\n<\/p>\n
Gary Gensler is officially out as America\u2019s securities regulator, but Tether\u2019s bestest Wall Street buddy blew his play to become the next Treasury chairman.<\/p>\n
On November 21, the Securities and Exchange Commission (SEC) announced that Gensler would resign as chairman effective at noon on January 20, 2025, the day that Donald Trump will be sworn in for his second term as President of the United States. Gensler praised SEC staff as \u201ctrue public servants\u201d and called it \u201can honor of a lifetime to have served with them.\u201d<\/p>\n
Gensler previously suggested that he planned to serve out his full term, which was set to expire in 2026, despite Trump\u2019s public pledge to fire Gensler \u201con day one\u201d of his second term. Gensler\u2019s announcement made no mention of Trump.<\/p>\n
The day after Gensler\u2019s announcement, SEC commissioner Jamie Liz\u00e1rraga announced his own intention to step down as of January 17. Liz\u00e1rraga cited his wife\u2019s \u201cserious illness\u201d as influencing his decision to step down. Both Gensler and Liz\u00e1rraga issued separate statements praising the other for their respective service.<\/p>\n
Liz\u00e1rraga\u2019s withdrawal will leave just one Democrat (Caroline Crenshaw) on the SEC\u2019s five-member commission. Crenshaw is no great fan of \u2018crypto,\u2019 having declared last January that trading of the BTC token is \u201cso susceptible to manipulation, so rife with fraud, so subject to volatility, and so limited in oversight.\u201d<\/p>\n
Gensler was the \u2018crypto\u2019 sector\u2019s b\u00eate noire<\/em>, accused of standing athwart progress, yelling \u2018stop\u2019 at every juncture. Trump has yet to indicate who he might appoint as SEC chair, although pro-crypto figures, including Robinhood (NASDAQ: HOOD)\u00a0Chief Legal Officer Dan Gallagher and former Commodity Futures Trading Commission (CFTC) Chair Chris Giancarlo, have already said they don\u2019t want the gig.<\/p>\n Current Commissioner Mark Uyeda is likely to be named Gensler\u2019s acting replacement. Uyeda appears to be openly angling for a permanent promotion, telling Fox Business that Trump is \u201cabsolutely right\u201d that \u201cthe current administration\u2019s war on crypto needs to stop.\u201d Uyeda added that he wants to \u201cwork with the Congress, the White House and other federal regulatory agencies to make sure we have a cohesive and comprehensive approach to crypto.\u201d<\/p>\n Once Gensler\u2019s gone, the fate of the SEC\u2019s numerous ongoing actions against \u2018crypto\u2019 firms\u2014including Binance, Ripple, Coinbase (NASDAQ: COIN), Consensys, Crypto.com, Cumberland, Kraken, Uniswap, and others\u2014remains unclear. However, many observers expect drama-free resolutions in which the targeted companies pay nominal financial penalties while avoiding any acknowledgment of wrongdoing. Ironically, the SEC just issued its 2024 enforcement report, which included several high-profile actions against crypto firms.<\/p>\n Don\u2019t mess with Texas<\/strong><\/p>\n The SEC\u2019s legal comeuppance hit another new low last week in the U.S. District Court for the Northern District of Texas. The Court issued a summary judgment that slammed the SEC\u2019s February 2024 revision of its \u2018dealer\u2019 definition in a manner that appeared to lump in digital asset liquidity providers.<\/p>\n The SEC\u2019s language change was challenged in April by the Crypto Freedom Alliance of Texas (CFAT) and the Blockchain Association (BA). CFAT, whose members include the Coinbase exchange and the Andreessen Horowitz (a16z) (NASDAQ: ZADIHX) crypto venture capital group, was formed in September 2023 to advocate on behalf of \u201ccoherent and predictable regulations for digital assets in Texas.\u201d<\/p>\n The Court ruled that, in revising the dealer language, the SEC had \u201cengaged in unlawful agency action taken in excess of their authority.\u201d The Court said the SEC\u2019s revision \u201cremoves the distinction between \u2018trader\u2019 and \u2018dealer\u2019 as they have commonly been defined for nearly 100 years. The Court refuses to allow such a broad expansion of the Exchange Act.\u201d<\/p>\n The Court not only granted the plaintiffs\u2019 request for summary judgment and denied the SEC\u2019s request for same, it also vacated the Dealer Rule in its entirety. The Court ruled that since the SEC \u201cexceeded its statutory authority in adopting the Final Rule \u2026 no part of it can stand.