Despite the dissatisfaction of the encryption industry, SEC Chairman Gary Gensler still has the ability to initiate multiple actions before leaving office, but there are reports that these measures may be revoked soon.

After Donald Trump won the US presidential election, the crypto market rebounded significantly. Investors are full of expectations for the self-proclaimed 'friend of encryption' president to lead the country for four years, coupled with Republican control of the Senate and potentially the House of Representatives, which gives the encryption industry confidence in the next four years. Currently, the biggest political concern of the Blockchain Community is what measures will be taken by the government in the 75 days before Trump's inauguration on January 20th.

Trump has promised to immediately dismiss Gensler after taking office, and there are divergent views among experts on whether Gensler will deliver a "devastating blow" to the encryption industry during his remaining term or choose to "lay down his weapons". But most experts agree that Trump's successor will have the power to stop existing investigations, lawsuits, and even new rule-making.

"Any law enforcement action he initiates can be reversed," said Jonathan Padilla, CEO of Web3 marketing tool company Snickerdoodle Labs and active Democrat. "Any new rules can also be overturned by a new chairman or new Congress." Padilla said, "Basically, everything can be reversed within 100 days."

Despite Trump's repeated promises to 'fire' Gensler on the first day of his new administration due to Gensler's hostile attitude towards the encryption industry and 'enforcement-style regulation', Trump may not be able to legally remove Gensler from the SEC Commission. However, he can downgrade Gensler to a regular commissioner, significantly reducing his authority. Normally, the SEC chairman appointed by the president would voluntarily resign when a new administration takes office. However, when Fox News reporter Eleanor Tret asked Gensler if he planned to resign before Trump took office, an SEC spokesperson declined to comment.

The SEC did not immediately respond to inquiries about this article.

Possible Actions by Gessler

Trump may appoint a new chairman with completely different views, which may prompt Grantham to impose stricter regulatory measures on the encryption industry in the final hours. Jack Chevinsky, Chief Legal Officer of Variant Fund, warned, "When new leadership takes over federal agencies, encryption policies will change immediately and significantly." He said on the X platform, "Before that, the current government may be busy finalizing rulemaking and initiating enforcement actions."

But others, like Padilla, speculate that Gensler may quietly spend the rest of his term. Insiders familiar with the SEC's internal affairs have indicated that Gensler's staff may slow down the implementation of any actions he intends to take, thereby weakening his ultimate influence.

If Gensler decides to take major action, he has several options. For example, he could unilaterally initiate new investigations into companies believed to be violating securities laws, which could be manifested through the issuance of new Wells notices or subpoenas. If Gensler can garner support from other Democratic-appointed commissioners, he may also file lawsuits against companies that have already received Wells notices, such as encryption gaming company Immutable, Non-fungible Token platform OpenSea, and stock and encryption trading platform Robinhood.

However, Clayton didn't have enough time to resolve any new legal cases or complete new regulations before January 20th, as both processes typically take months. Once the new SEC chairman takes office, they will have the authority to suspend or drop such lawsuits.

Gensler also has the power to further advance the rulemaking proposed and completed the public comment process. For example, he can finalize the SEC's update to the definition of 'exchange', expanding registration requirements for market makers (including some encryption businesses).

However, encryption industry supporters may also file lawsuits against these new rules. Meanwhile, Congress can use the Congressional Review Act to overturn these rules, as long as Congress takes action within 60 days of the start of the session. Therefore, if Grantham passes the new rules before January 20, the early congressional time of the next administration will be occupied.

For rules not overturned by Congress within 60 legislative days, the new SEC chairman can also gradually repeal them. However, this will be a longer process as the SEC will need to follow the public notice and comment procedures of the Administrative Procedure Act to formulate new rules to abolish the rules approved by Gansler.

Although rare, there is indeed a historical precedent for the SEC taking action during the period of a new president's election and inauguration. For example, the Trump administration filed a lawsuit against Ripple on December 22, 2020 (just before the end of its term), despite the SEC being less politicized at that time, and this move may not be related to the incoming SEC chairman under Biden's administration.

Sources say the SEC's enforcement action is rarely influenced by political factors, and speculation about how Garlinghouse will handle encryption affairs in the last moment is unprecedented. An experienced source in dealing with the SEC lawsuit explained, "This reflects Gary's anti-encryption attitude during his tenure. The SEC's enforcement strategy has never been as subject to presidential elections as it is today."

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