What problems can the SEC solve if Trump fires Gary Gensler?

After former U.S. President Donald Trump delivered a stirring speech on stage at the Bitcoin 2024 conference in Nashville, current Securities and Exchange Commission Chairman Gary Gensler may have to start sending out resumes as Trump vows to remove him and seek a crypto-friendly successor.

Gary Genslerstepping downWeb is great news for the industry, but turning the U.S. into the cryptocurrency capital of the world isn’t as easy as saying “You’re fired”It’s that simple. The unlimited demand for tokenized dollars has brought the United States an invaluable advantage, but Web3there is still a pressing need for investor protection and supervision, which is the purpose of regulatory agencies.

BitkoalaKoala Finance summarized Trump's dismissal ofGary GenslerCan make the United StatesSECWhat problems can be solved? Generally speaking, the following five goals can be achieved:

1, allow spot Ethereum ETF pledge

Spot Ethereum Exchange Traded Fund (ETF)finally on July 23 , but the staking function (or locking ETH as collateral in exchange for rewards) is conspicuously missing. Solving this problem is easy to say, but it is actually very difficult to do, because according to the Investment Company Act of 1940, ETFs and mutual funds should redeem fund asset shares in a timely manner (usually within one day), and pledge makes spot color:#333333;background: white;">ETHis almost impossible to achieve becauseETHwithdrawals are unpredictable and usually take several days to complete.

The SEC has had exemptions in the past, so the same approach needs to be taken for spot EthereumETFsDeveloping thoughtful exemptions takes time, so the new SEC chairman should start taking action from day one.

2, adopt on-chain compliance solutions

The SEC should adopt a similar flexible approach in other areas. The core functions of the securities market (such as reporting, clearing and settlement) are subject to strict regulatory scrutiny, which is a matter of course. These areas are also where blockchain technology excels.

Distributed ledgers automatically record and settle every on-chain transaction and are highly resistant to manipulation or fraud. The SEC knows this and has already treated on-chain ledgers as valid financial reports in at least one case.

Now, regulators should promote this practice on a large scale and issue comprehensive guidance so that others can follow suit.

3. Upgrade KYC and custody rules of Web3

The same is true for other compliance requirements, such as Know Your Customer (KYC)and custody, at this stage, self-custodial wallets (such as Ledger and MetaMask) seem to be regulatory black holes that most security tokens cannot enter.

Frankly, it doesn’t have to be this way. In the United States, qualified cryptocurrency custodians (QCs)—which hold cryptocurrencies for users in insured, separate accounts—have proliferated. These include Anchorage Digital, BitGo EN-US" style="color: rgb(51, 51, 51);">Coinbase Custody and Paxos etc.,Adding self-custody elements (such as non-upgradeable smart contracts and private keys) to existing cryptocurrency regulatory rules will only strengthen investor protection.

The deadlock in the U.S. Congress is not an excuse for not being able to promote this measure. To a large extent, the relevant regulatory rules can be fully implemented within the scope of existing laws. The core goals of SEC regulation are as important as ever, blockchain technology simply enables them in new ways, and mapping these new solutions onto the SEC’s existing framework will open up a world of possibilities for Web3.

4, let DEX step out of the shadows

UniswapandBalancer and other decentralized exchanges (DEX)represent the future of trading, they replace the expensive chain of intermediaries (including custodians, brokers, clearing houses and transfer agents) with transparent non-custodial smart contracts, and if implemented properly, DEXcan actually significantly reduce transaction costs, reduce counterparty risk and facilitate real-time, around-the-clock trading.

There is a problem. Despite being in use for nearly a decade, DEX is still almost completely unregulated. This is largely due to the ongoing tug-of-war between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), which regulates commodity derivatives markets.

The solution to this problem is simple - the SEC should clarify which tokens (if any) are securities, set up a clear registration path for DEXsthat trade these tokens, and hand over the rest of the spot cryptocurrency market to the CFTC. More importantly, DEXs should meet risk management, KYC, and disclosure standards comparable to those of traditional exchanges. In addition, as with other compliance rules, regulators should adopt on-chain solutions as comprehensively as possible.

5、Use RWA to realize the dollarization of the digital economy

On-chain dollarization is the holy grail of US encryption policy, and the opportunities are vast. The global demand for tokenized dollars has maintained a triple-digit growth rate. According to Bitkoala, stablecoins backed by the U.S. dollar - for example, USD Coin - has purchased up to $1000 billion worth of U.S. government debt.

In fact, tokenized money market funds and other real-world assets that generate income (RWA)are just beginning to be in Web3gain a firm foothold. A few early entrants - such as BlackRock's BUIDL) Fund and Franklin OnChain U.S. Government Money Fund (FOBXX)——are all hampered by very strict restrictions.

So, it's time for the SEC to change direction, and the new chairman should actively cultivate a strong dollar-backed WA on-chain market. These tokenized securities must fully utilize the power of the blockchain and must be tradable on DEX, available for user-managed wallets, and open to Web3developers.

A reasonable crypto policy should give priority to dominating the digital economy in the coming decades. In this regard, the United States does have a great advantage. After all, the existing financial regulatory framework is a priceless asset. If Trump is elected as the next US president, he should choose a new chairman of the Securities and Exchange Commission who understands this and is ready to take action.

The SEC's job is to protect investors. It is a complex issue that it faces, both to protect investors in the high-risk and high-volatility crypto market and to promote the United States to maintain its dominant position in the crypto economy.