Crypto Billionaire Predicts Drop in SEC Lawsuits under New Leadership

The current chair of the US Securities and Exchange Commission (SEC), Gary Gensler, has been widely criticized for his aggressive and inconsistent approach to regulating the crypto industry. However, according to billionaire investor and crypto advocate Mike Novogratz, this may change soon as many of the lawsuits initiated under Gensler will be dropped by the next SEC chairperson.

SEC Faces Backlash over Crypto Regulation

The SEC has been at the center of several controversies involving crypto regulation in the past year. One of the most prominent cases is the ongoing lawsuit against Ripple, the company behind the XRP cryptocurrency, which the SEC alleges is an unregistered security. The lawsuit has caused significant damage to the XRP market and reputation, as well as sparked a backlash from the crypto community.

Another contentious issue is the SEC’s denial of a spot Bitcoin exchange-traded fund (ETF), which would allow investors to directly buy and sell the cryptocurrency through a regulated platform. The SEC has rejected several applications for a spot Bitcoin ETF, citing concerns over market manipulation and investor protection. However, the SEC has approved several futures-based Bitcoin ETFs, which track the price of Bitcoin futures contracts rather than the actual cryptocurrency. This decision has been challenged by a court, which questioned the logic and consistency of the SEC’s reasoning.

Novogratz Expects Change in SEC Leadership and Attitude

In a recent interview with Forbes, Mike Novogratz, the founder and CEO of Galaxy Digital, a crypto-focused investment firm, expressed his optimism that the SEC’s stance on crypto will improve in the near future. He said that regardless of the political affiliation of the next SEC chairperson, there is a likelihood that many of the lawsuits initiated under Gensler’s tenure will be dropped. He explained that this reflects the growing recognition of the inevitability of crypto’s integration into the financial system.

Novogratz also pointed out the challenges and frustrations caused by the regulatory uncertainty surrounding the classification of digital assets as securities or commodities. He said that the outdated Howey Test, which was designed for traditional securities, fails to adequately address the complexities of blockchain-based technologies. He argued that this hinders industry growth and imposes financial burdens on businesses navigating the regulatory landscape. He emphasized the need for clear and comprehensive regulatory frameworks at both the federal and state levels to level the playing field and foster sustainable growth within the industry.

Bitcoin Gains Acceptance among Traditional Investors

Novogratz also discussed the role of Bitcoin as a store of value, which he said is gaining acceptance among registered investment advisors (RIAs) and retail investors. He said that he anticipates a gradual but steady increase in Bitcoin allocations within investment portfolios as RIAs recognize its potential for diversification and wealth preservation. He said that this influx of capital from the traditional financial sector is seen as the next phase of Bitcoin’s evolution and a significant catalyst for its growth.

Novogratz is not the only crypto billionaire who has expressed confidence in the future of Bitcoin and the crypto industry. Recently, Twitter and Square CEO Jack Dorsey announced that he is launching a new company called TBD, which will focus on building an open and decentralized platform for Bitcoin. Dorsey said that he believes Bitcoin is the best candidate for the native currency of the internet and that he wants to make it more accessible and inclusive for everyone.