\u201d<\/p>\n The Court\u2019s ruling was never in much doubt, as the Northern District has become a go-to site for right-leaning plaintiffs looking to push back on government rules they don\u2019t like, earning a reputation for \u2018judge shopping\u2019 that often sees groups establish shell companies in Texas to enable them to file complaints in the district.<\/p>\n CFAT\/BA issued a statement celebrating their victory as a win \u201cfor the entire digital asset industry,\u201d which can likely expect far fewer regulatory constraints on its activities come January.<\/p>\n Bessent wins Treasury knife fight<\/strong><\/p>\n Speaking of, Trump has finished issuing his list of cabinet nominees, including Key Square Group hedge fund founder Scott Bessent, for the all-important post of overseeing the Treasury Department. Trump said Bessent would \u201cMake America Rich Again, Prosperous Again, Affordable Again, and, most importantly, Great Again!\u201d<\/p>\n A longtime Wall Street veteran, Bessent claimed in a July interview to be \u201cexcited\u201d about Trump\u2019s recent \u201cembrace of crypto,\u201d adding that he felt \u201ceverything\u2019s on the table with (BTC).\u201d However, \u2018everything\u2019 doesn\u2019t include the more far-out fantasies of BTC Maximalists who believe BTC will one day supplant the U.S. dollar. Trump\u2019s announcement stated that Bessent shared his goal of \u201cmaintaining the U.S. Dollar as the Reserve Currency of the World.\u201d<\/p>\n Bessent wasn\u2019t the choice of Trump-whisperer Elon Musk nor recently appointed Health & Human Services chair Robert F. Kennedy Jr., both of whom pressed Trump to choose Howard Lutnick, boss of Wall Street financial services firm Cantor Fitzgerald\u00a0(NASDAQ: ZCFITX). Lutnick is also co-chair of Trump\u2019s presidential transition team and surprised many insiders last month by declaring himself to be the best candidate for the Treasury role.<\/p>\n The fight to win Trump\u2019s favor reportedly got very ugly behind the scenes, with reports of Lutnick throwing sharp elbows and trash-talking his Treasury rivals behind the scenes. After being made aware of these sabotage efforts, Bessent reportedly told Lutnick to \u201cgo f*ck\u201d himself on a call that Lutnick placed to his rival.<\/p>\n Lutnick got the consolation prize of being named Commerce secretary, a far less influential post that primarily involves being a cheerleader for American companies at home and abroad. Lutnick\u2019s new gig may be further hobbled by claims that he \u201cmade a lot of enemies\u201d within Trump\u2019s inner circle during the Treasury dust-up.<\/p>\n Cantor buying into Tether (literally)<\/strong><\/p>\n Lutnick\u2019s Cantor Fitzgerald is the (alleged) custodian of the nearly $100 billion in U.S. Treasury bills that (allegedly) belong to Tether, the issuer of the USDT stablecoin. However, Lutnick has to date offered only verbal assurances that Tether has sufficient reserves backing its $133 billion in issued USDT, which isn\u2019t much better than Tether\u2019s quarterly \u2018attestations\u2019 to that claimed reality.<\/p>\n Over the weekend, the Wall Street Journal dropped a few bombshells regarding the Lutnick-Tether bromance, including the claim that Cantor earns \u201ctens of millions of dollars of fees each year\u201d for managing Tether\u2019s T-bills.<\/p>\n The report also claimed that Cantor \u201cstruck a deal to invest in\u201d Tether sometime over the past year, giving Cantor \u201cabout a 5% ownership interest\u201d in the world\u2019s largest stablecoin by market cap. The WSJ reported that Lutnick reportedly \u2018personally negotiated\u2019 the investment and that such investments in clients weren\u2019t \u2018common practice\u2019 for Cantor.<\/p>\n This 5% stake \u201cwas valued by Cantor at as much as $600 million,\u201d which would value all of Tether at only around $12 billion. This seems surprisingly low given the $7.7 billion in \u2018profits\u2019 that Tether claims to have generated in just the first nine months of 2024. Tether is routinely promoted as a more profitable company on a per-employee basis than Wall Street titans like Goldman Sachs (NASDAQ: GS) or Morgan Stanley (NASDAQ: MS).<\/p>\n When Lutnick was named to the Commerce post, he issued a statement saying he would \u201cstep down from my positions\u201d at financial firms, including Cantor. Lutnick also said he \u201cintend(s) to divest my interest in these companies to comply with U.S. government ethics rules.\u201d<\/p>\n Tether claims the Lutnick fix is in<\/strong><\/p>\n The WSJ reported that Lutnick \u201crestricted the number of (Cantor) employees who had contact with Tether to a handful of top executives \u2026 He often handled the relationship himself, flying by private jet to meet (Tether CFO\/largest shareholder Giancarlo) Devasini.