The SEC is postponing actions on prominent crypto enforcement lawsuits, which may be a way of buying time to dismiss them. It has already postponed the deadline for the Coinbase case but hasn’t dropped its biggest lawsuits yet.
Under Gary Gensler, the SEC sued Ripple, Kraken, and other firms, but the Commission currently has a reduced appetite for these actions. Its case against Ripple has a deadline in April, but the SEC may change dramatically by then.
Will the SEC Drop its Ripple Lawsuit?
The Ripple vs SEC case, beginning in December 2020, was arguably the most impactful crypto enforcement litigation of Gary Gensler’s tenure as Chair. Now that Gensler is gone, the Commission is de-prioritizing the suit, but it still hasn’t formally dropped the charges.
According to some rumors from Capitol Hill, the SEC may be preparing to do so further down the line:
“I’m told by multiple legal sources that the SEC has been prioritizing cases with imminent court deadlines, which is one explanation for why we haven’t seen pause requests in the Ripple and Kraken cases. Ripple’s next court deadline is April 16 and it looks like Kraken’s is March 31,” said journalist Eleanor Terrett.
Specifically, the SEC already requested a 30-day extension in its battle with Coinbase, but no such thing has happened with the Ripple case. The Commission has shown a willingness to drop legal battles with lighter consequences, but the XRP case could have profound implications for US crypto regulation.
In other words, the SEC may not be prepared to drop it outright.
However, by the time this April deadline comes around, a few changes at the SEC could give it more wiggle room to dismiss the Ripple case.
First of all, Mark Uyeda is only the Acting Chair, as Paul Atkins has yet to pass his confirmation hearing. If the Senate formally approves Atkins, it may give him a firm mandate to make controversial decisions.
Additionally, Congress has its first-ever Crypto Subcommittee, and other legislative bodies are actively investigating regulatory overreach. The findings of bodies like this could help sell the message that the SEC overstepped its jurisdiction to sue Ripple.
Most importantly, President Trump could throw his weight behind the effort. Already, D.O.G.E. is planning to investigate the SEC, and it draws authority from the executive branch.
Will President Trump Play a Key Role?
Last night, Trump significantly escalated his policies with an executive order mandating direct oversight over federal regulators. If this is instituted by April, the US President could simply compel the SEC to drop its Ripple lawsuit.
“So-called independent agencies like the FTC and SEC have exercised enormous power over the American people without Presidential oversight. These agencies issue rules and regulations that cost billions of dollars and implicate some of the most controversial policy matters. Now they will no longer impose rules…without accountability,” Trump’s statement read.
This executive order has proven extremely controversial. It effectively centralizes federal authority, and the Supreme Court may strike it down.
Still, it illustrates the many avenues by which Trump could curtail US crypto enforcement. The SEC that first sued Ripple is already a thing of the past, but the changes have not been fully consolidated yet.
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