SEC Poised for Crypto Policy Overhaul with New Leadership

As President-elect Donald Trump prepares to take office, key Republican officials at the U.S. Securities and Exchange Commission (SEC) are set to implement significant changes to the agency's cryptocurrency policies, potentially beginning as early as next week. Sources familiar with the matter suggest that SEC commissioners Hester Peirce and Mark Uyeda are considering initiating a process to provide much-needed guidance on when cryptocurrencies should be classified as securities.

Peirce and Uyeda, both staunch advocates for the cryptocurrency industry, are expected to drive these changes in the interim, with Peirce taking the lead as the SEC's politically-appointed commissioners will soon hold a majority. Former SEC commissioner Paul Atkins, Trump's anticipated crypto-friendly SEC chair, is also expected to bring an end to the aggressive stance on cryptocurrencies that was adopted under the Biden administration's SEC chair, Gary Gensler.

Gensler, who has led a crackdown on the industry, including 83 crypto-related enforcement actions against companies such as Coinbase and Kraken, is expected to step down when Trump is inaugurated. However, it remains unclear when the Senate will confirm Atkins.

Peirce and Uyeda, both former aides to Atkins, are already discussing potential reforms and exploring alternatives to Gensler's policies. While some defendants in ongoing cases argue that cryptocurrencies should be classified as commodities, not securities, the new leadership is likely to begin a rule-making process aimed at providing greater clarity on this issue.

In the first days of the new administration, the SEC is expected to review ongoing enforcement cases, potentially freezing or even withdrawing lawsuits that do not involve fraud allegations. However, experts caution that dismissing multiple enforcement actions could set a risky precedent for the agency, with some calling for settlement negotiations to be reopened.