\u201d<\/p>\n Devasini was almost certainly reluctant to travel to New York to meet Lutnick given widely reported rumors that there are unsealed indictments against Tether and its executives waiting at U.S. customs.<\/p>\n The WSJ quoted unidentified business associates of Devasini\u2019s who claimed the Tether CEO \u201csaid privately earlier this year that Lutnick will use his political clout to try to defuse threats against Tether.\u201d<\/p>\n Those threats aren\u2019t limited to those rumored indictments for facilitating money movement on behalf of drug traffickers and terrorists. There\u2019s also stablecoin legislation currently before Congress that explicitly favors Tether\u2019s closest rival, USDC-issuer Circle, as well as an outside chance that Tether\u2019s T-bills could be seized from Cantor in the event charges are filed.<\/p>\n On November 24, Bloomberg reported that Lutnick would delegate responsibility for maintaining the Tether relationship to Cantor colleagues, possibly including his son Brandon. The junior Lutnick is no Tether neophyte, having interned at the stablecoin\u2019s Swiss offices.<\/p>\n Bloomberg also reported that Lutnick will look to Tether to provide at least some of the initial $2 billion that Cantor intends to support its BTC-as-collateral lending program. In reality, this funding may have already been obtained, given that the \u2018secured loan\u2019 category in Tether\u2019s reserves jumped by $2 billion around the time that Cantor first announced its BTC loan plans in July.<\/p>\n As this article was being finished, Trump announced plans to impose 25% tariffs on Canada and Mexico on his first day in office due to their \u201cridiculous Open Borders.\u201d The tariffs would remain in place \u201cuntil such time as Drugs, in particular Fentanyl,\u201d stop coming over the borders. Trump also slammed China for \u201cthe massive amounts of drugs, in particular Fentanyl, being sent into the United States.\u201d<\/p>\n We pause now to recall reports that Mexican drug cartels buy fentanyl precursors from Chinese manufacturers and \u201calways use USDT or (BTC) to pay.\u201d<\/p>\n Your move, Howard\u2026<\/p>\n You\u2019ve already tried the crypto Rasputins, so\u2026<\/strong><\/p>\n While Trump has officially named all his prospective cabinet members, it\u2019s still a guessing game about who will head up the non-departmental role of \u2018crypto czar.\u2019 Bloomberg reported that the White House was mulling designating such a point person on all things\u2019 crypto.\u2019 While the scope of his\/her responsibilities remains unclear, the individual would reportedly serve as a bridge between the industry, Congress, and the White House.<\/p>\n Ex-CFTC Chair Chris Giancarlo has reportedly told officials he\u2019d be interested in the \u2018czar\u2019 post. Other possible candidates include David Bailey, who ran this summer\u2019s BTC conference in Nashville, where Trump gave a speech.<\/p>\n Brian Morgenstern of block reward mining outfit Riot Platforms (NASDAQ: RIOT) is also said to be in the running, while Brian Brooks (ex-Coinbase\/Binance.US) reportedly met with Trump at his Mar-a-Lago resort in Florida (although Brooks might end up getting Gensler\u2019s old SEC job).<\/p>\n Trump reportedly discussed the czar concept with Coinbase CEO Brian Armstrong last week. These reports didn\u2019t specify whether Armstrong was being considered for the role, although this seems unlikely given Armstrong\u2019s full-time job trying to lure in retail suckers to trade memecoins on his exchange.<\/p>\n However, given that Fox Business reported that the czar will be tasked with \u2018creating a framework for the $180 billion stablecoin market,\u2019 Armstrong might see the value in delegating some of his Coinbase responsibilities in order to focus on the bigger prize. Coinbase is a partner with Circle on the USDC stablecoin, which stands to benefit if Tether is officially unwelcome in America\u2019s new freewheeling crypto market.<\/p>\n Meanwhile, Reuters reported that Trump is screening potential candidates to sit on the new \u2018crypto advisory council,\u2019 another promise he made during his Nashville speech. Representatives of Circle, Coinbase, the Kraken exchange, XRP-issuer Ripple Labs, and venture capital groups Paradigm and a16z are all reportedly vying for seats on the new council, the duties of which remain up in the air.<\/p>\n Watch: Teranode is the digital backbone of Bitcoin<\/p>\n