Trump eyes pro-crypto candidates for key federal financial agencies

These appointments are critical: Under Trump, the heads of the SEC and other agencies will have the power to determine whether crypto will become a larger, more formalized part of the financial system.

The choice has vast implications for the global economy, and the stakes are high, as evidenced by the 2022 collapse of the crypto giant FTX – and the risks it raised for a catastrophic contagion.

The names under consideration for the SEC and other positions include Daniel Gallagher, a former SEC official now at the financial technology firm Robinhood, which offers crypto wallets as well as stock trading; and Hester Peirce and Mark Uyeda, two Republican commissioners at the agency, the people said.

A Republican donor, Gallagher previously faulted the SEC for taking a “scorched earth” approach to crypto. Peirce and Uyeda, meanwhile, have criticized their agency for policy and enforcement actions taken under President Joe Biden. Peirce is seen as a potential interim chair of the SEC, once Trump takes over the White House, who could later lead a federal task force on crypto policy.

“The commission’s war on crypto must end, including crypto enforcement actions solely based on a failure to register with no allegation of fraud or harm,” Uyeda told Fox Business this month. “President Trump and the American electorate have sent a clear message. Starting in 2025, the SEC’s role is to carry out that mandate.”

Trump aides have also eyed Paul Atkins, a former SEC commissioner who aided on Trump’s last transition, and Chris Giancarlo, a former commissioner at the Commodity Futures Trading Commission (CFTC), according to the people familiar with the matter.

The candidate selected for the SEC is set to replace its current chairman, Gary Gensler, whom Trump promised to “fire” in an appearance at a major bitcoin conference this summer. Under Gensler, the SEC has aggressively cracked down on crypto companies, filing fraud charges against the leader of FTX and levying a vast array of allegations against Binance, another trading platform, over its business practices.

The agency has also sparred in court with Coinbase and Kraken, two other crypto exchanges, and Ripple, which launched the XRP token, for allegedly failing to adhere to federal law requiring registration of their platforms or tokens – charges they each deny.

“His days are numbered,” said Brad Garlinghouse, the chief executive of Ripple, adding that the company has “been in touch” with the Trump transition team. “I think it’s clear this is an area they intend to continue to focus on. I think Trump and a bunch of people realise there’s a new set of technologies that are likely to define the next couple of decades.”

Broadly, crypto supporters say Gensler has wrongly stretched the law out of a personal distaste for digital assets – and they expect his successor to reverse course on some of the federal enforcement actions now underway.

But it remains unclear if Trump can or will actually fire the sitting SEC chairman, rather than demote him to a commissioner while turning over the agency to a new leader. Fully ousting Gensler – a Senate-confirmed regulator – could trigger a novel and complicated legal battle over the president’s authorities, some of the people familiar with the matter said.

Gensler, for his part, has not said explicitly if he intends to step down on his own after the change in administration, though top SEC officials often do. A spokeswoman declined to comment.

“The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail,” Karoline Leavitt, a spokeswoman for the Trump transition, said in a statement. “He will deliver.”

No matter the outcome, the early signs suggest a dramatic change in the way Washington approaches cryptocurrency, a shift that underscores the industry’s rapid ascent into the top ranks of donors in American politics – having helped to elect dozens of friendly candidates to Congress while contributing heavily in support of Trump’s bid for the White House.

Industry executives say they mostly seek regulatory clarity, since Congress has failed to pass a single, comprehensive law governing their products and services - rules that would determine, for example, when crypto is a security or a currency, which investor protections should apply, and which agency would regulate the industry and its offerings.

“A lot of industry, I think a lot of companies, say they want to be regulated when their objective is actually anything but,” said Paul Grewal, the chief legal officer for Coinbase. With crypto, he said, the situation is different:

“There is specific legislation in the Congress right now that we believe would protect investors, and frankly, resolve some of the ambiguities.”

But the political blitz has troubled some Democrats on Capitol Hill, who say the legislative solutions backed by the crypto industry could actually leave millions of Americans with fewer protections – increasing the risks of loss and fraud, while posing new threats to the financial system.

“It means that people are going to be more vulnerable to an industry that is rife with fraud, abuse, market manipulation and cyber-breaches,” said Patrick Woodall, the managing director for policy at Americans for Financial Reform, which advocates for stronger financial regulations.

“This is an industry that is extremely volatile, where people take big losses, where market manipulation by insiders is very prevalent.”

To win the industry’s favor, Trump appeared in July at a national bitcoin gathering in Nashville, unfurling a pro-crypto agenda he would pursue if he returned to the Oval Office. He promised to advance crypto policies “written by people who love your industry”, and predicted bitcoin would surge under his watch.

Trump’s unqualified support marked a stark departure from his first time in office, when he dismissed crypto as a “scam”. But he ultimately came to embrace the industry as it showered him with public praise and financial support, even helping to launch his own crypto venture in the weeks before winning the presidency. A handful of crypto magnates – including Marco Santori, the chief legal officer at Kraken, and David Bailey, who hosted the crypto conference in Nashville – later joined Trump at his election night party in Florida, according to two people familiar with the matter.

Bailey did not respond to a request for comment. Kraken declined to comment, as did Santori, one of the crypto executives in conversation with aides to Trump’s transition about a possible role.

In preparation for his return to the White House, Trump has surrounded himself with prominent crypto supporters, including Elon Musk, one of Trump’s closest tech allies and financiers, and Howard Lutnick, who boasts close ties to the embattled cryptocurrency Tether. Lutnick serves as co-chair of the presidential transition process, and Bailey, who helped introduce Trump to the bitcoin community, similarly remains engaged.

Lutnick’s involvement in particular has raised concerns about potential conflicts of interest – since he is helping to select potential leaders for prime federal roles that could directly affect his business as the chief executive of Cantor Fitzgerald, a Wall Street firm. With Tether, for example, Lutnick has publicly acknowledged that he manages “many, many of their assets”. The currency is facing potential sanctions by the Treasury Department.

Lutnick has conducted some of the outreach to the crypto industry alongside other Trump aides including Michael Kratsios, who previously served as the White House’s chief technology officer, according to one of the people familiar with crypto planning.

The officials have spoken with at least one major crypto firm about serving on a new presidential council on digital currencies, which Trump promised to launch if he won, one person familiar with the matter said.

Another believed that the incoming administration intends to staff a top crypto aide at the National Economic Council, a key policy arm at the White House. Beyond that, the administration must fill a bevy of key roles: In addition to the SEC, Trump must tap leaders for the CFTC, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, all of which oversee elements of crypto, including its relationship to the banking system.

Some crypto executives said they also talked to Trump’s aides about the possibility of early executive orders or other presidential directives that might help the industry, perhaps by clarifying regulatory authorities between federal agencies or studies that would identify ways the government could further grow the crypto ecosystem.

They likened it to a similar set of orders issued by Trump in his first term, which laid out the administration’s regulatory approach to the financial system under the law known as Dodd-Frank.

A few of the conversations date back to the campaign, and it is unclear if Trump plans to act on them as he prepares to return to office. Many observers do expect him to follow through on his pledge to create a national reserve for cryptocurrency, preventing the US government from selling off bitcoin and other tokens it has seized in past criminal investigations.

“President Trump has the House and Senate. He has a mandate,” Bailey said on X last week, though the Associated Press by Monday had not yet called a set of remaining House races, leaving party control of the chamber in doubt.

“The environment is there for us to get this done in first 100 days.”

Written by: Tony Romm