The cryptocurrency market has been navigating through a landscape of regulatory challenges for over a decade. However, recent developments have sparked optimism within the industry. With the victory of Donald Trump in the presidential election, there is a renewed hope that forthcoming regulations will be more favorable towards cryptocurrencies, and past legal entanglements may be resolved. Katrina Paglia, the Chief Legal Officer at Pantera, shares this optimism and forecasts significant changes in the legal landscape surrounding crypto companies in the United States.
Ongoing Securities Lawsuits: A Turning Point?
Speaking at the North American Blockchain Summit, Katrina Paglia predicted that many ongoing securities lawsuits against crypto companies will “quietly go away” once SEC Chair Gary Gensler steps down in January 2024. She emphasized that settlements are likely to occur, with many defendants agreeing to pay fines without admitting to any wrongdoing. These settlements are expected to include language such as “neither admit nor deny,” signaling a resolution without further legal battles, which could bring much-needed relief to the industry.
Wells Notices to Be Dismissed?
In addition, Paglia pointed out that the SEC’s Wells Notices, which serve as warnings of potential legal actions, may become obsolete with Gensler’s exit. High-profile companies like Ripple, Binance, and Coinbase have received such notices, indicating the SEC’s readiness to initiate litigation. However, with a new SEC chair, Paglia anticipates that these investigations will lose momentum and gradually be dismissed, offering relief to the affected companies and allowing them to refocus on innovation and growth.
Potential for ‘No-Action Letters’
Paglia also foresees the possibility of the SEC issuing more “no-action letters” after Gensler’s departure. These letters are formal communications from the SEC stating that the agency will not pursue enforcement action against a company if it proceeds with a specified course of action. Such letters could provide the crypto industry with much-needed clarity and relief, especially after enduring years of regulatory ambiguity. This development could foster a more innovative and dynamic environment for crypto businesses to thrive.
Hester Peirce’s Role in Crypto Regulation
With Gensler’s departure, there is speculation that SEC Commissioner Hester Peirce might assume a more prominent role in overseeing crypto matters until a new chair is appointed. Known for her crypto-friendly stance, Peirce could guide the SEC towards more favorable outcomes for the industry, potentially issuing no-action letters to ease regulatory pressures. Her leadership could mark a significant shift in how cryptocurrencies are regulated in the United States.
Looking ahead, Paglia anticipates a relaxation in crypto-related legal cases by the first quarter of 2025. She believes that Gensler’s exit could be a pivotal moment for many crypto cases. High-profile cases such as Ripple vs. SEC, and issues involving Coinbase and Binance, have suffered due to what is perceived as an unfair legal trial. This period could be transformative for the crypto industry, especially if Trump endorses crypto-friendly guidelines by 2025.
Consensys CEO Joe Lubin recently expressed optimism, stating that ongoing crypto cases might reach a resolution or settlement with the appointment of a new SEC chair. Meanwhile, Coinbase CEO Brian Armstrong has called for an apology to Americans for the extensive damage caused by the previous regulatory approach. The future of crypto regulation in the United States remains uncertain, but these potential changes signal a more promising horizon for the industry.
