SEC Scales Back Crypto Enforcement Unit
The United States Securities and Exchange Commission (SEC) is scaling back its crypto enforcement unit.
Lawyers from the unit are reportedly being reassigned to other departments within the agency, with one top lawyer being moved out of enforcement. This reassignment has been regarded as an unfair demotion, by some, potentially signaling internal disagreements about the agency’s direction on crypto regulation.
Last month, Donald Trump signed an executive order that aimed to promote the growth of the crypto industry and “eliminate regulatory overreach” on digital assets.
Acting chair of the commission, Mark Uyeda, recently created a team to review the SEC's approach towards digital assets. This task force is led by SEC Commissioner Hester Peirce, who also championed the industry.
“The commission’s handling of crypto has been marked by legal imprecision and commercial impracticality,” Peirce wrote in a position paper yesterday.
"The Task Force also is thinking about the possibility of recommending Commission action to provide temporary prospective and retroactive relief for coin or token offerings for which the issuing entity or some other entity willing to take responsibility provides certain specified information," she added.
Her message suggests a radical shift in the SEC's position on digital assets from Gary Gensler's leadership. Under Gensler’s term, the SEC intensified enforcement in the crypto sector, resulting in record fines and high-profile cases, including the imprisonment of FTX’s Sam Bankman-Fried and Binance’s Changpeng Zhao. The SEC carried out approximately 100 enforcement actions over the past four years.
Gensler described the crypto industry as being “rife with fraud,” a stark contrast to Trump’s crypto-friendly approach.
Just days after Trump's inauguration, the SEC rescinded a notorious accounting rule that drastically impacted how cryptocurrency is recognised.
Known as Staff Accounting Bulletin (SAB) No. 121, the rule requires companies to list crypto assets on their balance sheets, increasing the expense for financial institutions to deal with cryptocurrencies.
On 23 January, a new SAB announced the withdrawal of the directive, stating it “rescinds the interpretive guidance” of SAB 121.Peirce applauded the decision, tweeting, "Bye, bye SAB 121! It's not been fun."