With the hawkish former chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, resigning on the day of President Trump's inauguration, Republican SEC Commissioner Mark Uyeda, who is crypto-friendly, has taken over as acting SEC chairman. This suggests that the era of the U.S. government's high-pressure regulation of cryptocurrencies over the past few years is coming to an end, and the industry and community can look forward to relaxed regulation and clear rules.
Acting SEC Chairman Mark Uyeda announced today that the SEC has officially established a new "Cryptocurrency Working Group" led by SEC Commissioner Hester Peirce, a member of the same party. Peirce, who has been hailed by the community as the "Crypto Mom" for opposing enforcement actions against crypto companies and advocating for a clear regulatory framework, will lead the working group in developing a "comprehensive and clear regulatory framework" for crypto assets.
The SEC announcement states that the focus of this working group will be to help the Commission define clear regulatory boundaries, provide realistic registration paths, develop reasonable disclosure frameworks, and deploy enforcement resources wisely. The SEC will work closely with the crypto industry in developing the rules, and will also provide technical assistance in the Congressional drafting of crypto legislation, as well as coordinate with other federal departments and agencies, including the Commodity Futures Trading Commission (CFTC) and state and international counterparts.
SEC Admits: Can Do Better on Crypto Regulation
It is worth noting that former SEC Chairman Gary Gensler, during his tenure, was seen as the crypto industry's biggest enemy, as he advocated that all crypto assets other than Bitcoin should be classified as securities, and opposed the development of a dedicated regulatory framework for crypto assets. He also initiated enforcement actions against industry leaders like Coinbase and Binance, and implemented strict accounting policies.
The tone and content of the SEC's announcement today indicate that under the new Trump administration, the agency has undergone a fundamental shift in its approach to cryptocurrency regulation, with the SEC acknowledging that it "can do better" in cryptocurrency regulation.
To date, the agency has primarily relied on enforcement actions to retroactively and passively regulate cryptocurrencies, often using novel and untested legal interpretations, with a lack of clarity on who must register and actual solutions for those seeking registration.
The result has been confusion about legality, creating an environment that is unfavorable to innovation and prone to fraud. The SEC can do better.
Crypto Mom Hester Peirce stated in the announcement:
"This work will require time, patience, and a great deal of effort. It can only succeed if the working group receives broad input from investors, industry participants, academics, and other stakeholders.
We look forward to working with the public to create a regulatory environment that protects investors, facilitates capital formation, promotes market integrity, and supports innovation."
SEC Cryptocurrency Policy Reform
The SEC's latest initiatives confirm previous reports that Uyeda, along with Crypto Mom Hester Peirce, will be leading the SEC's policy actions in the short term before Paul Atkins' appointment is confirmed by the Senate. The two are expected to launch cryptocurrency policy reforms as early as this week, including:
- Initiating the rulemaking process, seeking public input on when cryptocurrencies should be considered securities.
- Temporarily freezing some enforcement cases unrelated to fraud, and potentially withdrawing some litigation.
- Quickly withdrawing certain past accounting guidance that had significantly increased the cost for public companies to hold crypto asset holdings.
Recent reports from multiple foreign media outlets also indicate that President Trump is expected to issue an executive order soon to reduce regulatory scrutiny of the cryptocurrency industry and help promote the adoption of digital assets.
The SEC's decision to establish a Cryptocurrency Working Group may also receive widespread support from the industry and the market. After the news was announced, rose about 2.4% to over $106,000. As of the time of writing, it is trading at $106,027, up more than 3.6% in the last 24 hours.
