The U.S. Securities and Exchange Commission (SEC) has begun the year with a dramatic shift in policy, halting its aggressive enforcement actions against the cryptocurrency sector and signaling a new era of regulatory oversight.
Over the past month, the SEC has either dismissed or paused at least eight cases against crypto firms, including lawsuits against high-profile exchanges Coinbase Global Inc. and Binance Holdings Ltd. The agency had also previously threatened legal action against Robinhood Markets Inc., Uniswap Labs, and Opensea.
“It’s a multifaceted demolition of the most successful SEC enforcement programme in history,” said John Reed Stark, a former SEC enforcement attorney and now consultant. He added that following the election of President Donald Trump, the SEC’s message to the world has been clear: “We’re going to grind to a screeching halt every single aspect of the SEC crypto enforcement programme in a manner that’s not just unprecedented and unusual, it’s beyond imagination.”
The shift follows the departure of former SEC Chair Gary Gensler, who stepped down in late January. He is expected to be replaced by former SEC Commissioner Paul Atkins, with Mark Uyeda acting in the role while Atkins awaits confirmation.
A spokesperson for the SEC did not immediately respond to a request for comment.
During his campaign, Trump vowed to fire Gensler on his first day in office, capitalizing on the former chair’s unpopularity within crypto circles. His support for digital assets had boosted Bitcoin’s price to an all-time high on inauguration day, though subsequent policy decisions on tariffs have since led to a 25% decline.
As the SEC’s enforcement efforts wane, industry leaders anticipate a more favorable environment for innovation.
“There are, we think, reasons to be long-term cheerful,” said Alex Saunders, research strategist at Citigroup, in a note last Friday. “Clarity on regulation should deliver more opportunities to innovate, build trust, and improve the user experience in crypto.”
Changing Sentiment in the U.S.
Under the Biden administration, many crypto executives viewed the U.S. market as a lost opportunity. Criticism of Gensler’s regulatory approach was widespread, with companies like Coinbase and Ripple expanding their operations overseas in response. However, some firms are now reversing those decisions, with Ripple listing 75% of its open positions in the U.S. in January.
“It seemed like the SEC on a whim could wake up on the wrong side of the bed and decide to bring in enforcement action or to file a Wells notice, or subpoena for information. That fear seems to have gone away, especially in light of these dismissals,” said Cathy Yoon, general counsel at Wormhole Foundation.
Since taking over on January 21, Uyeda has overseen immediate changes within the agency. The SEC has replaced its crypto division with a new Cyber and Emerging Technologies Unit and established a “crypto task force” focused on developing industry-friendly regulations. The conclusions of this task force are already influencing SEC decisions, including the request to stay its case against Binance last month.
Meanwhile, the debate over whether cryptocurrencies should be classified as securities or commodities has lost intensity, as the threat of enforcement diminishes. Robinhood, which had previously delisted tokens like Solana and Cardano following SEC lawsuits, has since restored trading access for U.S. clients.
Broader Market Shifts
The SEC has also shown a more open stance toward approving exchange-traded funds (ETFs) linked to digital assets. Last Thursday, the agency clarified that memecoins—tokens created for viral appeal with no intrinsic utility—are not considered securities under its regulations.
Trump himself launched a memecoin in January, which briefly soared to a valuation of $15 billion before crashing more than 80%. His family is also linked to World Liberty Financial, a yet-to-launch crypto platform that has already sold over $1 billion in tokens.
Trump’s allies in the crypto industry have also benefited from the SEC’s changing stance. Last Thursday, lawyers for the agency and crypto entrepreneur Justin Sun, who invested $75 million in World Liberty Financial, jointly sought to stay regulatory proceedings against him. Meanwhile, Gemini Trust Co., owned by billionaire brothers who attempted to donate $1 million in Bitcoin to Trump’s campaign, announced that the SEC had closed its case against the company without taking any action.
Despite this shift, the SEC maintains that investor protection remains a priority.
“They’re looking for the industry to return to a more traditional American ethos of the Internet, which is to build things and break things, and don’t ask permission, ask forgiveness,” said J. Christopher Giancarlo, former chair of the Commodity Futures Trading Commission (CFTC). “There’s one major caveat to that, and that is don’t cheat people.”
While the CFTC has historically been more crypto-friendly, Giancarlo suggested that the agency may increase enforcement activity in this new regulatory environment. “When it comes to fraud, manipulation, and market misconduct, you’ll continue to see very strong enforcement activity,” he said. “Perhaps even more strong because it’ll be less distracted by going after firms for technical violations.”
Despite the SEC’s softer approach, the crypto industry continues to face challenges. On February 21, crypto exchange Bybit suffered a theft of nearly $1.5 billion in digital assets. Meanwhile, Argentine President Javier Milei became embroiled in controversy last month after a memecoin he promoted resulted in estimated investor losses of $251 million.
“Say what you will about Gary—he may have stood in the way of progress, but he also stood in the way of crime season,” said Dan Hughes, founder of blockchain firm Radix DLT Ltd. “Just be careful what you wish for, I suppose.”
