YEREVAN (CoinChapter.com) — The Securities and Exchange Commission (SEC) is cutting its crypto enforcement division, reassigning 50 lawyers and staff members. This decision marks a shift in the federal approach to crypto regulation under President Donald Trump’s administration.
“The SEC is scaling back its crypto enforcement unit. Some in a special unit of 50 lawyers and staff that had been dedicated to bringing enforcement actions are being reassigned,”
wrote analyst Eric Balchunas.
SEC Reduces Crypto Unit. Source: XThe agency had expanded its crypto enforcement unit under former SEC Chair Gary Gensler, but the new leadership is now reducing its size. Many staff members are moving to other SEC divisions, and one senior lawyer has been transferred out of the enforcement team. Some insiders believe this reassignment could impact ongoing crypto cases.
Trump’s Administration Scales Back Crypto Regulation
The downsizing follows an executive order by President Trump aimed at promoting the growth of digital assets and limiting SEC enforcement actions. His administration has taken steps to roll back regulatory measures imposed in previous years.
Acting SEC Chairman Mark Uyeda is overseeing the changes, and his leadership signals a different approach to crypto oversight.
The S.E.C.’s crypto enforcement unit was created in 2017 during the first Trump administration. Initially known as the Cyber Unit, it was designed to tackle issues related to fraudulent and unregistered crypto asset offerings and platforms.
Under Gary Gensler’s leadership, the SEC significantly expanded the unit in May 2022, nearly doubling its size by adding 20 positions, bringing the total to 50 dedicated roles. This expansion aimed to enhance the SEC’s ability to protect investors in the rapidly growing cryptocurrency markets and address cyber-related threats.
At the time, the SEC stated that the unit had already brought more than 80 enforcement actions, focusing on fraudulent schemes and unregistered offerings in the crypto space. A more recent count reveals that during the Biden administration, the SEC initiated over 100 crypto-related enforcement actions, demonstrating a robust approach to overseeing the evolving digital asset industry.
SEC Expands Crypto Unit. Source: SEC.govHester Peirce Leads New Crypto Task Force
In response to the SEC’s restructuring, Commissioner Hester Peirce has been appointed to lead a Crypto Task Force. This team will focus on re-evaluating digital asset classifications and determining whether certain enforcement responsibilities should be shifted outside the SEC’s direct jurisdiction.
In her statement titled “The Journey Begins,” Peirce highlighted the importance of providing clear regulatory guidelines to foster innovation in the crypto industry. She criticized the SEC’s previous reliance on enforcement actions, advocating instead for a more transparent and predictable framework to help industry players navigate compliance requirements.
“SEC rules will not let you do whatever you want, whenever you want, however you want. Some of these rules will impose costs and other compliance burdens that some may find irritating, and the Commission will use its enforcement tools when necessary to pursue noncompliance,”
said Peirce.
A new task force to review the S.E.C.’s approach to dealing with digital assets is led by Hester Peirce, an S.E.C. commissioner and an outspoken crypto supporter.Credit…Joshua Roberts/ReutersShe emphasized that while regulatory compliance might seem burdensome, a clear set of rules is essential to prevent fraud and misconduct in the digital asset space. The task force under her leadership aims to strike a balance between protecting investors and fostering an environment that encourages technological advancements in blockchain and cryptocurrency.
The Ripple lawsuit, one of the SEC’s biggest crypto cases, has also been affected. While the lawsuit was removed from the SEC website, there has been no official dismissal. This has raised questions about how the SEC will handle ongoing crypto litigation.
U.S. States Consider Bitcoin as a Reserve Asset
The White House Digital Assets Working Group, led by David Sacks, is working with 15 U.S. states to explore Bitcoin as a strategic reserve asset. This initiative is part of broader discussions on crypto adoption in government reserves.
Congress is also considering a new stablecoin bill, which could impact crypto regulation in the U.S. The bill aims to establish a legal framework for stablecoins, but its details remain under review.
Future of SEC’s Crypto Lawsuits
The SEC’s crypto enforcement changes could affect major cases. This includes the 2023 lawsuit against Coinbase. The SEC had accused Coinbase of operating as an unregistered securities exchange, a claim the company disputes.
With the SEC shifting priorities, it is unclear how these cases will proceed. Some believe reducing enforcement staff could delay or limit regulatory actions. However, Uyeda’s leadership team has stated that fraud investigations will continue despite the enforcement cutbacks.
Trump Administration’s Influence on Crypto Policy at the SEC
Under Trump’s leadership, the administration has taken a pro-crypto stance, reversing many policies from the Biden era. Trump’s nomination of Paul Atkins as SEC Chair signals further regulatory shifts. Atkins, who served as SEC Commissioner under George W. Bush, has supported reducing regulatory burdens in financial markets.
The Senate Banking Committee has yet to schedule a hearing for Atkins’ confirmation. Until then, the SEC’s enforcement policies remain under review.
Crypto Industry Pushes Back Against SEC Officials
The crypto industry has responded to these regulatory changes by distancing itself from former SEC officials. Coinbase CEO Brian Armstrong stated that his company would not work with law firms that employ ex-SEC officials who were involved in past crypto lawsuits.
Brian Armstrong on SEC Ethics. Source: XSimilarly, Gemini co-founder Tyler Winklevoss announced that his firm would not hire MIT graduates, following Gary Gensler’s return to the university after leaving the SEC.
Tyler Winklevoss on MIT-Gensler Ties. Source: XGary Gensler Returns to MIT Sloan as Professor of the Practice
Former SEC Chair Gary Gensler has rejoined the MIT Sloan School of Management as a Professor of the Practice in the Global Economics and Management Group and the Finance Group. Gensler will teach and conduct research on artificial intelligence, finance, financial technology, and public policy.
He will also co-direct the FinTechAI@CSAIL initiative alongside Professor Andrew W. Lo at MIT’s Computer Science and Artificial Intelligence Laboratory (CSAIL).
Simon Johnson, the Ronald A. Kurtz Professor of Entrepreneurship, expressed excitement about Gensler’s return. He highlighted their collaboration on a new course focused on global economic issues.
“I am honored to return to MIT, whose faculty, staff, and students have long been at the cutting edge of research and technology,”
said Gensler
Regulatory Changes Are Still Developing
Above all, the SEC’s crypto enforcement policy is shifting, but the full impact remains unclear. The Crypto Task Force, ongoing lawsuits, and state-level Bitcoin initiatives will determine the future of crypto regulation in the U.S.
The post SEC Cuts Crypto Enforcement, Reassigns 50 Lawyers in Major Shift first appeared on Coinchapter.
The post SEC Cuts Crypto Enforcement, Reassigns 50 Lawyers in Major Shift appeared first on Coinchapter.
