Donald Trump’s 2024 presidential election win is expected to bring significant changes to both the Securities and Exchange Commission (“SEC”) and securities law broadly. Expected changes include a less aggressive regulatory environment, an undoing of many Biden led regulations, new SEC leadership, and new regulation for digital assets.
SEC Leadership Changes
One of Trump’s many campaign promises was to fire current SEC Chair Gary Gensler on his first day in office. Although Trump cannot directly fire him, many expect that Gensler will either step down or that Trump will demote him and appoint an interim chair. Potential replacements include current SEC commissioner Hester Pierce, former SEC commissioner and current CLO of Robinhood Markets Dan Gallagher, and former Acting Comptroller of the Currency Brian Brooks. Gensler’s imminent departure from the SEC is anticipated to result in much less aggressive regulation than seen under President Biden and positive changes for digital assets and cryptocurrency.
Regulatory Changes
A new SEC chair and potentially new leadership of the SEC’s Division of Investment Management is also expected to undo some of Biden’s regulations provide companies with easier access to private capital. One big regulatory change involves removing enhanced disclosures on environmental, social, and governance investment practices by investment advisers and investment companies. Furthermore, a Trump led SEC is expected to make it easier for companies to go public, with less challenges and restrictions for private companies and therefore less Regulation D disclosures.
However, reversing Biden-era regulations and implementing more business-friendly regulations can be challenging and take time. The process to achieve these initiatives involves complex legislative and administrative procedures which could involve pushback and litigation.
Digital Assets and Cryptocurrency
During the Trump campaign at a crypto conference, Trump promised to make the United States the crypto capital of the planet and bitcoin the superpower of the world. Known for being an advocate of digital assets, the Trump administration is expected to bring a more relaxed regulatory environment and positive changes to digital assets and cryptocurrency. Since Trump’s victory was announced, the price of Bitcoin has already hit all-time highs.
This shift in approach represents a stark contrast to the current regulatory landscape, which has been characterized by scrutiny, uncertainty, and aggressive enforcement actions. Currently, the SEC’s approach to regulation of digital assets has been “regulation by enforcement.” This strategy involves the SEC addressing perceived violations reactively through legal actions rather than proactively establishing clear, comprehensive guidelines for the industry. Trump’s win and potential replacements for Gensler are expected to create a more crypto-friendly market with development of a clear regulatory framework around digital assets. Many expect that a Trump led SEC will formalize the regulation of cryptocurrency and integrate it into the financial system. Furthermore, many anticipate clarity on characterization of crypto as a security versus currency, investor protections, and more concrete regulations tailored to digital assets.
Final Thoughts
With Gensler’s imminent departure from the SEC, differing regulatory approaches, and Trump’s support for digital assets and cryptocurrency, Trump’s presidency is sure to bring significant changes to securities law. While some changes are already evident, such as the surge in cryptocurrency prices, implementing new legislation or undoing existing regulations may prove challenging and time-consuming. As the new administration takes office, it is imperative that those dealing with securities and digital assets broadly stay on top of regulatory changes.