The Securities and Exchange Commission’s (SEC) campaign against the crypto industry has cost American companies more than $400 million in legal defense costs alone. That’s enough to fund multiple startups or research initiatives that could have advanced U.S. financial technology leadership. Instead, these resources have been spent fending off an unprecedented regulatory assault that voters have now clearly rejected.
The numbers tell a stark story. Under Chair Gary Gensler’s leadership, the SEC has devoted an excessive amount of its time and resources to targeting crypto – an industry that represents, by the Commission’s own estimate, just 0.25% of global markets. This disproportionate focus has yielded little besides costly courtroom defeats and damaged institutional credibility. The Commission’s setback in the Ripple case and other significant reversals demonstrate the flaws in its strategy of regulation-by-enforcement.
Recent Blockchain Association and HarrisX polling reveals that two-thirds of voters want Congress, not unelected regulators, to establish clear rules for crypto markets. This shouldn’t surprise anyone. Americans understand that innovation requires regulatory clarity, not arbitrary enforcement actions. They’ve witnessed how the SEC’s approach has pushed innovation, jobs, and economic opportunity overseas while leaving U.S. consumers with fewer protections than a well-regulated market would otherwise provide.
This context makes any additional enforcement actions during Chair Gensler’s remaining tenure particularly problematic. Blockchain Association has consistently opposed last-minute regulatory moves by outgoing administrations, regardless of party. In December 2020, we strongly criticized the Treasury Department’s rushed “midnight rulemaking” on digital asset wallets. The same principles apply today: major regulatory decisions should not be made during transition periods when they lack democratic legitimacy and especially when they can be quickly reversed by the next Commissioner.
The costs of ignoring this principle extend beyond immediate market disruption. Each enforcement action launched in these final months would further erode the SEC’s institutional credibility and waste taxpayer resources on cases likely to be abandoned or reversed. More importantly, it would represent a form of regulatory defiance against the clear preference voters have expressed for a different approach.
The path forward is clear. Chair Gensler should immediately halt any planned enforcement actions against crypto firms and focus instead on an orderly transition. This would allow his successor to implement a regulatory framework aligned with both congressional intent and market realities. It would also help restore the Commission’s reputation for thoughtful, measured regulation rather than partisan activism.
The crypto industry stands ready to work with Congress on comprehensive legislation that protects consumers while fostering innovation. We’ve consistently advocated for appropriate regulation – but it must come through proper channels, with democratic accountability and due process. The era of regulation-by-enforcement has failed. It’s time for the SEC to acknowledge this reality and step back from a strategy that has harmed American competitiveness while failing to achieve its stated objectives.
The stakes extend beyond crypto. How the SEC conducts itself during this transition will set precedents for future administrative changes. By choosing restraint over activism, Chair Gensler can help restore institutional norms that benefit all market participants, regardless of administration or party.
The message from voters and the markets is unambiguous: the SEC’s crypto enforcement campaign has been a costly mistake. Continuing it now, in the face of clear public rejection, would only compound the damage. Chair Gensler should do what’s right for the markets, the Commission’s reputation, and American innovation. It’s time to stand down.
