New Leadership at the SEC Signals Changes in Crypto Regulation
As President-elect Donald Trump gears up to assume office, the US Securities and Exchange Commission (SEC) is reportedly gearing up for a shift in its approach to crypto enforcement actions. According to sources familiar with the matter, SEC commissioners Hester Peirce and Mark Uyeda, who have been known for their favorable stance towards cryptocurrencies, are looking to revise the agency’s policies.
The potential changes being considered include clarifying the criteria for determining when a cryptocurrency qualifies as a security and reviewing ongoing enforcement cases involving prominent companies like Coinbase and Kraken. Bill Hughes, a lawyer at ConsenSys, suggested that the information leaked to Reuters aligns with the anticipated direction of the new administration under Trump’s leadership.
With the impending appointment of Paul Atkins, a former SEC commissioner and proponent of less restrictive crypto regulations, as the new SEC chair, the industry is bracing for a more crypto-friendly approach. Atkins, who has been involved with the Digital Chamber’s Token Alliance, is expected to usher in a new era of crypto regulation that may alleviate compliance burdens for companies holding cryptocurrencies for clients.
Potential Challenges Ahead
While the proposed shift in enforcement actions may be welcomed by the crypto industry, it also raises concerns about the politicization of regulatory processes. Critics warn that halting enforcement actions or dismissing cases en masse could set a dangerous precedent and undermine the SEC’s credibility in the long run.
Legal experts caution that courts may push back against resolving complex legal disputes related to the classification of securities, potentially prolonging the regulatory uncertainty surrounding cryptocurrencies. Philip Moustakis, a partner at Seward & Kissel and former SEC attorney, emphasized that the unprecedented move to freeze or reevaluate ongoing enforcement actions could have far-reaching implications for the SEC’s enforcement credibility.
Despite the potential challenges ahead, crypto firms are hopeful that the SEC’s new leadership will be more open to settlement negotiations, which have been reportedly difficult under the previous administration led by Gary Gensler. Robert Cohen, a partner at Davis Polk and former SEC enforcement division member, suggested that reopening settlement discussions in ongoing cases could pave the way for more collaborative regulatory outcomes.