A few Republicans have crypto’s destiny in their hands at the SEC, CFTC

President Donald Trump’s campaign to cut Democrats out of U.S. regulatory work has set up an unusual situation at the two agencies that will have the most say over how the federal government handles crypto: A handful of Republican crypto advocates are entirely in charge of both.

The U.S. Securities and Exchange Commission just said farewell to its only Democratic commissioner, Caroline Crenshaw, last week, removing routine opposition to its current policy drives. Crenshaw had often cautioned the agency about its shift toward a digital asset embrace, including opposing bitcoin exchange-traded funds (ETF) as a danger to investors. She took a consumer-protection stance that regularly extended to those who invest in crypto.

“I think it’s safe to say they’re speculating, reacting to hysteria from promoters, feeding a desire to gamble, wash trading to push up prices, or as one Nobel laureate has posited — betting on the popularity of the politicians who support, or stand to benefit personally from, the success of crypto,” Crenshaw had said in a speech last month. Whether or not such vocal opposition inside the agency has an effect on the regulatory direction of the SEC, it’s over now, and the regulator is run by Trump nominee Chairman Paul Atkins and two commissioners who’d advanced crypto interests, Hester Peirce and Mark Uyeda.

At its sister agency, the Commodity Futures Trading Commission, the new year begins with a new leader, as Trump nominee Mike Selig won the confirmation late last month to be sworn in as chairman on Dec. 22. Acting Chairman Caroline Pham took the opportunity to exit for an industry job at MoonPay, leaving Selig alone in the five-member commission.

While that may be a good situation for crypto-friendly policy, as Selig advances into his not-yet-outlined agenda without needing input or debate from fellow commissioners, the absence of a bipartisan slate of commissioners at the CFTC and SEC has become a sticking point for crypto legislation in the U.S. Senate.

One of the remaining points of debate over the bill that could establish a U.S. crypto regulatory regime is the Democrats’ demand that their party’s vacancies be filled at the two agencies. It’s unclear how much Republicans are prepared to give on that. For his part, Trump has been less than illuminating.

When asked recently whether he’d be willing to make Democratic nominations, he answered with a question, “Do you think they would be appointing Republicans if it were up to them?”

The historic answer is that presidents of both parties have routinely made nominations from both, often in package deals negotiated in Congress that result in multiple confirmations at once.

“There are certain areas we do look at, and certain areas that we do share power, and I’m open to that,” Trump concluded, leaving the matter in uncertain waters. 

Both agency chiefs have been careful not to rhetorically run afoul of Trump’s preference not to allow new Democrats into regulatory roles, with new CFTC chief Selig saying in his confirmation testimony that he’d welcome bipartisan input at the agency but that it’s out of his hands.

Atkins noted at Crenshaw’s departure that she had “listened carefully, engaged substantively and approached every day with the purpose of safeguarding investors and strengthening our markets.”

For now, both the SEC and CFTC have been racing forward on crypto policy. In the final weeks of Pham’s interim chairmanship, she pushed several policies, set in motion the trading of leveraged spot crypto at CFTC-registered platform Bitnomial and established a panel of CEO advisers. And Atkins has called digital assets the top policy priority at his agency, which has abandoned crypto enforcement actions and issued a series of policy statements to clarify its pro-industry digital assets stance in such diverse areas as mining, memecoins, staking and custody.

Both Republican-led agencies have made it clear that they intend to pursue crypto rules with or without input from the law that Congress is working on.

If Congress does manage to pass the crypto market structure bill and the new law directs the agencies toward a list of new rules and duties, writing those permanent regulations would currently be in the hands of only Republican commissioners.

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