SEC Poised for Crypto Policy Overhaul Under Incoming Trump Administration

With President-elect Donald Trump set to take office on January 20, the U.S. Securities and Exchange Commission (SEC) is preparing to overhaul its cryptocurrency policies.

Hester Peirce and Mark Uyeda, top Republican commissioners at the SEC, are expected to take the lead in initiating a more crypto-friendly regulatory framework, according to multiple sources briefed on the matter.

Among their priorities are clarifying when cryptocurrencies are classified as securities and revisiting some of the 83 crypto-related enforcement actions brought under outgoing SEC Chair Gary Gensler, sources told Reuters.

Shift in Leadership at the SEC

The expected appointment of Paul Atkins, a former SEC commissioner and advocate for crypto, as the new SEC chair under Trump marks a significant departure from Gensler’s enforcement-heavy approach. While Atkins’ confirmation by the Senate may take time, Peirce and Uyeda will hold a majority among politically appointed commissioners starting next week and are poised to begin policy reforms.

Both Peirce and Uyeda have expressed criticism of Gensler’s tough stance on the crypto industry and are expected to advance initiatives promoting regulatory clarity and innovation.

Potential Changes on the Horizon

• Guidance on Crypto Classification:
  The SEC could begin drafting rules to clarify when cryptocurrencies qualify as securities. This effort would likely start with calls for public and industry feedback, which could shape the framework over the coming months.
• Review of Enforcement Actions:
  Sources indicate that the SEC may freeze or withdraw some litigation cases that do not involve fraud allegations. Many of these cases hinge on the legal classification of cryptocurrencies, with companies arguing that tokens function more like commodities than securities.
• Rescinding Costly Accounting Guidance:
  The SEC is also expected to reverse accounting rules that have deterred publicly listed companies from holding crypto assets for third parties.

Trump’s crypto-friendly administration has fueled optimism in the digital asset space, with Bitcoin surpassing $100,000 in December for the first time. Market participants are hopeful that clearer regulatory policies will attract institutional capital and spur growth in the crypto industry.

However, dismissing existing enforcement actions could be controversial. Legal experts warn that such moves might set a precedent for politicizing enforcement decisions.

“I think the industry wants to see fraudsters or wrongdoers held accountable,” said Robert Cohen, a former SEC attorney. While reforms may provide clarity, Cohen emphasized that enforcement against fraud will remain essential.

Reaching a consensus on crypto regulations could take months or even years, given the complexity of defining securities in the context of digital assets. Still, early executive orders from Trump are expected to prioritize a comprehensive review of regulatory policies, signaling a shift toward a more favorable environment for crypto innovation.

For now, the SEC’s leadership transition and the anticipated policy reforms mark a turning point for the U.S. cryptocurrency market. Whether these changes deliver the clarity the industry seeks remains to be seen.