Changes in Policy Possible with New Leadership at the SEC
The United States Securities and Exchange Commission could dramatically shift how it regulates cryptocurrencies once President-elect Donald Trump takes office, Reuters reported. Republican commissioners Hester Peirce and Mark Uyeda are likely to lead the charge in revisiting policies and moving away from the enforcement-heavy approach favored by outgoing Chair Gary Gensler.
The agency under Gensler has issued 83 crypto-related enforcement actions, targeting companies like Coinbase and Kraken and repeatedly labeling many digital assets as securities. Critics say this approach is choking innovation without clear direction. Peirce and Uyeda support clarity on the rulebook and equal enforcement.
Starting next week, Peirce and Uyeda will be a majority of the commissioners at the SEC. They plan to review the inventory of pending enforcement cases, which could put frozen or dismissed actions not involving fraud allegations in store. That may prove salvation for the crypto industry and open the way to a discussion on regulation, at least more constructively.
Rescission of SAB No. 121: Top of the Agenda
Another major priority of the new SEC leadership is reconsideration of SAB No. 121. The 2022 guidance compels public companies holding cryptocurrencies for clients to account for the digital assets as liabilities. Though designed to bring about more transparency and lower risks, the rule has come under fire for the heavy costs it places on companies, thereby discouraging them from providing crypto custody services.
By revoking SAB No. 121, the SEC could ease the operational burdens placed on public companies and pave the way for increased participation in the crypto custody market. Critics have argued, though, that relaxing the rules would undermine investor protections. Finding a balance between promoting innovation and protecting stakeholders will be of essence.
Longer-term Ramifications on the Crypto Space
As Peirce and Uyeda gain influence, their crypto-friendly stance, supported by SEC Chair nominee Paul Atkins, may drive regulatory reforms. These changes could address long-standing concerns in the industry, such as unclear definitions of securities and the regulatory overlap with commodities.
The Trump administration has also signaled that it will address the broader issues, such as crypto de-banking, to be truly supportive of a vibrant digital asset marketplace. But comprehensive and effective rulemaking requires public input and coordination with industry participants.
While the immediate reviews of enforcement actions might continue to crowd the SEC’s agenda, these moves could be the first step in a sea-change for U.S. cryptocurrency regulation that will serve the twin imperatives of innovation and investor confidence.
