🏦 Trump Appoints Pro-Crypto Treasury Secretary 🙌
Also: Democratic SEC Commissioner Jaime Lizárraga announces his resignation, but don’t expect a totally pro-crypto commission.
Hey! I’m Veronica Irwin, Unchained’s regulatory reporter.
Talk about a Friday news dump. Tonight, the president-elect made a slew of announcements on people he was nominating to lead the American economy. Amongst them, at least one important to crypto: Secretary of the Treasury.
Democrats made a little bit of news as well: Democratic SEC Commissioner Jaime Lizárraga will step down on January 17th due to his wife’s illness. While that means Trump will technically get two nominees, one will have to be a big compromise with Democrats.
Trump Taps Hedge Fund Manager Scott Bessent to Be Treasury Secretary
The role has significant power to enact or stall Trump’s vision for the economy.
President-elect Donald Trump nominated hedge fund manager Scott Bessent for the role of Treasury Secretary, according to a post on Truth Social Friday.
As Secretary, Bessent would possibly be the most important voice after Trump himself on the United States economy, and would have the power to sanction foreign crypto projects, as well as play a role in pursuing or discouraging the creation of a central bank digital currency (CBDC). Cabinet nominees are almost always approved by the Senate. However, Trump posted on Truth Social earlier this month that he could use recess appointments to push through his nominees in a “timely manner” if the Senate delays the process.
Bessent is the founder of Key Square Group and previously led investments at Soros Fund Management. He is known to be very supportive of crypto and bitcoin in particular, having made several positive statements about cryptocurrency in recent months. “Crypto is about freedom," he said in an interview on Fox.
The race between Bessent, former Federal Reserve Governor Kevin Warsh, Apollo Global Management CEO Marc Rowan, Republican Tennessee Senator Bill Hagerty and, until this week, Cantor Fitzgerald CEO Howard Lutnick, has been contentious, with allies for each actively lobbying the president-elect. On Tuesday, Lutnick was nominated for the lesser role of Commerce Secretary after infighting between people close to Trump, including Department of Government Efficiency Secretary nominee Elon Musk and Department of Health and Human Services Secretary nominee Robert F. Kennedy Jr., frustrated Trump, according to reports.
Read More: The Trump-Connected Brad Bondi Is A New SEC Chair Contender and Pro-Crypto
After Lutnick was tapped to serve as Commerce Secretary, the remaining four contenders to head the Treasury Department each visited Mar-A-Lago this week. Bessent visited Mar-a-Lago on Thursday, according to Fox Business. A source who speaks with Trump aides told Unchained that Rowan was out of the running after a meeting between Rowan and Trump on Wednesday went sour. Also on Wednesday, Trump reportedly floated the idea of Warsh temporarily serving as Treasury Secretary before becoming Fed Chair at the end of Jerome Powell’s term in 2026.
Read More: Trump’s Plans for a ‘Crypto Czar’ and a Crypto Advisory Council: Here’s What We Know
Deliberations over Trump’s Treasury choice were so tense largely because the Treasury Secretary will play a significant role in crafting tax legislation, and also because they will likely serve as a middleman between Trump and other foreign leaders during trade negotiations. The Tax Cuts and Jobs Act, broadly known for including tax cuts for wealthy individuals and corporations that Trump campaigned on, expires at the end of 2025. A replacement bill would ultimately need to be passed by Congress, but would also incorporate input from the Treasury Secretary. Debate over what will be included in a new tax bill are expected to be a political focal point next year, and crypto lobbyists are already meeting with members of Congress to ensure that the industry's priorities, such as avoiding the inclusion of a capital gains tax, are prioritized.
The crypto industry was also concerned that Trump’s Treasury Secretary nominee would have a strong understanding of blockchain technology and a desire to avoid targeting crypto builders so that he would not sanction international protocols. Under current Secretary Janet Yellen, the Treasury Department sanctioned cryptocurrency mixer Tornado Cash for allegedly laundering money for North Korean hackers Lazarus Group. The sanctions have been criticized by many in the industry for being unsuccessful in halting financial crime, as well as unfairly penalizing developers and consumers who use the mixer to protect their privacy.
Democratic SEC Commissioner Is Stepping Down, but That Doesn’t Mean Trump Will Get 2 Outright Picks
Because of the way that the commission is structured, the president-elect will likely have to cede control over one of the two vacancies to Democratic party leadership.
When Democratic SEC Commissioner Jaime Lizárraga announced on Friday that he planned to step down from the agency on January 17 because of his wife’s health issues, the crypto community jumped to the conclusion that President-elect Trump would have sole discretion to choose two SEC commissioners—one to replace outgoing chair Gary Gensler, and the other to replace Lizárraga. However, that appears now unlikely to be the case.
The commission is currently composed of five individuals, one of whom also serves as chair. Those five individuals are Gensler, Lizárraga, and Caroline Crenshaw, who are Democratic appointees, and Hester Peirce and Mark Uyeda, who were appointed by Republican presidents. In order to remain non-partisan, no one party is allowed to have more than three commissioners on the panel at a time. That means that a Democrat must be assigned to at least one of the two seats available on the commission after January 17.
Read More: A Degen Administration? Why the Crypto Czar Might Not Be Allowed to Own Tokens
As a result, Trump will likely now have full control over just one pick, with the other nominee chosen with the input of Democratic party leadership, according to three legal experts who spoke with Unchained. Precedent holds that if a vacancy on the SEC cannot be filled by someone from the same party as the President, Senate leadership from the opposing party gets to choose. Under this arrangement, both commissioners are officially nominated by the President, but the choice is the product of a political deal between Democrats and Republicans. Often, in this scenario, the two nominees are approved by the Senate simultaneously as a pair.
The process of pairing a Republican with a Democratic nominee is relatively common. Republican Commissioner Hester Peirce and Democratic Commissioner Robert Jackson were confirmed as a pair in 2017, for example. The balance encourages Senators on both sides of the aisle to confirm the opposite party’s pick, making it more likely that the nominees will each receive the 60 Senate votes needed to be confirmed. It would likely be New York Senator Chuck Schumer, as leader of the Senate Democrats, who would make a deal with the Trump administration in this case, according to lawyers.
Read More: Trump Promised Clear Crypto Regulations, But the SEC Might Not Be Prepared to Give Them
Meanwhile, Commissioner Crenshaw was nominated in June to serve another term on the commission, but she has not yet been confirmed by the Senate. Though her term has expired, she can still sit on the commission via an extension until the end of 2025. Crenshaw could be re-nominated to the commission in exchange for Senate Democrats giving Trump the votes necessary to confirm his nominee for SEC Chair. But lawyers who spoke to Unchained were divided on whether they thought Trump would be willing to cut this deal, given Crenshaw’s well established critical views of the crypto industry. Crenshaw has also been scrutinized for her support of climate disclosure rules.
Before the new commissioners are approved, Republican commissioners Peirce and Uyeda will have authoritative sway over SEC activity with a 2-1 majority. The three sources who spoke with Unchained said it is widely expected that Uyeda would serve as an acting chair, putting him in control of the Commission’s priorities for now. However, it is likely that Uyeda and Peirce will focus on readying the commission for Trump’s nominee for SEC chair, as opposed to trying to implement their own priorities.
Related stories from Unchained: