As President-elect Donald Trump prepares to take office, significant changes are on the horizon for the US Securities and Exchange Commission (SEC), particularly concerning its approach to crypto regulation.
According to a Reuters report, top Republican officials within the SEC are poised to initiate a comprehensive overhaul of the agency’s cryptocurrency policies as early as next week.
Key Commissioners Seek Clarity On Crypto As Securities
Among the key figures leading this charge are commissioners Hester Peirce and Mark Uyeda, both of whom have been critical of the SEC’s current enforcement stance under President Biden’s administration, particularly under the leadership of Chair Gary Gensler.
Peirce and Uyeda are reportedly considering measures to clarify the criteria under which digital assets are classified as securities—an issue that has fueled ongoing debates within the industry.
They are also expected to review several pending crypto enforcement cases in the courts, which could lead to significant shifts in how such cases are handled.
Paul Atkins, a crypto-friendly choice for SEC chair and a former commissioner, is anticipated to replace Gensler, who has announced he will step down on January 20.
While the timeline for Atkins’ Senate confirmation remains uncertain, Peirce and Uyeda will hold the majority among the politically-appointed commissioners at the SEC, enabling them to initiate policy changes in the interim.
Reuters alleges that their previous collaboration with Atkins during his tenure at the SEC has fostered a “strong working relationship,” setting the stage for potential reforms.
Could The SEC Retract Some Of Its Enforcement Actions?
Under Gensler’s leadership, the SEC has aggressively pursued enforcement actions against numerous cryptocurrency firms, citing concerns about fraud and market manipulation.
The agency has brought at least 83 crypto-related enforcement actions, targeting prominent companies such as Coinbase and Kraken. In these cases, the SEC has argued that many tokens function similarly to securities, necessitating compliance with existing SEC rules.
However, some industry participants contend that cryptocurrencies should be classified more as commodities, prompting calls for clearer regulations.
As the new administration takes charge, the SEC is expected to review ongoing court cases and may consider freezing litigation that lacks allegations of fraud. Sources indicate that some enforcement actions could ultimately be withdrawn, signaling a shift in the agency’s approach.
Peirce and Uyeda are likely to initiate a public feedback process to explore the early stages of rule-making, inviting input from both the industry and the public on the future of cryptocurrency regulation.
New SEC Leadership May Revive Settlement Talks
In addition to revisiting enforcement actions, the SEC is anticipated to rescind accounting guidance that has created obstacles for publicly listed companies wishing to hold cryptocurrencies on behalf of third parties.
Despite the excitement surrounding these potential changes, experts caution that reaching consensus on new regulations may take considerable time.
The complexity of defining what constitutes a security adds layers of difficulty to the process. Additionally, dismissing multiple enforcement actions could reportedly set a “controversial precedent,” raising concerns about the politicization of regulatory enforcement.
Industry insiders suggest that the new SEC leadership may opt to reopen settlement negotiations with digital asset firms, a practice that has been largely absent under Gensler.
Featured image from DALL-E, chart from TradingView.com
