TLDR:
- Trump’s incoming SEC leadership, led by crypto-friendly Paul Atkins, plans to begin overhauling cryptocurrency policies as early as next week, with commissioners Peirce and Uyeda taking initial steps before Atkins’ confirmation.
- The SEC may freeze and review ongoing crypto enforcement cases that don’t involve fraud allegations, potentially leading to some cases being withdrawn or settled.
- New leadership is expected to initiate the process of creating clearer guidelines for when cryptocurrencies are considered securities, starting with a call for public and industry feedback.
- Current SEC Chair Gary Gensler, who brought at least 83 crypto-related enforcement actions, will step down on January 20 when Trump takes office.
- Bitcoin recently surpassed $100,000 amid optimism about the incoming crypto-friendly administration, though implementing new regulations could still take months.
The United States Securities and Exchange Commission (SEC) is preparing for a major shift in its approach to cryptocurrency regulation as President-elect Donald Trump’s administration takes office next week.
Republican commissioners Hester Peirce and Mark Uyeda are positioned to initiate changes to the agency’s crypto policies before Trump’s pick for SEC chair, Paul Atkins, receives Senate confirmation.
Starting January 20, when current SEC Chair Gary Gensler steps down, Peirce and Uyeda will hold the majority among the agency’s politically-appointed commissioners. Both officials have previously criticized Gensler’s strict stance on cryptocurrency regulation and have proposed more industry-friendly approaches.
The incoming leadership’s first actions may include reviewing ongoing enforcement cases against crypto companies. Sources familiar with the matter indicate the SEC could freeze some litigation, particularly cases that don’t involve fraud allegations. This review could lead to certain cases being withdrawn or reopened for settlement negotiations.
Under Gensler’s leadership, the SEC pursued at least 83 crypto-related enforcement actions. The agency sued several major companies, including Coinbase and Kraken, often arguing that crypto tokens should be treated as securities and therefore fall under SEC regulations. Many of these companies have countered that cryptocurrencies should be classified as commodities rather than securities.
The relationship between the incoming officials appears strong, with both Peirce and Uyeda having worked as aides to Atkins during his previous tenure at the SEC from 2002 to 2008. Sources indicate the three have already discussed potential changes to crypto policy, though specific details remain private.
We have a lot of work to do at the SEC to advance free markets, capital formation, investor choice, and innovation. I’m delighted that Paul Atkins will be returning to lead the effort. Having worked for him during his last stint at the agency, I cannot think of a better person…
— Hester Peirce (@HesterPeirce) December 4, 2024
One of the key initiatives expected from the new leadership is the development of clearer guidelines for determining when a cryptocurrency qualifies as a security. The process is likely to begin with a call for feedback from the public and industry stakeholders, according to sources briefed on the matter.
The SEC is also expected to reconsider accounting guidance that has made it expensive for listed companies to hold crypto tokens on behalf of third parties. This change could make it easier for traditional financial institutions to offer crypto-related services.
The transition comes as Bitcoin reached new heights, surpassing $100,000 for the first time in December 2024. The price increase reflected market optimism about the incoming administration’s crypto-friendly stance. Trump has actively courted crypto supporters during his campaign, promising to be a “crypto president.”
Despite the planned changes, implementing new regulations could take months or longer. The process of defining securities in the context of cryptocurrency remains complex, and resolving ongoing enforcement actions requires careful consideration of legal precedents.
Some legal experts have raised concerns about the implications of dismissing multiple enforcement actions. Philip Moustakis, a partner at Seward & Kissel and former SEC attorney, warned that such moves could politicize the enforcement process.
The new leadership is expected to maintain a firm stance against crypto fraud, according to Robert Cohen, a partner at Davis Polk and former SEC enforcement division official. Cohen noted that the industry generally supports actions against fraudulent activities.
Current Democratic Commissioner Caroline Crenshaw will likely remain at the agency until the end of 2025, though attempts to confirm her for another five-year term were blocked by Republican lawmakers in December 2024.
Trump’s administration plans extend beyond the SEC, with the President-elect expected to issue executive orders directing regulators to review their crypto policies. He has also announced plans to appoint an AI and crypto czar to help shape the administration’s technology policies.
The transition marks a sharp departure from Gensler’s approach, which prioritized investor protection through strict enforcement. Under his leadership, the SEC often argued that most crypto tokens behaved like securities and should comply with traditional securities regulations
Source: https://blockonomi.com/cryptos-new-dawn-sec-to-begin-crypto-policy-changes-following-trump-inauguration/