US SEC Scales Back Crypto Enforcement Unit Amid Regulatory Overhaul

The U.S. Securities and Exchange Commission (SEC) is downsizing its Crypto Assets and Cyber Unit, according to The New York Times. Under former Chair Gary Gensler, the unit expanded to over 50 lawyers and staff, aggressively pursuing enforcement actions against crypto firms. 

Now, sources report that lawyers are being reassigned to other divisions, with at least one senior lawyer moving out of the enforcement division entirely.

This move aligns with the Trump administration’s broader efforts to ease regulations on cryptocurrencies. President Donald Trump’s recent executive order aims to promote crypto innovation while reducing excessive oversight. 

Acting SEC Chairman Mark Uyeda has also set up a task force, led by Commissioner Hester Peirce, to review digital asset regulations.

SEC Requires Higher-Level Approval for Investigations

As part of the regulatory shift, the SEC has introduced a new policy requiring enforcement staff to obtain commissioner approval before launching formal investigations. Previously, staff had the autonomy to issue subpoenas and compel testimony.

This change is intended to ensure that investigations are well-supported and evidence-based. However, critics argue it could slow down enforcement actions, giving fraudulent actors more time to operate.

Hester Peirce Pushes for Crypto-Friendly Reforms

SEC Commissioner Hester Peirce, a long-time advocate for crypto-friendly regulations, has welcomed the SEC’s new direction. She recently criticized the previous enforcement-driven approach, describing it as "careening down the road while incessantly slamming on the brakes."

Peirce’s task force will focus on:

• Clarifying whether digital assets qualify as securities

• Offering retroactive relief for certain token offerings

• Simplifying the registration process for crypto-related financial products

• Improving regulatory clarity for staking, lending, and custodial services

Impact on Pending SEC Cases and the Crypto Industry

The SEC’s restructuring raises questions about the fate of pending cases, including its lawsuit against Coinbase for allegedly operating as an unregistered securities exchange. The crypto industry has long criticized the SEC’s regulatory uncertainty, and this shift may indicate a more measured approach moving forward.

According to Cornerstone Research, the SEC filed 33 crypto-related enforcement actions against 90 defendants in 2024. With this downsizing, enforcement efforts may slow, signaling a shift from punitive actions to clearer regulations.

Trump’s Vision for Crypto Regulation

President Trump has positioned himself as a pro-crypto leader, aiming to foster digital asset innovation while reducing government control. His recent executive order includes:

• Encouraging the development of stablecoins backed by the U.S. dollar

• Prohibiting Central Bank Digital Currencies (CBDCs)

• Exploring a national digital asset reserve

• Creating a working group to propose new crypto regulations

The administration’s stance contrasts with past SEC policies, which heavily focused on enforcement rather than fostering innovation.