Crypto Bros won’t waive SEC regulations despite supporting Trump

The crypto business — from CEOs to individual owners — likes to think it provided the margin of victory in Donald Trump’s surprise victory in the November presidential election.

Trump, of course, went after crypto for votes and money and promised a lighter regulatory touch than the enforcement measure imposed by Securities and Exchange Commission chief Gary Gensler.

Whether it’s real crypto that gave Trump his big win is another matter, but crypto leaders want something in return for the tens of millions of dollars and new voters it brought to Team Trump.

It’s the reason so many of them are seen at Mar-a-Lago these days as Trump prepares to take over the White House on Monday.

One big question, On The Money learned, involves no longer having to deal with the heavy hand of regulation from the SEC, also known as Wall Street’s top cop.

That won’t happen, according to someone who until recently was among the most involved members of the federal government’s regulatory apparatus. Patrick McHenry, the former chairman of the House Financial Services Committee, told me during a fireside chat I was moderating Tuesday about private lender Biz2Credit that the SEC really isn’t going anywhere.

Far from being the small player that crypto types have advocated, the SEC and its new chairman, Trump appointee Paul Atkins, are still very much at the top of the $3.5 trillion digital currency market.

And according to McHenry, the industry’s favorite regulator — the Commodity Futures Trading Commission — won’t take on all crypto regulation with its lighter hand.

The reason, he said, is a law dating back to the Depression. Under securities law, Bitcoin does not qualify for SEC oversight — which includes investor disclosure — because it was not used as part of a bid to build the blockchain technology used to make transactions that underpin the digital currency.

Not so for other crypto sales that funded new blockchain platforms; they will have to go through the regulatory and disclosure opening of the SEC.

“If you’re going to raise capital in America, raising capital is done through our securities laws,” McHenry said. “So what’s native to the SEC — that’s not going to change.”