SEC Scales Back Crypto Enforcement Amid Regulatory Shift

The U.S. Securities and Exchange Commission (SEC) is scaling back its dedicated crypto enforcement unit, which previously consisted of more than 50 lawyers and staff, according to The New York Times.

This move marks one of the first tangible steps by President Donald Trump’s administration to ease cryptocurrency regulations. Early in his presidency, Trump signed an executive order focused on promoting crypto growth and curbing “regulatory overreach” in the digital asset space.

Some members of the SEC’s crypto unit are being reassigned to other divisions, while a senior lawyer from the team has already been moved out of the enforcement department, the sources said. Once a vocal critic of cryptocurrencies, Trump shifted his stance during the 2024 campaign, aligning with the crypto industry, which viewed former SEC Chair Gary Gensler as its top adversary.

The SEC’s acting chair, Mark Uyeda, a Republican known for his crypto-friendly stance, has made several key appointments while restructuring leadership within the agency. One of his first actions was establishing a task force to reassess the SEC’s digital asset policies. Leading this effort is Commissioner Hester Peirce, a longtime crypto advocate.

In a position paper published on February 4, Peirce criticized the SEC’s past regulatory approach, stating it had been “marked by legal imprecision and commercial impracticality.” She outlined the task force’s goal of developing a framework that allows for innovation while preventing crypto from becoming “a haven for fraudsters.”

Peirce also suggested that the group might propose SEC action to provide both prospective and retroactive relief for certain coin or token offerings. “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 wrote.

These developments indicate a significant shift from the aggressive enforcement approach under Gensler, who characterized the crypto industry as “rife with fraud.” During his tenure, the SEC intensified its crackdown, issuing record fines and prosecuting high-profile figures, including FTX’s Sam Bankman-Fried and Binance’s Changpeng Zhao. Over the past four years, the agency pursued approximately 100 enforcement actions in the sector.

One of the administration’s first regulatory reversals came shortly after Trump took office when the SEC rescinded a controversial accounting rule that had placed financial burdens on institutions dealing with crypto.

Known as Staff Accounting Bulletin (SAB) No. 121, the rule required companies to report crypto holdings on their balance sheets, making compliance more costly. On January 23, the SEC formally withdrew the directive, stating it “rescinds the interpretive guidance” of SAB 121.

Reacting to the decision, Peirce celebrated the repeal, posting on social media: "Bye, bye SAB 121! It’s not been fun."