SEC Shifts Focus Away From Crypto Enforcement Under New Leadership

This change in direction follows a shift in priorities driven by multiple factors, including staffing challenges and leadership transitions.

After years of intense scrutiny on the cryptocurrency sector, the SEC is scaling back its actions against the industry. Under the previous leadership of Gary Gensler, the SEC concentrated heavily on cracking down on crypto-related activities, particularly targeting major industry players. However, with Gensler’s departure and a change in leadership, the SEC is now prioritizing cases involving traditional corporate and individual securities fraud.

The shift is evidenced by recent dismissals of high-profile cases, including the legal battle with Ripple, and the SEC’s stance that memecoins do not qualify as securities. Additionally, the SEC has exempted Proof-of-Work mining from certain securities regulations, further illustrating the change in strategy.

This shift also stems from operational challenges within the SEC, which has faced significant staff reductions following efforts to downsize government agencies. SEC’s interim Enforcement Director, Sam Waldon, acknowledged the drop in workforce numbers, noting that the focus would now be on traditional cases rather than pushing forward aggressive enforcement in the crypto sector.

The SEC is restructuring its Crypto Assets and Cyber Unit and has established a Crypto Task Force, signaling a move towards engaging with industry stakeholders through discussions and collaboration instead of continued regulation through enforcement. Additionally, the SEC is responding to requests for more transparency regarding the costs and outcomes of its previous cryptocurrency-focused actions, particularly in light of the lengthy legal battles that have characterized the past five years of crypto regulation.