There is a broad misunderstanding in the crypto community about the status of the Securities and Exchange Commission's (SEC) campaign to undermine blockchain innovation in the United States. When Consensys announced in June that the SEC had decided to conclude its "Ethereum 2.0" investigation, it was taken as another signal that a hostile administration was changing its tune.

That, I’m afraid, is simply not true. The SEC is as antagonistic as it has ever been, and that is unlikely to abate until new leadership takes the agency in a new, more productive policy direction.

It’s understandable that people are a bit confused. Both policy wonks and the public at large perceived that the SEC might be rethinking its stance when it did an 11th hour about-face in late May on approval of a spot Ethereum (ETH) exchange-traded product. When that decision was made, the days were numbered for the SEC’s year-long harassment of the Ethereum protocol development community.

It is a big moment, but it hasn’t resulted in the SEC shying away from maintaining very aggressive positions about blockchain software more generally. Look no further than the lawsuit against Consensys in Brooklyn federal court and the imminent lawsuit against Uniswap.

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The SEC’s lawfare campaign still rests on two propositions — that a lot of tokens (perhaps nearly all, as they keep changing their story) are securities. Then when consumers use certain smart contracts, it turns the developers of those contracts into intermediaries regulated under the securities laws.

The SEC's enforcement division in June ended an effort to classify ETH as a security. Source: X

By now, everyone recognizes the SEC’s tactic of maximum ambiguity as to which tokens are securities is intended to give them unfettered discretion in who to investigate and sue. Enforcement actions are the metric that Chairman Gary Gensler points to first when he talks about his leadership record, and it seems that he’s doubled down on boosting the applicable numbers.

This approach might be well designed to get the SEC’s desired headlines, but no one other than the most ardent crypto belligerents believe it’s good policy.

It’s plainly terrible policy. The SEC is playing a never-ending game of token whack-a-mole. The agency spends millions to bring a case identifying a handful of tokens as securities in a space where there are tens of thousands of tokens — and that list expands every single day.

The reality is that the SEC could litigate until the next ice age, and it still wouldn’t be able to achieve its purported regulatory aims.

As newly announced VP candidate JD Vance correctly pointed out in February, the SEC’s tactics seem to be driving the market in a way that may be worse for the consumer. The meme coin craze is largely the SEC’s creation, while tokens that aim to serve a computer science function are considered too risky to be accessed by US users. If anything, that is backwards.

Thankfully, the SEC’s campaign just got a whole lot harder in the wake of the decision in SEC v. Binance. There, the judge said that the SEC’s allegations concerning the secondary trading of tokens on the Binance platform were facially deficient and thus should be dismissed. They relied on a line of reasoning that was “a departure from the Howey test.” Growing is the list of judges who look askance at the SEC’s unctuous explanations as to why a token should be considered an investment contract when it changes hands well after it was issued.

The SEC’s goal with its second tactic — to insist that software developers are securities intermediaries — is to cut the US out of the peer-to-peer blockchain space completely. Despite years of engagement prior to the Gensler regime, the industry is nowhere close to having a workable path to registration of any software product, which allows the SEC to effectively ban US access to such products while they are freely used everywhere else around the globe. “Let the Europeans, Asia, and LatAm lead the way,” seems to be the SEC’s motto. Lawmakers on both sides of the aisle continue to be incensed with this power grab.

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So is Consensys. Consensys’s legal fight with the SEC — both in Fort Worth and in Brooklyn — will play out over the many months ahead against a watershed political moment for crypto generally. Republican presidential candidate Donald Trump is full-throatedly endorsing an innovation-friendly agenda that seeks to achieve American preeminence in blockchain. He has signaled he will end the SEC's abuses and beat strategic adversaries in this technological race, and his recognition of the assault on crypto has spurred unprecedented support from major industry leaders — including notables such as Marc Andreessen and Ben Horowitz, who have abandoned the Democrats’ camp in favor of Trump.

Industry leaders throughout crypto are supporting the former president’s bid with both their social influence and their capital. Although the Democratic camp is seeking to reclaim a beachhead with the industry, including through closed door meetings with industry leaders, they are too far behind and too unwilling to change their tune.

We will see what happens in November, but the odds of a resounding victory for Trump and even possibly a sweep of the GOP in Congress are getting better by the day. Until then, you should not doubt that the SEC under this leadership will continue to fight tooth and nail against the industry. In 2025 and beyond, that leadership not only must change but also must start walking a more collaborative policy path.

However, a change in administration may not yield that immediately. There is speculation that Gary Gensler would not resign the commission at the end of the Biden administration but instead stay on as a commissioner after being removed as chair in order to sustain the anti-crypto policies (as well as his other expansions of SEC purview) his current 3-2 commission majority has championed. Commissioner Caroline Crenshaw is also seeking reconfirmation to another term on the commission, although White House and broader support for her has been tepid. (She was the commissioner who famously responded to an appellate court smacking down the SEC’s capricious denial of a Bitcoin (BTC) ETF by insisting the law should be ignored.)

We can be optimistic that, while the Senate may reconfirm Crenshaw, Gensler will depart rather than be forced to take a backseat. And perhaps new policy priorities at the agency along with stronger engagement by the Hill will end this war of attrition.

Until that day, we have no choice but to fight.

Bill Hughes is the senior counsel and director of global regulatory matters at Consensys, and a board member at the Blockchain Association. He served in the Justice Department as associate deputy attorney general from 2019-21, and as deputy director in the Executive Office of the President from 2017-19. He obtained an undergraduate degree from Vanderbilt University before obtaining a