SEC Pulls Back on Crypto Enforcement, Reassigns Lawyers

The US Securities and Exchange Commission (SEC) is reducing its focus on crypto-related enforcement by reassigning lawyers from its crypto unit to other roles within the agency.

SEC Scales Back Crypto Enforcement 

The SEC is scaling back its crypto enforcement unit, following Donald Trump’s recent executive order aimed at boosting the crypto industry and curbing regulatory overreach on digital assets.

Some of the 50 lawyers and staff in the SEC crypto unit have been reassigned to other departments, while one of the unit’s top lawyers has entirely left the crypto unit, according to the sources cited by the New York Times.  

Meanwhile, the crypto-friendly Acting SEC Chair, Mark Uyeda, has been appointing new officials and reshuffling key positions at the agency, which has over 1,000 lawyers.

Uyeda also formed a task force to review the SEC’s approach to digital assets, led by Commissioner Hester Peirce, a long-time crypto advocate.

A Shift in the SEC’s Approach

In a statement published on Tuesday, SEC Commissioner Hester Peirce criticized the agency’s past approach to crypto regulation, pointing out that the SEC’s previous crypto policies were legally unclear and commercially impractical, resulting in ongoing lawsuits, delayed rules, and market uncertainty.

Peirce also outlined the goals of the newly established Crypto Task Force: to create a balanced regulatory framework that fosters innovation while preventing fraud.

The commissioner highlighted new regulatory approaches, including potential temporary relief for token issuers to enable compliant trading, modifications to current securities registration processes for crypto firms, clarification on issues like staking, lending, custody, and crypto-related ETFs, and exploration of international regulatory collaboration.

According to Pierce,  although regulatory changes will take time, the new Crypto Task Force will provide more clarity to the crypto industry.

Commissioner’s comments suggest a shift in the SEC’s approach to digital assets, moving away from the aggressive enforcement strategy under former Chair Gary Gensler . 

Gensler’s tenure saw dozens of enforcement actions against crypto firms, with the most high-profile being the SEC vs. Ripple case regarding XRP sales and unregistered securities.

SEC Reverses Staff Accounting Bulletin 

Apart from this week’s decision, the SEC has implemented more crypto-related changes since Donald Trump became the 47th President of the United States.

Immediately after his inauguration on January 20, the SEC withdrew the Staff Accounting Bulletin (SAB) No. 121, a rule that had required companies to list their crypto holdings on their balance sheets, creating challenges for financial institutions handling digital assets.

The move was seen as a step toward easing the regulatory burden on crypto companies and institutions.

Why This Matters

The SEC’s decision to scale back its crypto enforcement unit and revisit policies signals a potential shift toward a more balanced regulatory approach, offering clarity to the crypto industry and alleviating some of the past burdens on digital asset firms.

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