The SEC backtracks on crypto, but the market does not react

After the collapse of the FTX exchange, the American SEC began a real war on crypto. Essentially, the agency claimed that most cryptocurrencies, excluding Bitcoin and perhaps Ethereum, should be considered unregistered securities. If this approach had been adopted, they would have had to be delisted from all centralized exchanges providing services to Americans. 

Given that the USA market is by far the main one in the crypto field, this would have meant the end of many crypto projects, and probably also a sort of implosion of their market. 

However, in the end, it was not so, because the SEC ended up backtracking on crypto and completely gave up its war. 

The SEC of Gary Gensler: a continuous challenge against the crypto market

When the exchange FTX closed, at the head of the SEC was Gary Gensler. 

Gensler is a Democrat, and he was appointed as head of the SEC by the Democratic President Joe Biden in April 2021.

To tell the truth, in 2021, in the midst of a bull-market, neither Biden, nor Gensler, nor the SEC had shown signs of wanting to start a war against crypto.

During the bear-market of 2022, however, things changed. After the implosion of the ecosystem Terra/Luna in May, and after the failure of FTX in November. 

What likely led Gensler’s SEC to start a full-blown war against crypto was this second event, especially because the CEO and co-founder of FTX, Sam Bankman-Fried, over the years had donated several million dollars to Democratic politicians taken from their clients’ accounts without their consent. 

The objective of that war was in fact to kill the crypto market in the USA. 

The SEC throws the hatchet of war against crypto 

In particular, the SEC had initiated lawsuits in two directions: against cryptocurrencies, often considered unregistered securities, and against the exchanges that allowed their trading.

It must be said that, in the event that they were actually considered unregistered securities, the exchanges would indeed be guilty of illegally allowing their exchange. 

But it was not so. 

In fact, during the following year, 2023, an initial court ruling went against the SEC regarding XRP, declaring that it could not be considered an investment contract when sold on the secondary market (i.e., the exchanges).

A second ruling went against the SEC on another point, because the agency had refused to approve spot Bitcoin ETFs after approving those on BTC price futures. 

Since then, the agency has started to accumulate a long series of legal defeats, so much so that in the end, this year, it practically decided to withdraw all ongoing cases of this type. 

In the meantime, last year ETFs on Bitcoin landed on the markets in January, and in May the SEC also approved those on Ethereum spot. 

Among the cases withdrawn this year, the one against Coinbase, the main US crypto exchange, stands out, but there are also those against Gemini, Tron, Uniswap, MetaMask, etc. 

At the current state in the USA, it does not seem that any significant SEC lawsuit remains active against a crypto exchange accused of allowing the trading of unregistered securities.

The reason for the marcia indietro

The turning point occurred in November 2024, with the victory of Trump in the presidential elections, but already in 2023 the events had begun to take a turn unfavorable to the SEC.

In fact, not only have all the main crypto cases been withdrawn as of now, but practically from 2022 to today, the SEC hasn’t won any, among those concerning the nature of cryptocurrencies as unregistered securities. 

In other words, the reversal began already in 2023, particularly when a court ruled against the agency regarding XRP. However, at that time, Gensler was still the head of the SEC, and Biden was still the president of the USA. 

That they were preparing for a real about-face was understood in May of last year, when the SEC was invited (probably by Biden) to approve the spot Ethereum ETFs, probably reluctantly. 

Gensler at that point had become more of a problem than a resource, politically, but the initiative did not allow Biden to regain electoral support within the crypto world. 

Trump’s victory

Donald Trump is the most crypto-friendly US President in history. 

From this point of view, his policies are the opposite of those of Joe Biden, so much so that he has declared his intention to make the USA the main crypto hub worldwide. 

It is not surprising, therefore, that a few days after his victory, Gensler announced his resignation, which became effective on the day of Trump’s inauguration at the White House (January 20, 2025). 

The new Republican-led SEC has completed the reversal to align with Trump’s pro-crypto policies and has ended up withdrawing all ongoing crypto cases. 

The new President of the agency has not yet been appointed, but it should be Paul Atkins, Republican and pro-crypto. In the meantime, the acting president is Mark Uyeda, Republican and pro-crypto. 

All this has certainly been good for the crypto markets, so much so that after Trump’s electoral victory, a true bullrun was triggered. But Trump’s honeymoon with the crypto markets seems to be over. 

The problems created by Trump

First of all, part of the bull run was driven by memecoins. 

On January 18, Trump launched his official memecoin $TRUMP, followed the next day by that of his wife Melania. 

After an initial moment of euphoria, both of these memecoins proved to be detrimental for medium-short term traders, so much so that the situation, combined with the scamcoin Libra promoted by the Argentine president Javier Milei, ended up bursting the mini-bubble of memecoins.

All this has certainly contributed to the sharp decline recently in the crypto markets. 

But there’s more. 

Regarding crypto policies, Trump has done nothing negative for the markets, but also nothing concrete and positive. Many were expecting the announcement of the establishment of a strategic reserve in Bitcoin, but such an announcement has not yet been made. 

In reality, however, the main problems seem to be others, as highlighted for example by the price of gold which recently reached all-time highs, rising for the first time in its history above $2,900 per ounce. 

Financial markets fear that if Trump really follows through with his threats on tariffs, this could generate a global economic crisis. This is creating a lot of fear, even though many are still convinced that he is bluffing just to try to get something else in return. 

If this issue is not resolved, it is possible that the consequences on the crypto markets will continue to be negative.