On a cool, sunny June evening in San Franciscoenterprise capitalist David Sacks's Pacific Heights mansion was the scene of an event rarely seen in considered one of America's most progressive cities: an expensive Republican political fundraiser.
The guest of honor that evening was former President Donald Trump, who gave an official speech from a curtained stage to the guests who had paid as much as $300,000 to attend.
The presumptive Republican presidential nominee promised to loosen cryptocurrency regulation if elected in November and “not stand in the way of innovation,” a one that was within the room told CNBC. When he finished, Trump invited listeners to voice their opinions.
Stuart Alderoty, general counsel for blockchain giant Ripple, said the corporate spent over $100 million defending itself in a legal battle with the U.S. Securities and Exchange Commission.
Alderoty's comment was intended to be an example of how SEC regulatory actions under Chairman Gary Gensler have hurt his company and the industry as a complete, in response to a guest and an individual accustomed to the situation who were granted anonymity to explain a personal meeting.
While Alderoty was speaking, there was a second crypto executive within the audience whose company can also be fighting against the SEC: Paul Grewal, the overall counsel of Coinbase.
In 2020, before President Joe Biden took office, SEC accused Ripple and its founders of violating securities laws by acting as unregistered brokers of digital currency tokens regulated by the SEC as securities. In 2023, the regulator filed an identical criticism against Coinbase, the biggest U.S. crypto exchange platform.
The lawsuits are ongoing, and each corporations deny violating securities laws. Alderoty's comments on the Trump fundraiser haven’t been made public, but he has made similar remarks elsewhere.
This frustration with Gensler's regulatory agenda has taken on a political tenor this 12 months as crypto investors seek to exert more influence in Washington, DC
Trump has capitalized on this frustration in recent months, shifting from crypto skeptic to crypto supporter. Early signs suggest that this shift is gaining Trump support within the small but vocal crypto community.
Some industry officials who’re on Trump's side are going further than simply complaining about Gensler. Instead, they are attempting to shape the agency in a possible future Trump administration — from the highest.
In recent weeks, crypto investors have floated several names of potential candidates for SEC commissioner if Trump is elected to a second term, in response to three people accustomed to the talks.
These names include two former chairmen of the Commodity Futures Trading Commission in the course of the Trump administration: J. Christopher Giancarlo and Heath Tarbert.
Another name that has been mentioned is Dan Gallagher, who served as SEC commissioner during Barack Obama's two terms in office and now works as general counsel at investment platform Robinhood.
Gallagher said he was honored to be regarded as a possible SEC chairman in a Trump administration.
“I have had the privilege of serving in a variety of roles at the SEC, including as a commissioner,” he said in a press release to CNBC.
“The agency is very close to my heart and I hope that any new SEC chair will promote access to markets and ensure that the United States remains at the forefront of financial innovation,” he said.
The fourth name mentioned by people near Trump is that of Paul Atkins, in response to three individuals with knowledge of the discussions.
As SEC Commissioner under former President George W. Bush, Atkins against it the agency's policy of imposing heavy fines on corporations that violate securities laws. He later played an influential role on Trump's transition team in 2016, where he helped shape Trump's laissez-faire approach to financial regulation.
“It's a mess there right now,” Atkins said of the SEC in an interview with CNBC. “I think there's a lot of work that needs to be done. There needs to be a change of course.”
Atkins has not heard from Trump or his team a few possible role on the agency, he said. When asked if he would take an SEC job if Trump wins, he replied, “Who knows?”
If Trump is elected, the SEC and crypto policy as a complete could potentially be influenced by more aspects than simply who chairs the commission.
According to OpenSecrets data, at the very least 16 former Trump administration officials are actually lobbying for the crypto industry.
In the event of a brand new Trump administration, they’d likely be top candidates for key positions on the SEC, the Commodity Futures Trading Commission and the Federal Trade Commission, all of which could influence crypto regulation.
Biden's allies raise the alarm
While the crypto industry can lobby Trump and Republicans to arrange for a possible restructuring of the SEC, crypto investors allied with Democrats have to be more cautious of their approach to those in power.
Gensler was considered one of Biden's first nominees in 2021, and his handling of cryptocurrencies has helped set the tone for the administration's broader policies despite the SEC's independence from the White House.
Over the past three years, Gensler has not softened his criticism of digital currencies. On the contrary, it’s harsher than ever.
“This is an area where the leaders of a few years ago are either in prison, about to go, or awaiting extradition,” Gensler said in a recent Bloomberg interview about cryptocurrencies.
The perception that Biden is against cryptocurrency and Trump is for cryptocurrency is troubling some Biden allies a lot that they’re taking their view on to senior White House officials, people accustomed to the matter say.
Venture capitalist John Doerr hosted a gathering with White House Chief of Staff Jeff Zients at his home in Woodside, California, on June 14.
According to an individual with direct knowledge of the meeting, greater than a dozen crypto enthusiasts were there to talk with Zients. Technology investor Ron Conway joined the meeting by phone.
Some of the guests spoke to Zients about Trump's growing appeal to crypto holders, attributing this rise in support partly to Gensler's public statements and policies regarding crypto, this person explained.
The group argued to Zients that Gensler mustn’t be the one public face of the Biden administration's crypto policy, as his comments may lead crypto owners to support Trump as a substitute of Biden.
An SEC spokesperson didn’t reply to a request for comment from CNBC.
Doerr and Conway have supported Democrats, including Biden, for over a decade. Doerr hosted a fundraiser for Biden in February. According to Federal Election Commission records, Conway donated $600,000 to the pro-Biden campaign committee Future Forward.
Both Doerr and Conway have also invested in crypto. Conway’s enterprise capital firm SV Angel lists Coinbase as a part of its portfolio, while Doerr's firm Kleiner Perkins has been investing in crypto corporations for years and was recently a part of a $2 million seed round to support cryptocurrencies Data evaluation Start, skewer.
A White House spokeswoman defended the president's handling of cryptocurrencies, saying administration officials are meeting with quite a few industry stakeholders.
“President Biden has initiated the first comprehensive approach to support innovation in digital assets while protecting consumers and investors from the risks associated with new technologies,” said Robyn Patterson, a White House spokeswoman.
The White House didn’t address the warnings it has received about its dealings with the crypto industry, nor did it reply to subsequent requests for comment on Zients' meeting at Doerr's home.
Conway and Doerr didn’t reply to requests for comment.
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