The SEC is scaling back its crypto enforcement unit under the Trump administration, reassigning staff and signaling a shift toward a more lenient regulatory approach, raising questions about ongoing lawsuits and future digital asset oversight.
Shift in Regulatory Approach
The U.S. Securities and Exchange Commission (SEC) is scaling back its cryptocurrency enforcement unit, marking a significant shift in its regulatory stance. The unit, previously composed of approximately 50 lawyers and staff members dedicated to enforcing crypto-related regulations, is undergoing a reduction. Many of these personnel are being reassigned to other divisions within the agency.
This move follows an executive order issued by President Donald Trump aimed at fostering the growth of digital assets by easing regulatory constraints. The downsizing reflects a broader effort by the administration to create a more favorable environment for cryptocurrency businesses.
Internal Reassignments and Reactions
As part of this restructuring, several lawyers from the crypto unit have been reassigned to other departments. According to reports, at least one senior attorney has been transferred out of the SEC’s enforcement division. Some insiders view these reassignments as a demotion, signaling internal disagreements over the agency’s evolving stance on digital asset regulation.
Senior crypto analyst Eric Balchunas commented on the restructuring,
“The SEC is scaling back its crypto enforcement unit. Some in a special unit of 50 lawyers and staff that had been dedicated to bringing enforcement actions are being reassigned.”
Peirce’s Criticism and New Direction
While the SEC has yet to provide an official statement on the matter, Commissioner Hester Peirce has addressed the agency’s shifting priorities. Peirce, a long-time advocate for clear regulatory guidelines in the crypto sector, has been outspoken in her criticism of the SEC’s past regulatory approach, describing it as “marked by legal imprecision and commercial impracticality.”
Peirce’s appointment to lead the newly established crypto task force, underscores the agency’s shift away from aggressive enforcement toward a more structured and predictable regulatory environment.
Impact on Key SEC Cases
The downsizing of the SEC’s crypto enforcement unit has raised questions about the future of the agency’s major lawsuits. One of the most notable cases, the long-running lawsuit against Ripple, was recently removed from the SEC’s website, though it has not been officially dismissed. This has led to speculation about whether the agency will continue pursuing the case.
Similarly, the SEC’s lawsuit against crypto giant Coinbase, which alleges that the exchange was operating as an unregistered securities platform, remains ongoing. The case has been seen as a key test of the SEC’s stance on classifying digital assets as securities under former Chair Gary Gensler.
Broader Implications for Crypto Regulation
This restructuring follows the SEC’s decision to revoke Staff Accounting Bulletin No. 121 (SAB121), a policy that required companies to classify customer-held crypto as a liability. Critics, including Peirce, argued that the rule placed an unnecessary burden on banks and discouraged them from engaging with digital assets.
The reduction in the SEC’s crypto enforcement unit, combined with policy changes such as the repeal of SAB121, signals a broader shift in the U.S. government’s approach to cryptocurrency regulation.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.