Yesterday, it was announced U.S. Securities and Exchange Commission Chair Gary Gensler will be stepping down from his position and completely leaving the agency before Trump takes office. Gensler’s tenure does not expire until 2026. Gensler had sought increased regulations and was a staunch opponent of cryptocurrencies – something the Trump administration is very much committed to, and even the Harris campaign to a degree.
Trump said in July he would fire Gensler “on day one.”
CoinDesk reported: ‘Gensler also oversaw the first approval of spot bitcoin and ether exchange-traded products, after a decade of crypto companies trying to introduce these products to U.S. markets. He initially opposed them, but a court ruling against the agency pushed him to vote alongside the five-member commission’s two Republicans to ultimately approve the ETFs.’
With Gensler on his way out, this paves the way for an SEC that is more favorable to cryptocurrencies and a deregulation of the banks. Trump has promised “the largest regulatory reduction in the history of our country.”
CNBC interviewed Larry Tabb, director of market structure research at Bloomberg Intelligence, on the prospect of deregulation to pave the way for cryptos and relaxed banking protocols. The outlet wrote:
What might be the priorities for the incoming SEC chair?
That will depend very much on the incoming chairman. There’s little doubt a Republican-led SEC will be more sympathetic to crypto. Gensler has said he believes most crypto currencies are securities. I think there will be an attempt to more clearly define which crypto currencies are or are not securities, which would go a long way toward clearing up regulatory uncertainty. There will likely be a bigger push for broad legislation in Congress that would give much of the power to regulate crypto to the CFTC.
There may also be an effort to reinvigorate the IPO market. Helping companies become public could be a priority, including an effort to eliminate existing rules which impede capital formation and make investing more expensive.
[…]Are there any other reasons to believe rulemaking will be greatly curtailed under the Trump administration?
Yes. The Chevron doctrine was established by the Supreme Court in 1984, it granted deference to a government agency’s interpretation of rules, providing they were reasonable. This was overturned this year by the Supreme Court, which held that the Administrative Procedure Act required courts to exercise independent judgement in deciding whether an agency acted within its statutory authority.
What is the effect of that ruling?
It’s still being worked out, but it will likely reduce the power of federal agencies to make rules and increase the role of courts in interpreting those rules. That said, the SEC has not historically relied on Chevron, so this ruling will probably have little impact, but suing the SEC has become very popular, not only by broker, agencies and exchanges but also by the buyside, which is really aggressive for money managers (or their associations). There is little way to put this genie back in the bottle without changing strategy, so you will continue to see many lawsuits, which has and will undermine the authority of the agency.
The only way out of this is two-fold: one, take out a big stick and use enforcement to push back on the industry and/or two, go back to the industry and seek consensus. The industry is of course looking for number two, but it may be a combination of both.
While the Trump administration will not be able to get the changes they want made overnight, they will certainly seek to make a quick turnaround. John Gulliver, executive director of the Committee on Capital Markets Regulation, an industry think tank, said, “We’re going to see a pretty major pivot here.”
Barron’s noted: ‘For other new rules that the new administration may dislike, it will take time for the rules to percolate through the administrative process. “A new leadership cannot come in and just flip a switch and reverse what Gensler put forth these past couple of years,” says Jillien Flores, the managed funds group’s government affairs chief. “It won’t work that way.”’
The SEC is currently being sued for a multitude of things that were passed by Gensler, including board diversity, share buybacks, short-sale disclosures, securities loan reporting, registration of Treasury market dealers, climate disclosure, and cybersecurity.
Larry Tab explained, “The SEC is an independent agency but they have great latitude in deciding how to respond to lawsuits. Most of these suits are still pending in federal court. As soon as a new Republican chairman comes in, I suspect many of these lawsuits will probably not be contested and the regulations will not go into effect.”
Last week, a team of anonymous editors for Bloomberg said that dialing back some regulations is a good thing but can also lead to more instability down the road.
“Where the financial system is concerned, deregulation may be especially fraught,” they argue. “Last time around, Trump scaled back several major rules adopted after the global financial crisis, an effort that may have contributed to last year’s spate of bank failures. Weakening requirements further, without due discretion, could create needless risk.”
They argued that banks must be stable and be able to weather the storm. “First, banks must be strong enough to weather turmoil. The 2007-2009 crisis showed that an overleveraged system — both banks and nonbanks — was too vulnerable to a drop in asset prices. Last year’s bank failures demonstrated that even “safe” assets can create losses. Ensuring that equity capital levels remain adequate is the best form of protection, and far preferable to elaborate plans for bank resolution or long-term debt-funding requirements.”
AUTHOR COMMENTARY
The bank issue Bloomberg is referring to, in part, is how in 2020 the Trump administration made it so banks are zero-reserve. We used to operate under fractional reserve banking, where financial institutions were obligated to only hold 10-20% of the money on hand. That was already very risky and dangerous, but in 2020 banks were no longer obligated to hold any reserves, and so when it was time to pay creditors they didn’t have to have it on hand, a contributing factor into the demise of SVB in 2023.
Earlier this week I published a report – “Expect Greater Currency Devaluation And Central Bank Empowerment In 2025 With Massive Swings Toward Cryptocurrency” – which noted that this deregulation of banking and crypto, and merger of the two, is paving the way for broader adoption of cryptocurrency, CBDCs and tokenization. Guaranteed.
Interestingly enough, about a week out from the [s]election, Janet Yellen and the Treasury announced a new plan to coerce “unbanked” Americans with some new ‘financial inclusion’ plan.
This is a TRAP! We have seen a number of times that next year there are going to be a slew of bank failures and consolidations, and this will only be further exacerbated by deregulation; and by enticing more Americans to become ‘banked,’ under the auspices that the economy is doing better and is resolute, will prove to be a massive and debilitating rug pull with extreme consequences. But hey, the stock market will be hitting new record highs from all the quantitative easing, low rates and further currency devaluation!
Psalm 15:5 He that putteth not out his money to usury, nor taketh reward against the innocent. He that doeth these things shall never be moved.
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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In conclusion just wait on the LORD and he will provide coming soon. God here’s the cries of the saved and is moving to get them out of the place they are vexed in.
Psalm 3 !
The Lord Never fails on his promises.
God is more reliable than any bank.
The trying of our faith is precious in the sight of the Lord.