Trump Administration’s Cost Cutting Hits SEC Regional Leadership

This move forms part of the agency’s shift away from aggressive crypto enforcement, as seen in its decision to drop its investigation into Robinhood Crypto. Meanwhile, market sentiment took a major hit after President Trump confirmed his planned tariffs on Mexico and Canada. This caused the Crypto Fear & Greed Index to drop to “Extreme Fear” as Bitcoin fell below $92,000. 

SEC to Remove Regional Directors

The United States Securities and Exchange Commission (SEC) is reportedly planning to eliminate its regional office director roles as part of the Trump administration’s  broader government cost-cutting initiative. According to sources cited by Reuters, the SEC informed the directors of its ten regional offices on Feb. 21 that their positions will be removed in a plan that is set to be formally filed next month. However, the offices themselves are expected to stay operational.

This move was announced after the SEC’s closure of its Salt Lake City office in June. The decision also came just a week after a federal judge imposed $1.8 million in fines on the agency for what was described as “bad faith conduct” in its legal action against crypto firm DEBT Box. Two SEC attorneys involved in the case resigned in April. So far, the SEC has not provided a formal response to these developments.

The restructuring is happening during sweeping changes in US regulatory agencies after the return of Donald Trump to the presidency. His administration prioritized federal budget reductions and government downsizing, spearheaded by the Elon Musk-led Department of Government Efficiency, or DOGE. A DOGE-affiliated account on Musk’s social media platform X posted on Feb. 18, encouraging the public to report instances of waste, fraud, and abuse related to the SEC.

In its budget justification plan to Congress in March, the SEC requested $2.6 billion for the 2025 fiscal year. On Feb. 20, senior SEC staff participated in a call where leadership indicated that several agency members were already coordinating with DOGE. Reports suggest that all departments must submit their reorganization proposals to acting chair Mark Uyeda by Feb. 25.

Most of the SEC’s workforce operates from its Washington, DC headquarters, but its regional offices span major financial and technology hubs like New York and San Francisco, as well as smaller cities like Atlanta and Boston, to facilitate local enforcement and corporate investigations. The decision to remove regional directors will require a vote from the SEC’s three-person commission, composed of two Republicans, Mark Uyeda and Hester Peirce, and one Democrat, Caroline Crenshaw.

The SEC also started rolling back its enforcement efforts, particularly its previous regulatory focus on cryptocurrency under former chair Gary Gensler. In fact, the agency downsized its crypto enforcement division and halted multiple lawsuits against crypto-related entities. Reports also indicate that its former lead crypto litigator has been reassigned to the SEC’s IT department.

SEC Drops Investigation Into Robinhood Crypto

The SEC recently closed its investigation into Robinhood Crypto less than a year after issuing the online brokerage a Wells notice. This serves as the latest proof that the regulator is rolling back its enforcement actions. Robinhood announced on Feb. 24 that the SEC’s Enforcement Division informed the company on Feb. 21 that it will not recommend any enforcement action.

(Source: Robinhood)

Dan Gallagher, Robinhood Markets’ compliance and corporate affairs officer, criticized the investigation by stating that it should never have been opened in the first place. He held firm that Robinhood Crypto always complied with federal securities laws and never facilitated transactions in securities. The SEC was investigating Robinhood’s cryptocurrency operations for almost a year, and issued a Wells notice on May 4 of 2024, with a preliminary determination to recommend enforcement action for alleged securities violations.

Last month, Robinhood reached a $45 million settlement with the SEC over accusations that it violated more than ten securities laws. The Jan. 13 order stated that Robinhood entities admitted to certain findings presented by the SEC. Now that the investigation has concluded, Robinhood urged the regulator to shift away from its “regulation by enforcement” approach and provide clearer guidelines for digital assets, which is a sentiment that is echoed by many in the industry.

John Reed Stark X post

Former SEC official John Reed Stark suggested that the SEC’s shift in stance could impact its enforcement actions against other industry players like Coinbase, Binance, and Ripple. He pointed to the SEC’s recent request for a 28-day extension in its ongoing lawsuit against Coinbase as an indication that its approach to crypto-related litigation may be changing. Stark also predicted that the SEC could pause or withdraw many of its crypto-related appeals, including the case against Ripple.

Crypto Sentiment Plummets as Trump Confirms Tariffs

Unfortunately, the Trump administration is causing stress to crypto investors in ways other than regulation. Crypto market sentiment plummeted over the past 24 hours as the broader financial markets declined, after US President Donald Trump’s confirmation that his planned tariffs on Mexico and Canada will proceed as scheduled. 

The Crypto Fear & Greed Index, which measures market sentiment on a scale of 100, dropped to a score of just 25 on Feb. 25, indicating “Extreme Fear.” This is a very sharp decline of 24 points from the previous day when the index was at 49, reflecting a neutral stance.

Crypto fear and greed index (Source: Alternative)

The downturn came after Trump, in a Feb. 24 press conference alongside French President Emmanuel Macron, reiterated that his proposed 25% tariffs on Canadian and Mexican imports were “going forward on time, on schedule.” These tariffs were initially announced on Feb. 1, and include a 25% tax on general imports from Canada and Mexico, with Canadian energy imports facing a 10% tariff. Goods from China are also set to face a 10% tax.

After the initial announcement, Bitcoin saw a big drop from around $105,000 to approximately $92,900, while over $2.2 billion worth of Ethereum (ETH) was liquidated because traders feared an impending trade war. Trump later agreed to pause the tariffs for 30 days after the two neighboring countries pledged to increase border protections. However, with the pause set to expire next month, the President’s latest comments only renewed market anxieties.

The crypto market reacted negatively to other tariff-related announcements from Trump in recent weeks. Bitcoin saw another decline on Feb. 9 when the President imposed a 25% tariff on aluminum and steel imports, followed by another dip on Feb. 13 after he signed an executive order implementing sweeping reciprocal tariffs. The last time the Crypto Fear & Greed Index reached “Extreme Fear” levels was on Sept. 7 last year, when Bitcoin tumbled to around $54,000.

The price of Bitcoin fell 5.4% over the last 24 hours of trading, dropping below $92,000. The broader crypto market also suffered, with total market capitalization declining by close to 7% from over $3.31 trillion to approximately $3.09 trillion. 

Bitcoin’s price action over the past 24 hours (Source: CoinMarketCap)

The impact extends beyond crypto, with the US stock market also experiencing declines. The S&P 500 fell 2.3% over the past five trading days, while the Nasdaq Composite has dropped by 4% in the same time period.