15th January 2025 – (New York) Top Republican officials at the U.S. Securities and Exchange Commission (SEC) are poised to begin overhauling the agency’s cryptocurrency policies potentially as early as next week when President-elect Donald Trump takes office. Among the measures being considered by commissioners Hester Peirce and Mark Uyeda are initiating the process that would ultimately lead to guidance or rules clarifying when the agency considers a cryptocurrency to be a security, as well as reviewing some crypto enforcement cases pending in the courts.
As of next week, Peirce and Uyeda will hold the majority among the agency’s politically appointed commissioners and are expected to get the ball rolling in the interim. Like Trump’s crypto-friendly pick for SEC chair, Paul Atkins, the pair are crypto enthusiasts who have previously criticised the tough stance taken by outgoing SEC chair Gary Gensler. Peirce and Uyeda were aides to Atkins during his tenure at the SEC from 2002 to 2008, and the three maintain a strong relationship. They have been discussing potential changes to crypto policy, according to sources familiar with the matter.
Gensler has indicated he will step down on 20th January, coinciding with Trump’s inauguration. Under Gensler, the SEC launched at least 83 crypto-related enforcement actions, targeting prominent companies such as Coinbase and Kraken. The SEC argued that many crypto tokens behave like securities, requiring the companies involved to comply with SEC regulations. However, some defendants contend that cryptocurrencies are more akin to commodities and have called for clearer regulations regarding when SEC rules apply.
In the early days of the new administration, the SEC is expected to review existing court cases and possibly freeze some litigation that does not involve allegations of fraud. Some of these cases could ultimately be withdrawn. Peirce and Uyeda are anticipated to initiate the early stages of the rule-writing process, likely including calls for feedback from the industry and the public.
Additionally, reports suggest that the SEC may quickly rescind accounting guidance that has made it prohibitively costly for some listed companies to hold crypto tokens on behalf of third parties. Trump, who has sought to position himself as a “crypto president,” is expected to issue executive orders urging regulators to reassess their crypto policies.
Despite the proactive measures, reaching consensus on crypto regulations could take months or longer, particularly given the complexities surrounding enforcement actions that hinge on the definition of a security. Dismissing numerous enforcement actions would be unprecedented and could risk politicising the enforcement process, cautioned Philip Moustakis, a partner at Seward & Kissel and former SEC attorney.
One potential avenue for the SEC could be to re-open settlement negotiations, which are typically aimed at avoiding lengthy litigation. However, crypto companies have reported that the SEC under Gensler has been reluctant to engage in meaningful discussions. Robert Cohen, a partner at Davis Polk and former SEC enforcement division member, noted that the new leadership is likely to maintain a firm stance on crypto fraud, emphasising the industry’s desire for accountability among wrongdoers.
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