The 2024 Election Cycle and the SEC | Kramer Levin Naftalis & Frankel LLP

With the US election cycle in full swing and the presidential election just around the corner, there is speculation about how the outcome could affect government regulators. In general, commentators agree that a lot will change regardless of who wins.

The fate of SEC Chairman Gary Gensler

• Under Kamala Harris: Gensler’s fate under the Harris administration appears to be sealed and she is expected to choose to replace the SEC chairman, largely due to his politicization of the cryptocurrency issue^[1]and the resulting pressure from influential figures in the financial and technology sectors.^[2]
• Under Donald Trump: A Trump victory would almost certainly lead to the end of Gensler’s term sooner or later. Trump has declared his intention to fire Gensler.^[3]While it is generally accepted that presidents cannot actually fire SEC commissioners, including the SEC chairman, they can certainly use political pressure to influence their resignation.

Implications for regulation

• Under Harris: The SEC under Harris would generally continue or build on the Biden administration’s regulatory priorities, although efforts to do so could well be hampered by the increasing vulnerability of regulatory efforts to legal challenges following the Supreme Court’s decision in the current legislative session Loper Bright A Harris administration could well seek greater regulation of financial institutions and markets, as well as increased transparency requirements, particularly around climate-related disclosures.^[4]
• Under Trump: A Trump victory could lead to major changes for the SEC, with further deregulation similar to what occurred during his first term in 2016. It is also possible that Trump would roll back rules put in place during the Biden administration, particularly those related to disclosures focus on environmental, social and governance issues.^[5]

Impact on cryptocurrency

• Under Harris: Harris has not yet formulated a final stance on cryptocurrency, so it is difficult to determine how the SEC will view the industry if she wins. Harris appears open to discussions with the crypto industry, as industry groups have held informal discussions with her campaign.^[6]This apparent openness to dialogue could mean the potential for more clearly defined rules if she wins. Additionally, there are pro-crypto factions within the Democratic Party that are encouraging Harris to take a positive stance on digital assets.^[7]
• Under Trump: If Trump wins, there would likely be pressure on regulatory frameworks that support cryptocurrency growth.^[8]

Diploma

As the election approaches, the future of the SEC and its leadership hangs in the balance, with significant implications for financial regulation and market stability. The decisions made in the coming months will shape the financial landscape for years to come and reflect broader economic policy and governance priorities.

^[1]_CoinPedia

^[2]_TechReport

[3]_Newsweek

^[4]_{Fast company}

^[5]_{US News and World Report}

^[6]_CoinDesk

^[7]_Politically

^[8]_{The conversation}