SEC scales back crypto enforcement as Trump administration reverses regulatory push

The Securities and Exchange Commission (SEC) is shrinking the size of its cryptocurrency enforcement unit, which had been staffed with over 50 lawyers and staff to regulate digital assets, according to five sources with knowledge of the situation. 

This restructuring is one of the first concrete moves by President Trump’s administration to diminish the regulation of cryptocurrencies and other digital assets. Early executive orders of Trump’s administration aimed to promote crypto growth and prevent over-regulation.

Some of the changes include the fact that some members of the crypto enforcement team are being moved to different divisions within the SEC, one high-profile lawyer has been taken out of the enforcement division, and one could say a demotion. The regulatory firm did not comment on the restructuring when asked.

Trump shifts to crypto support as SEC leadership overhaul signals new regulatory approach

During the 2024 presidential campaign, Trump, a previous cryptocurrency skeptic, changed his position to support digital assets and was endorsed by the crypto community, which had considered former SEC Chairman Gary Gensler as an enemy.

The current acting SEC chair, Mark T. Uyeda, has shown crypto-friendly tendencies and has made several notable alterations to the agency’s leadership, including forming a team to review the SEC’s tactics regarding digital assets. 

This team is headed by Hester Peirce, an SEC commissioner and a known crypto advocate, who has recently expressed disappointment with the watchdog’s previous handling of crypto regulation.

The team calls it legally ambiguous and unworkable. Peirce wants to develop a regulatory framework that encourages innovation and helps avoid fraud.

Uncertainty looms over crypto enforcement as SEC reshuffles

It is currently unknown how this downsizing will affect ongoing enforcement actions, including a high-profile case launched against Coinbase in 2023. The regulator accused Coinbase of providing exchange services without being registered with the SEC, which was in violation of federal securities laws. 

However, the company has argued that many digital assets are not securities — a position the crypto industry has rejected.

The crypto enforcement unit at the SEC was created during Trump’s first term and was greatly enhanced during Gensler’s tenure. When Biden took over in May of this year, the agency had already essentially doubled the size of the team responsible for cracking down on fraudulent and unregistered crypto-asset offerings and had brought more than one hundred enforcement actions.

During that time, Trump has nominated Paul Atkins, a lawyer with strong crypto industry ties, to succeed Gensler as SEC chair. At the time of this writing, awaiting Senate Banking Committee confirmation is Atkins, an advocate of a less stringent regulatory regimen.

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