Cryptocurrencies rise sharply after industry critic Gary Gensler steps down as US financial regulator

Bitcoin extended its recent rally on Friday morning, hitting $99,500 (£79,463) for the first time.

Cryptocurrencies rose sharply on Friday after one of the industry’s biggest critics said he would stand down as the head of the US financial regulator when president-elect Donald Trump is inaugurated in January.

In a post on Medium, Gensler confirmed he would resign from the US Securities and Exchange Commission (SEC) on 20 January.

Trump had previously said he intended to fire Gensler on “day one” of his presidency after the chair of the SEC took legal action against cryptocurrency trading platforms and a cryptocurrency exchange.

“I thank President Biden for entrusting me with this incredible responsibility,” Gensler wrote in the post on Medium.

Gensler was appointed chair of the SEC in 2021 and immediately called on Congress to give him more powers to regulate the “wild west” crypto-sector, saying that it was “rife with fraud, scams and abuse”.

Bitcoin extended its recent rally on Friday morning, hitting $99,500 (£79,463) for the first time. Ether rose more than 7% in the last 24 hours, while the “meme coin” doge rose 2%.

According to the digital currency news site CoinDesk, the total market capitalisation of crypto coins is now a record $3.4tn, having added 4.5% in the past 24 hours.

Officially, Gensler’s five-year term at the SEC was meant to run until 2026, however it has become common practice for the chair to leave when the presidency changes.

Under Gensler, the SEC pushed through rules seeking to bring more transparency to markets and improve corporate disclosure.

However, he had a number of legal defeats in his attempt to tighten regulation. On the day he announced his resignation, a federal court in Texas threw out the SEC’s new rules for the $27tn US Treasury market, finding that the regulator had exceeded its authority.

“The SEC has met our mission and enforced the law without fear or favor,” Gensler said in his Medium post on Thursday.

Trump holds more pro-crypto views and the value of cryptocurrencies have been rising since he won the US election. Crypto firms have donated at least $119m to congressional candidates they think will pass legislation that is more favorable to their aims.

In his time as SEC chair, Gensler’s regulatory efforts also included new standards for climate disclosures and cybersecurity and market changes.

However, a US appeals court threw out rules that would have forced private equity and hedge funds to increase transparency. A series of lawsuits also prompted the SEC to halt a measure that for the first time would have required companies to disclose their climate risks.

Trump will nominate Gensler’s successor and is expected to appoint someone who will seek to deregulate and potentially discard rules proposed by the outgoing SEC chair but not yet finalised.

In remarks made before Gensler’s resignation announcement, Ken Griffin, the billionaire founder of the hedge fund Citadel, said: “Over the last four years, there were a number of rule changes proposed where, to be blunt, it’s like: ‘What problem are we trying to solve?’”

“Much of Gensler’s agenda will not survive, in my opinion, the next four years. Between the courts and a new SEC, we’re going to see a rollback of the regulatory onslaught,” Griffin told the Economic Club of New York on Thursday.

The Trump transition team is reportedly considering Teresa Goody Guillén, a securities lawyer, to lead the SEC, according to CoinDesk.

She is the co-leader of the blockchain team at the law firm BakerHostetler, and has defended crypto firms and individuals facing investigations and enforcement actions brought by the SEC.