The SEC is wasting no time in signaling a sea change in its approach to crypto. On Jan. 21, 2025 – the first full day of the new Trump Administration – Acting Chair Mark T. Uyeda launched a new crypto task force focused not on enforcement but instead on "set[ting] the SEC on a sensible regulatory path that respects the bounds of the law."
Leading the task force will be Commissioner Hester Peirce, dubbed "crypto mom" by many for her support of innovation and evolution in the crypto industry while also opposing a so-called "regulation-by-enforcement" approach previously taken by the Commission under former Chair Gary Gensler.
In announcing its newly launched task force, the SEC described its goals and a new direction for its approach to crypto, which can be summed up as follows:
|
OUT |
IN |
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Chair Gary Gensler |
Chair Paul Atkins (pending confirmation) |
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Commissioners Jaime Lizárraga and Caroline Crenshaw |
To be determined |
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Relying on enforcement actions as the primary means to regulate crypto determined to implicate federal securities laws |
Aiming for clearer regulation and guidance and "deploy[ing] enforcement resources judiciously" |
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Uncertainty regarding who must register (and how to register) crypto as securities |
Establishing a practical and achievable process for registration when warranted |
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Confusing legal environment for crypto innovators whose business may implicate federal securities laws |
Designing clearly defined disclosure requirements and frameworks |
At the same time, there has been no announcement regarding the state or fate of the SEC Division of Enforcement's Cyber and Crypto Unit (CACU), which was formed in 2017 and which in mid-2022 the agency staffed up with additional attorneys and other internal resources, signaling at the time that expansion was needed to, among other things, "police wrongdoing in the crypto markets ..."
With recent turnover in CACU and the launch of this latest agency task force – not housed in the SEC's Enforcement Division and focused instead on developing clearer regulations and industry guidance – the new administration is keeping a campaign promise to take a more friendly approach to crypto. And the creation of the task force is neither unexpected nor unwelcome for those seeking a path to registration for crypto asset securities and regulatory clarity beyond the much-discussed Howey doctrine (and so-called Reves Test), on which the agency has largely relied since it filed its earliest crypto enforcement actions in 20131 and an increasing number of SEC enforcement actions since then (often filed as "settled actions" which in and of themselves offer no binding precedential value, but are often seen as anecdotal data points from which industry participants and the defense endeavor to identify useful trends and guardrails). It will be worth monitoring this and other regulators' crypto initiatives – the Commodity Futures Trading Commission (CFTC) in particular – especially in light of President Donald Trump's Executive Order (not uncommon for new presidents) directing a regulatory freeze for the time being, which our colleague Eric Crusius covered earlier this week.
With equal interest, we will be watching developments on Capitol Hill. With Republicans now in control of both the House Financial Services and Senate Banking committees, Congress and the White House are expected to work together on legislation addressing stablecoins and market structure reform further defining the roles of the SEC and CFTC in crypto regulations. Additionally, the White House is working to establish a crypto council to develop new regulatory policies, making 2025 an active and exciting year in this space.
Footnote
1. See SEC v. W.J. Howey Co., 328 U.S. 293 (1946) for the so-called Howey test: (i) investment of money (ii) in a common enterprise (iii) with profits to be derived solely from the efforts of others.
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