in the crypto industry have stepped up their lobbying efforts. They have given millions of dollars to political campaigns and formed alliances with lawmakers who support policies that are good for crypto.

The industry's political power is likely to grow thanks to Gensler's resignation and the possibility of better regulations. As lawmakers who support crypto become more well-known, the industry could have a big impact on how future rules are made.

This political power could also be used in global settings. The U.S. could push for international rules that are similar to the rules it has in place. These kinds of efforts could help the U.S. become a leader in the world of crypto, which could change how other countries regulate the space.

A lot of countries would definitely be against this movement. In any case, the fact that the crypto sector is getting more involved in politics shows how mature it is as an industry. By having a say in how policies are made, the industry can make sure that its needs are met, which will lead to long-term growth.

Potential Successors to Lead the SEC

The appointment of the next SEC Chair will be crucial in shaping the future of cryptocurrency regulation in the U.S. and will have serious implications around the globe.

Though there is no clear understanding of what will happen under Trump’s administration, some predictions as for the SEC’s chair are already emerging.

Several names have emerged as potential candidates, each with distinct perspectives on the crypto industry:

• Teresa Goody Guillén: A securities lawyer with deep expertise in corporate governance, Guillén is seen as a moderate candidate who could balance investor protection with innovation. Her leadership might focus on establishing clear guidelines rather than pursuing enforcement-heavy strategies.
• Brian Brooks: Known as the “Crypto Comptroller” during his tenure as Acting Comptroller of the Currency, Brooks is a strong advocate for crypto innovation. His appointment would likely signal a dramatic shift in the SEC’s approach, favoring policies that encourage industry growth.
• Richard Farley: A Wall Street lawyer with extensive experience in financial regulation, Farley is considered a pro-business candidate. His leadership might focus on integrating crypto into the broader financial system while ensuring robust investor protections.

The choice of SEC Chair will reflect the administration’s broader policy priorities. A pro-crypto leader could accelerate the adoption of digital assets, while a more cautious appointee might opt for incremental reforms.

In any case, the new leadership is expected to usher in an era of significant change, with implications not just for the U.S. but for the global crypto industry.