US SEC Would Require Approval for Launching Investigations Under New Leadership: Report

The U.S. Securities and Exchange Commission (SEC) must now seek approval from politically appointed leadership before launching formal investigations, according to Reuters sources. 

The change in procedure was introduced under the current leadership at the SEC, following the leadership shift that occurred after President Donald Trump’s administration. 

Per Reuters, although the details of the policy change were not publicly disclosed, two anonymous sources familiar with the matter confirmed the new guidelines. Prior to this shift, the SEC’s enforcement staff had the authority to issue subpoenas for documents or testimony independently.

Under the new rules, however, these staff members now need to gain approval from the five commissioners, who oversee the agency’s work. Currently, the SEC's leadership comprises three commissioners—two Republicans and one Democrat—appointed by the President. These commissioners are responsible for decisions that affect enforcement policies.

Implications for SEC Investigations

The decision to require approval from the politically appointed leadership could potentially slow down investigations, which typically require swift action to issue subpoenas or launch formal inquiries. Critics argue that this could delay enforcement actions, particularly in cases that demand immediate attention. 

On the other hand, proponents of the change assert that it will help protect individuals from being wrongfully subjected to investigations, thus reducing harm.

While some argue this move undermines the autonomy of the enforcement staff, others suggest that having higher-level oversight could ensure that investigations align more closely with the Commission’s broader goals and political directives.

Gary Gensler’s Legacy and Mark Uyeda’s Shift

This procedural change occurs at a time of leadership transformation within the SEC. Former chair Gary Gensler, who served under the Biden administration, was known for his aggressive approach toward enforcing securities laws, particularly in the cryptocurrency industry. His tenure was marked by a strong stance against crypto platforms, with the SEC launching more than 100 enforcement actions under his watch, including high-profile cases involving companies like Coinbase, Binance, and Ripple.

Many in the cryptocurrency community criticized Gensler's approach, calling it too harsh and inconsistent. The Blockchain Association, which represents major crypto companies, reported that Gensler’s regulatory actions had cost its members over $429 million in legal fees. Furthermore, the ongoing case against Ripple over its XRP token remains a major point of contention.

With Gary Gensler’s departure from the SEC, the agency has begun shifting its regulatory direction under acting chair Mark Uyeda. Uyeda, appointed in 2022, is known for his more balanced approach to regulation and is considered by many to be more crypto-friendly than Gensler.

Mark Uyeda’s Influence on Crypto Regulation

Uyeda has already made it clear that he plans to reverse some of Gensler’s policies, particularly those that have caused significant uncertainty in the crypto market. One of his main goals is to bring clarity to the regulatory framework for digital assets, addressing the concerns of many within the cryptocurrency space. This includes providing clearer guidelines for the approval of cryptocurrency exchange-traded funds (ETFs) and working to create a more stable environment for crypto innovation.

During his tenure, Uyeda has been vocal about his belief that the SEC should not stifle crypto innovation but instead provide clearer and more transparent regulations. This marks a stark contrast to the regulatory stance under Gensler’s leadership, which was often seen as adversarial toward the industry.

For the cryptocurrency market, this shift in leadership and regulatory approach offers hope for a more transparent and predictable regulatory environment.