Democrats to Step Aside at SEC

Democrats will likely not hold top posts at the U.S. Securities and Exchange Commission (SEC), allowing Republicans to adopt crypto-related rules, as noted by TD Cowen. This shift could carry risks, the investment bank cautioned.

Following the November elections, President-elect Donald Trump has appointed Paul Atkins as chair of the SEC. Atkins will lead alongside fellow Republican commissioners Hester Peirce and Mark Uyeda. Current Democratic SEC Chair Gary Gensler and Commissioner Jaime Lizárraga will leave by January.

This situation leaves Caroline Crenshaw as the lone Democrat on the commission, facing challenges for renomination. A Senate Banking Committee hearing to vote on her renomination was recently delayed due to Republican opposition, as reported by Chair Sen. Sherrod Brown (D-Ohio).

Jaret Seiberg from TD Cowen's Washington Research Group stated, "We believe it is increasingly likely that there will not be any Democrats on the SEC next year."

Some in the crypto industry are calling for Crenshaw's removal, criticizing her dissent following the approval of spot Bitcoin exchange-traded products. Crenshaw expressed concerns about fraud and investor misperceptions regarding protections.

The Senate Banking Committee is set to reconvene on Wednesday to vote on Crenshaw's nomination.

Seiberg emphasized that an all-Republican commission would expedite rule-making processes, minimizing potential delays caused by Democrats. However, there are risks of partisanship in crypto regulation which could impact future rules. He stated, "If the rules are viewed as partisan, then a Democratic SEC is more likely to change them. Conversely, bipartisan rulemakings likely create a regulatory environment that endures through elections, providing necessary policy stability for crypto platforms and issuers."