Trump's new SEC leadership poised to kick start crypto overhaul, sources say

Trump's new SEC leadership poised to kick start crypto overhaul, sources say

Top Republican officials at the U.S. Securities and Exchange Commission (SEC) are preparing to begin a significant overhaul of the agency’s cryptocurrency policies, possibly as soon as next week, when President-elect Donald Trump takes office, according to three sources familiar with the matter.

Commissioners Hester Peirce and Mark Uyeda are considering taking steps that could eventually lead to clearer guidance or rules regarding when a cryptocurrency is considered a security. They are also looking into reviewing some pending crypto enforcement cases in the courts, the sources said.

Trump’s pick for SEC chair, Paul Atkins, a known crypto advocate and former SEC commissioner, is widely expected to shift the regulatory approach away from the crypto crackdown led by President Biden's SEC chair, Gary Gensler. However, the timing of Atkins' confirmation by the Senate remains uncertain, with Gensler expected to step down on January 20, when Trump is sworn in.

With the upcoming change in leadership, Peirce and Uyeda are poised to take charge, as they will hold a majority among the politically-appointed commissioners. Both are crypto enthusiasts who have criticized Gensler's tough stance on the industry and have previously proposed crypto-friendly alternatives.

Peirce and Uyeda, who previously worked alongside Atkins at the SEC from 2002 to 2008, are expected to begin discussions on crypto policy changes. The three have maintained a close working relationship, and the sources indicated that they have already discussed potential policy adjustments. Despite requests for comment, representatives for Peirce, Atkins, and Uyeda did not respond.

Gensler’s tenure at the SEC saw the agency bring at least 83 enforcement actions against crypto-related companies, alleging fraud and arguing that many cryptocurrencies should be classified as securities, subject to SEC regulation. Some companies, including Coinbase and Kraken, are among those targeted by the SEC. Many defendants argue that cryptocurrencies should be treated as commodities, not securities, and have called for more precise regulations.

As Trump’s administration begins, the SEC is expected to review ongoing enforcement cases, potentially halting litigation that does not involve fraud allegations. Some of these cases may eventually be dismissed. Additionally, the SEC is likely to withdraw accounting guidance that has made it prohibitively expensive for publicly listed companies to hold crypto assets on behalf of third parties.

Trump, who has positioned himself as a "crypto president," is also anticipated to issue executive orders directing regulators to reassess their crypto policies. This comes amid rising optimism in the cryptocurrency market, with Bitcoin surpassing $100,000 for the first time in December, driven by excitement over the incoming crypto-friendly administration.

However, despite the momentum, reaching an agreement on crypto regulations could take months or longer. Resolving complex enforcement actions and clarifying when a token is a security will require careful deliberation. Some experts warn that dismissing multiple enforcement actions could set a risky precedent and politicize the enforcement process.

Settlement negotiations, often used to avoid lengthy public litigation, could be re-opened as an option. Crypto companies argue that under Gensler, the SEC has been unwilling to engage in meaningful discussions. The new SEC leadership, however, is expected to maintain a firm stance on holding fraudsters accountable.