Facing a joint lawsuit from 18 states, the SEC chairman delivered a farewell speech and may resign at this time.

18 states collectively sued, questioning excessive SEC regulation

Recently, 18 states, including Nebraska, Tennessee, Wyoming, Kentucky, West Virginia, Iowa, Texas, Mississippi, Ohio, Montana, jointly sued the Securities and Exchange Commission (SEC) of the United States and its chairman Gary Gensler, accusing them of implementing 'government overregulation' on the cryptocurrency industry.

The complaint directly accuses the SEC of attempting to unilaterally take over the regulatory authority of various states through a series of enforcement actions without congressional authorization. According to the Blockchain Association, Cryptocurrency companies have incurred litigation costs of up to $426 million in response to SEC's various legal actions since 2021. Industry executives have long criticized the SEC for lacking a coherent digital asset policy, which has become the biggest obstacle for developers in the United States.

Image source: Eleanor Terrett, 18 states in the United States filed a lawsuit against the Securities and Exchange Commission (SEC) and its chairman Gary Gensler

Gensler insists on making a 'farewell speech'

After the election of President Trump in the United States, Gensler delivered a speech at the 56th Annual Seminar of the Securities Regulation Law Association, which was widely interpreted by the market as a 'farewell speech'. In his speech, he first talked about 'effective regulation' and the history of U.S. securities laws, and then firmly defended his controversial regulatory policies. He reiterated that, in addition to Bitcoin, Ether, and Stablecoin, most of the currently circulating 10,000 digital assets should be considered securities. The market capitalization of these assets is about $600 billion, accounting for less than 20% of the overall encryption coin market, and less than 0.25% of the global Capital Market.

Image source: Invezz Gary Gensler reiterated that BTC is not a security, and the SEC has never considered BTC as a security

Gensler emphasized in his speech: "Over the years, this industry has seen significant investor harm, with the vast majority of encryption assets yet to demonstrate sustainable use cases, in addition to speculative investment and potential illegal activities."

He further pointed out that since 2021, enforcement actions related to Cryptocurrency have accounted for 5% to 7% of the SEC's overall enforcement work. Nevertheless, he finally did not forget to remind the audience that he ultimately approved the BTC ETF and considered it as a paradigm of effective Compliance. At the end of the speech, Gensler said, "I am honored to serve with my colleagues at the SEC, day in and day out, protecting American families on the financial highway."

Note: The following image is an explanation of Cryptocurrency. If you don't want to see the English version, "encryption City" has also provided a Chinese translation at the end of this article.

Image source: SEC Gary Gensler's full speech on Cryptocurrency confession

The resignation will be requested after Thanksgiving, and many candidates will emerge.

According to reports, Gensler is expected to proactively resign after Thanksgiving, giving up his original term until 2026, and leaving office in early January 2025, before Trump takes office. This personnel change has been widely anticipated by investors and industry executives since Trump's victory, as Trump has publicly expressed support for the Crypto Assets industry, which is completely contrary to Gensler's regulatory philosophy.

Several potential successors are being followed, including Dan Gallagher, current Chief Legal Officer, Compliance and Corporate Affairs Officer at Robinhood, former SEC Commissioner; Bob Stebbins, former SEC General Counsel; Paul Atkins and Brad Bondi, lawyers who advocate for relaxed Cryptocurrency regulation. It is worth noting that Stebbins was recommended by former SEC Chairman Jay Clayton, and sources revealed that if nominated, he would align with the policy direction of the Trump White House. In addition, SEC Commissioner Mark Uyeda has also gained attention due to his previous public criticism of Gensler's 'enforcement over compliance' policy, describing it as a 'disaster' for the entire industry.

With Gensler about to step down, the regulatory landscape of the US crypto assets industry may undergo a major shift. The Trump administration plans to introduce a leader who supports cryptocurrencies and innovation, which could create a more favorable development environment for the industry. It is widely expected that the new chairman's appointment will ease regulatory pressure on the industry, encourage more businesses and investors to enter the crypto assets industry, and enhance the US's position in the global encryption economy.

Image source: CNBC Gary Gensler is expected to resign on Thanksgiving

Full text of Gary Gensler's Confession Speech

When I took office in 2021, the Securities and Exchange Commission (SEC), chaired by Jay Clayton, had filed approximately 80 lawsuits against participants in the cryptocurrency market, including the Ripple case, for failing to comply with basic market rules.

He and his committee often mention these markets, and the committee has issued a DAO report since his third month in office. The SEC has remained vigilant to ensure that the offering or sale of securities complies with our time-tested securities laws. Since 2018, such cases have accounted for approximately 5% to 7% of our total enforcement workload.

One court after another has supported our actions to protect investors and rejected all arguments that the SEC lacks enforcement power, regardless of the form of the security.

Not every asset is a security. Former Chairman Jay Clayton and I have both stated that BTC is not a security, and the SEC has never treated BTC as a security.

Our focus is on a subset of the other approximately 10,000 digital assets, many of which have been ruled by the courts to be offered or sold in the form of securities. Putting it in context, the rest of this market, apart from BTC, Ether, and Stable Coin, is about $600 billion, less than 20% of the entire crypto market and less than 0.25% of the global Capital Market.

I want to make two points:

First, those who offer or sell securities to the public need to register and provide appropriate disclosure to the public.

Second, intermediaries - brokers, exchanges, clearinghouses - need to be registered and subject to appropriate regulation in terms of conflicts of interest, disclosure, and business practices.

Before I joined the committee, many applications for BTC-related exchange-traded funds (ETFs) and products (ETPs) had been rejected or withdrawn at the request of SEC staff. Shortly after I took office in 2021, the first BTC futures ETF became effective after negotiations with SEC staff. Although we initially followed the practice of the predecessor in holding physical BTC ETPs, the committee approved physical Bitcoin and Ethercoin ETPs earlier this year. Compared to the non-Compliance encryption asset market, investors in these products benefit from disclosure, regulation, lower costs, and the advantages of stronger competition.

This industry has caused significant damage to investors over the years. In addition, apart from speculative investments and potential use for illegal activities, the majority of encryption assets have not yet proven their sustainable use cases.

Everything we do is focused on ensuring compliance with the law. Our experience since the 1930s has shown that Compliance is crucial. It protects investors, builds trust in the capital markets, and helps issuers enter the market. History has shown that sound securities regulations can both create market confidence and promote innovation for 90 years.

The article 'Sued by 18 states, SEC Chairman delivers a confession speech, may resign at 'this time'' was first published in 'encryption city'.