Under Trump, expect a crypto, corporate-friendly SEC — with costs

In March 2024, for example, the SEC adopted rules that would require public companies to make climate-related disclosures, but these might not come to fruition. Well before Trump’s reelection, the SEC issued a stay, meaning these rules were put on pause until further judicial review.

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Initially, that could bring down costs and enable more widespread investment — especially for crypto and other digital assets. But in the long run, deregulation arguably increases risk throughout the financial system — such as what was seen leading up to the Great Recession — and leaves individuals more on their own to figure out what’s a legitimate investment.

That’s not to say the SEC will stop prosecuting crypto scams like pump-and-dump schemes, but the number of enforcements might lower, in part because of regulatory clarity and rules that give more leeway to issuers. 

For investors, however, not having standardized disclosures — such as how companies are addressing cybersecurity risks — makes it “harder to do an apples-to-apples comparison,” Lee said.

However, that can mean people are on their own to understand risks and ensure they’re choosing reputable financial products and service providers. 

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Overall, public companies and others regulated by the SEC will likely have more leeway under Trump. A relaxed regulatory environment “can be very good for the market,” Groth said. “People can see their portfolios grow more quickly and more substantially.”

“Right now, with a lack of a stronger regulatory framework with respect to digital assets, really what you’re relying on is a mishmash of rulings from U.S. district courts throughout the country,” Groth said. “That opens a book for potentially conflicting rulings from different courts. And it’s hard to kind of grasp what direction you can take.”

Anyone who invests in securities such as stocks or bonds — the majority of Americans, especially when accounting for retirement investments — arguably benefits from the SEC’s rules and enforcement. Born out of the Great Depression, the SEC’s mission includes ensuring fair and orderly financial markets.

This could bring confidence to these companies that if they’re offering digital assets in compliance with a clear regulatory framework. “They’re not going to be subject to enforcement actions or subject to lawsuits for potential fraud, which we see a lot of right now,” he added.

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If companies try to manipulate investors with false information, for example, the SEC can put an end to this practice and punish bad actors. The SEC’s mission also extends to areas such as facilitating capital formation by startups and other businesses — such as through initial public offerings (IPOs) — which ultimately can help create jobs and economic growth.

“I expect those to either be not enforced or rolled back entirely,” Lee said.

To the average person, the SEC’s policies may seem obscure or irrelevant. But even if you don’t work in finance, the agency can have a significant impact on your life. 

Any new regulatory framework will be likely to include some form of investor and consumer protection, but “as digital assets and cryptocurrencies proliferate under this administration, it’s important to be smart. It’s important to not just hitch your wagon to this train that’s coming into the station without being as educated as you possibly can,” Groth said.

A crypto-friendly SEC

In early December, Trump tapped Paul Atkins for SEC chair to replace outgoing Biden nominee Gary Gensler. Atkins, an SEC commissioner under President George W. Bush’s administration whose current roles include being co-chair of the Token Alliance, is expected to embrace more crypto-friendly practices as opposed to Gensler’s emphasis on cracking down on crypto fraud. 

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