Thomas Maxwell
If you were hoping President-elect Trump would not follow through on his support of crypto, you may be disappointed. The United States is poised to become the “crypto capital of the planet” and perhaps the securities fraud capital of the world as President-elect Trump has reportedly begun evaluating pro-crypto candidates for a set of key roles in U.S. financial regulatory agencies.
The news comes as Bitcoin has soared past $86,000 following Trump’s election last week, and other coins including Dogecoin similarly reach new heights.
The Washington Post published a story today reporting that Trump aides are considering a mix of current regulators, former federal officials, and executives from the financial industry who have ties to crypto for top leadership roles. Among the most important agencies regulating crypto has been the Securities and Exchange Commission, which has targeted cryptocurrency companies in the past several years. The Post writes:
Some of the names under consideration for the SEC and other positions include Daniel Gallagher, a former SEC official now at the financial technology firm Robinhood, which offers crypto wallets as well as stock trading; and Hester Peirce and Mark Uyeda, two Republican commissioners at the agency, the people said.
A Republican donor, Gallagher previously has faulted the SEC for taking a “scorched earth” approach to crypto. Peirce and Uyeda, meanwhile, have criticized their agency for policy and enforcement actions taken under President Joe Biden. Peirce is seen as a potential interim chair of the SEC, once Trump takes over the White House, who could later lead a federal task force on crypto policy.
The SEC’s current chief Gary Gensler has received criticism from crypto proponents for applying existing securities laws to crypto. Companies like Coinbase have tried to argue that existing financial regulations need to be modernized and are incompatible with new technology like the blockchain. Critics say existing securities laws are sufficient and the industry just wants to play by its own rules instead. Blowups like FTX, which was considered one the biggest financial frauds in modern history and took down a web of other companies in the industry, have put pressure on regulators to take a tougher stance on crypto. Changpeng Zhao, the former CEO of Binance, just spent four months in prison for turning a blind eye to money laundering activities on his exchange and allowing people to trade who shouldn’t have been able to.
The cryptocurrency industry poured more than $130 million into the recent elections across the U.S. and has been a big supporter of President-elect Trump even though he was dismissive of crypto during his first term and called it a “scam.” If anyone showers enough praise on Trump, it seems he’ll have a change of heart. He was a big supporter of Bitcoin and the crypto industry in the run-up to his re-election, giving a speech at Bitcoin 2024 in Nashville and visiting a crypto-themed bar in Manhattan, where he paid for hamburgers using Bitcoin. Trump even has his own NFT trading cards.
Though crypto isn’t as shady as it used to be, it’s still an industry rife with fraud and loose oversight. Besides the FTX collapse, Tether has long resisted calls to open itself up to an audit of its funds, which could prove everything is on the up-and-up and there can’t be a run on the bank as happened with FTX. USDT is a preferred form of payment for use in “pig butchering” scams as organized networks of scammers abroad can easily transact in the currency without being subject to scrutiny. The U.S. Treasury Department is considering sanctions against Tether for enabling illicit activity.
But looks like all that money spent on political races across the U.S. will pay off for the company and its token:
In preparation for his return to the White House, Trump has surrounded himself with prominent crypto supporters, including Elon Musk, one of Trump’s closest tech allies and financiers, and Howard Lutnick, who boasts close ties to the embattled cryptocurrency Tether. Lutnick serves as co-chair of the presidential transition process, and Bailey, who helped introduce Trump to the bitcoin community, similarly remains engaged.
Lutnick’s involvement in particular has raised concerns about potential conflicts of interest — since he is helping to select potential leaders for prime federal roles could directly affect his business as the chief executive of Cantor Fitzgerald, a Wall Street firm. With Tether, for example, Lutnick has publicly acknowledged that he manages “many, many of their assets.” The currency is facing potential sanctions by the Treasury Department.
There’s one positive way to look at all this. Boomers may have taken away all the available housing in this country, but if crypto proponents get their way, investor protections will be thrown out the window and you’ll be able to legally fleece old people with your promising new PoopCoin crypto project.