From: allin

The landscape of US crypto regulations and industry impact is seeing significant shifts with the appointment of Paul Atkins as the new SEC Chair, replacing Gary Gensler. This change is anticipated to have a notable impact on the cryptocurrency framework and regulation and the broader market.

Paul Atkins: The New SEC Chair

Paul Atkins has been appointed as the new SEC Chair, with Bitcoin’s price cracking $100k around the time of this news [00:20:09]. Atkins previously served as an SEC commissioner under the Bush 2 administration in the early 2000s and worked for both Bush 1 and Clinton at the SEC in the 1990s [00:20:17]. He is respected in DC Legal circles and among regulators [00:20:27].

Atkins is considered pro-crypto and has actively helped draft best practices for crypto trading platforms [00:20:29]. He is described as a fair and smart individual who cares about rules and helping innovators [00:21:00]. The overall reaction from those familiar with him has been very positive [00:25:52].

A Different Regulatory Approach

Paul Atkins’ approach contrasts sharply with that of his predecessor, Gary Gensler. Gensler’s stance on cryptocurrency regulation and risks was largely to enforce existing rules without a willingness to change them or provide a clear path forward for “good actors” in the industry [00:20:37]. Critics argue that Gensler’s SEC purposely avoided defining rules in certain cases, only to pursue enforcement actions later, which was seen as a “dishonorable” tactic [00:21:22].

Atkins, on the other hand, is expected to foster a more innovative and less punitive regulatory environment [00:21:51]. His past comments suggest a thoughtful approach to what constitutes a “sophisticated” investor, questioning the premise that private investment funds are too risky for the non-rich [00:33:20]. He advocates for allowing broader participation in investment opportunities, believing it’s crucial for socioeconomic mobility, rather than exclusively protecting against downside risk [00:35:01].

Impact on Cryptocurrency

The appointment of a pro-crypto SEC Chair is expected to create a more favorable regulatory climate for digital assets. The previous administration’s regulatory stance was seen as adversarial, particularly concerning large projects like Meta’s Libra (later Diem), which aimed to integrate cryptocurrency into its platform [00:23:06]. This project, which could have significantly reduced predatory remittance fees for immigrants [00:23:31], was reportedly “killed” by informal threats from politicians to financial market participants [00:24:19].

While governments have a rational fear of losing control over monetary policy due to cryptocurrencies [00:25:21], a more collaborative regulatory approach could lead to clearer guidelines and a more robust market. Paul Atkins is also viewed as someone who would ensure the integrity of US Capital markets, which are considered the most trusted globally [00:26:00].

Bitcoin and the Dollar

The discussion also touched upon the potential of Bitcoin as a threat to the US dollar. While some view Bitcoin as a “safe haven asset” and a “store of value” [00:29:36], it is seen as a long-term serious threat to the US dollar by some [00:31:35]. This perspective views Bitcoin as representing a move towards “Liberty” and a “Pro-Liberty Network State” [00:30:19], providing a check on potential government excesses in monetary policy [00:31:50].

The previous administration’s stance on Bitcoin, particularly Trump’s support and claiming credit for its price surge to $100k [00:29:54], has been noted as ironic given his simultaneous opposition to BRICS nations attempting to create an alternative currency to the US dollar [00:29:56].

Concerns were also raised about specific high-leverage strategies within the crypto space, such as Michael Saylor’s MicroStrategy issuing debt to purchase Bitcoin [00:41:00]. While bullish on Bitcoin, some expressed concern about the unusual and risky nature of such leveraged access, urging the public to do their research before investing [00:43:29].

Broader Regulatory Philosophy

The discussion around the new SEC Chair extended to the broader philosophy of regulation. There’s a consensus that excessive regulations lead to inefficiency and hinder progress, citing examples like delays in broadband and EV charger infrastructure due to regulatory hurdles [00:06:01]. Proponents of deregulation believe simplifying the regulatory and tax code will lead to immense economic growth [00:06:41].

The previous SEC was criticized for not only aggressive enforcement but also for allegedly preferential meetings based on political donations, as seen with FTX’s Sam Bankman-Fried getting meetings while Coinbase’s Brian Armstrong did not [00:22:26].

While some argue for caution to prevent fraud and protect individuals, suggesting a “sophistication test” for investment access [00:39:11], the sentiment from the new administration leans towards reducing regulatory barriers that prevent ordinary Americans from participating in potentially high-growth private markets [00:35:01]. This shift is seen as crucial for wealth creation and allowing individuals to move up the socioeconomic ladder [00:35:35].