SEC Reassigns 50+ Crypto Unit Staff in Regulatory Overhaul

TLDR

• SEC is downsizing its crypto enforcement unit, reassigning over 50 staff members as part of Trump administration’s new approach to digital asset regulation
• Commissioner Hester “Crypto Mom” Peirce now leads a new crypto task force, criticizing previous SEC regulatory approaches as imprecise and impractical
• The agency recently scrapped SAB121, a policy that required firms to treat customer crypto holdings as liabilities
• Trump banned CBDCs and established a presidential working group on crypto policy through executive order
• The restructuring raises questions about ongoing SEC lawsuits, including the 2023 case against Coinbase

The U.S. Securities and Exchange Commission (SEC) has begun dismantling its specialized crypto enforcement unit, marking a dramatic shift in regulatory approach under the Trump administration. According to a February 5 report by The New York Times, more than 50 lawyers and staff members focused on digital asset regulation are being reassigned to different departments within the agency.

The restructuring affects personnel across multiple levels of the organization. At least one senior lawyer has been removed from the enforcement division entirely, a move that some inside sources described as an “unfair demotion,” according to the Times report.

This overhaul aligns with President Trump’s campaign promises to reduce government intervention in the digital assets sector. Since taking office, the administration has made clear its intention to position the United States as a global leader in cryptocurrency innovation.

Commissioner Hester Peirce, known in the industry as “Crypto Mom,” now leads the agency’s newly formed crypto task force. Peirce has been outspoken about the need for change, describing the SEC’s previous regulatory approach as “marked by legal imprecision and commercial impracticality.”

In a Tuesday statement, Peirce compared the agency’s past treatment of digital assets to “a car careening down the road.” She emphasized the need for a more balanced regulatory framework that better serves both the industry and investors.

The reorganization raises questions about several ongoing SEC lawsuits against major crypto companies. One notable case is the 2023 lawsuit against Coinbase, where the SEC alleged the exchange operated as an unregistered securities platform.

This case became a central point of debate during former Chair Gary Gensler’s tenure, who maintained that most cryptocurrencies should be classified as securities. The stance drew criticism from industry leaders, who accused the SEC of trying to “unlawfully kill” the crypto industry while failing to provide clear guidelines.

The changes at the SEC extend beyond staff reorganization. Last month, the agency eliminated Staff Accounting Bulletin No. 121 (SAB121), a controversial policy that required firms to treat customer-held cryptocurrency as a liability on their balance sheets.

Critics of SAB121, including Commissioner Peirce, argued that the rule placed unfair burdens on banks and discouraged them from embracing digital assets. The removal of this requirement signals a more accommodating approach to financial institutions working with cryptocurrencies.

President Trump has taken additional steps to reshape the government’s approach to digital assets. Through executive order, he established a presidential working group dedicated to developing crypto policy. The same order included a ban on the creation of a central bank digital currency (CBDC), effectively ending plans for a government-issued “digital dollar.”

The SEC’s transformation comes amid other regulatory developments in the crypto space. Recently, the agency expedited approval for the Bitwise Bitcoin and Ethereum ETF, allowing it to be listed and traded on NYSE Arca. This hybrid ETF will give investors direct exposure to both Bitcoin and Ethereum in a single fund.

The Times report indicates that several members of the original crypto unit have already begun transitioning to their new roles within the SEC. These reassignments span various departments, suggesting a broader redistribution of crypto oversight responsibilities throughout the agency.

While the SEC has not officially responded to requests for comment on the restructuring, the changes appear to be moving forward rapidly. The agency’s new direction represents a clear departure from its previous enforcement-heavy approach to cryptocurrency regulation.

The reorganization of the SEC’s crypto unit is currently underway, with staff transitions expected to continue in the coming weeks. The Times report notes that these changes affect both junior and senior staff members across multiple departments.

Commissioner Peirce’s crypto task force is now taking shape as these changes unfold. The new group’s structure and specific objectives are still being defined, but early indicators suggest a more industry-friendly approach to oversight.