SEC Prepares to Change Enforcement Actions Against Crypto Firms
As the new administration gets ready to take office, the US Securities and Exchange Commission (SEC) is gearing up to make significant changes that could impact enforcement actions against crypto firms, according to sources familiar with the matter.
Commissioners Ready for Policy Revisions
SEC commissioners Hester Peirce and Mark Uyeda, who are known for their favorable stance towards cryptocurrencies, are reportedly considering revising the agency’s policies. They are looking into measures to clarify the classification of crypto as securities and reviewing ongoing enforcement cases, including those involving major companies like Coinbase and Kraken.
Bill Hughes from Consensys noted that insiders at the SEC are aware of the new administration’s direction, aligning with President Trump’s previous comments on crypto.
New Leadership, New Approach
With Paul Atkins, a former SEC commissioner and Trump’s nominee for SEC chair, expected to lead the agency, a shift towards less restrictive crypto policies is anticipated. Atkins has been involved with the Digital Chamber’s Token Alliance since 2017, advocating for a more favorable regulatory environment for cryptocurrencies.
While Peirce and Uyeda may start paving the way for new regulations, consensus on crypto rules may take time to achieve. The SEC could potentially freeze or reassess ongoing litigation, especially cases without fraud allegations, leading to settlements or case withdrawals in some instances.
Potential Roadblocks Ahead
The possibility of scaling back enforcement actions raises concerns about the politicization of regulatory processes, with experts warning about the implications it could have on the SEC’s credibility. Legal battles over the definition of securities may face opposition from courts, complicating resolution processes.
Philip Moustakis, a partner at Seward & Kissel and former SEC attorney, emphasized that halting enforcement actions abruptly could have long-term consequences for the SEC’s reputation. Robert Cohen, a partner at Davis Polk and ex-SEC enforcement division member, suggested that settlement negotiations in ongoing cases could be revisited.
Under the Gary Gensler administration, crypto firms have reportedly faced challenges in negotiating settlements with the SEC, indicating potential tensions in regulatory discussions.