Trump Paves Way for Quick SEC Action on Crypto

In his first week on the job, President Donald Trump and new decisionmakers at the Securities and Exchange Commission appear poised to act quickly to deliver some regulatory clarity on cryptocurrency.

Despite crypto’s popularity with some investors, the new era of businesses buying digital assets such as Bitcoin represents a major departure from traditional investing. According to one estimate, roughly 70 publicly traded companies currently invest in Bitcoin. The trend comes as a surprise to some analysts, as corporations typically safeguard their cash by investing in decidedly less risky investments like U.S. government bonds and money market funds. Some of the public companies holding crypto assets, such as Coinbase, already operate in the crypto industry. However, several only recently began buying it – coinciding with Trump ramping up his public support for crypto in the last year.

“I cannot understand how a risk-averse board could justify an investment in digital assets, given we know they swing quite significantly,” Naresh Agarwal, an associate director at the Association of Corporate Treasurers, told The New York Times. “It is quite an opaque market.”

Meanwhile, with former SEC chair and noted crypto critic Gary Gensler now out of the picture, regulators are moving quickly to address crypto-related issues that have lingered over the sector for years. On January 21, acting chair Mark T. Uyeda announced the SEC had formed a task force to develop a clear regulatory framework for crypto assets. Uyeda said fellow Republican commissioner Hester Peirce will lead the group.

The legal system will probably appreciate whatever clarity the new SEC task force can offer. Earlier this month, the U.S. Court of Appeals for the Third Circuit issued an opinion calling on the SEC to explain its rationale for not undertaking the typical process of notice-and-comment rulemaking when it comes to interpreting where digital assets fit within securities laws.

Even so, the SEC’s latest actions appear to be less motivated by orders from the Third Circuit than by Trump’s desire to legitimize crypto. Note that Peirce, a longtime crypto advocate, is running the new task force. Moreover, the SEC used pointed language in its release announcing the creation of the task force, arguing the agency “relied primarily on enforcement actions to regulate crypto retroactively and reactively, often adopting novel and untested legal interpretations along the way” under Gensler. “The SEC can do better,” the release added.

But even as the White House is pressing for more certainty on regulation, Trump and his wife, Melania, are complicating matters with their own crypto ventures. Absent any economic purpose, the $TRUMP and $MELANIA digital tokens recently launched to great fanfare among the financial press, meme investors and the president’s strongest supporters. That’s probably not the news crypto proprietors wanted to hear with their biggest policy win to date in sight.