Reuters, citing sources familiar with the issue, reported that as President-elect Donald Trump is preparing for his inauguration, the US Securities and Exchange Commission will be implementing changes which could halt enforcement action against crypto firms.
Sources told the news outlet that SEC commissioners Hester Peirce and Mark Uyeda, known for their crypto-friendly stances, are ready to revise the agency’s policies.
According to reports, the two commissioners will be examining measures that would clarify whether crypto is a form of security or not and reviewing ongoing enforcement actions. These cases include those involving prominent companies such as Coinbase and Kraken.
Bill Hughes is an attorney at Consensys. You can also read about how to get started. the sources cited were inside the SEC and knew about the new administration’s path. He said the information aligns with expectations created by Trump’s remarks on crypto.
Then he added:
“Given how tight lipped SEC folks generally are that really isn’t a bad bet — then this isn’t credible and potentially fed to Reuters to put pressure on SEC leadership to change things up starting next week.”
The new chair has a different position
Paul Atkins, Trump’s nominee for SEC chairman and a former SEC commission, will be taking the reins after Senate confirmation. Atkins, who has been co-chair of the Digital Chamber Token Alliance’s Token Alliance in 2017 and is widely considered a supporter of less restrictive crypto policy, will take the reins following Senate confirmation.
Amid the cost of compliance, it is expected that the new administration will revoke the accounting guidance which critics have claimed has discouraged businesses from storing cryptocurrency for their clients.
Peirce & Uyeda could begin to lay the foundation for new crypto regulations. However, it may take several months or even longer before a consensus is reached on these rules.
According to sources, the SEC could freeze or reconsider some cases in progress. These are mainly those that don’t involve fraud allegations. In some cases, this could result in settlements and even the withdrawal or certain lawsuits.
Potential challenges
The possible rollback of enforcement measures raises concerns about the politicization and risk of precedent of regulatory processes. Experts in law note that the courts may also be unwilling to resolve complex legal disputes related to securities definition.
Philip Moustakis, a partner at Seward & Kissel and a former SEC attorney, stated that halting enforcement actions or dismissing cases en masse would be unprecedented and could have long-term implications for the SEC’s credibility.
Meanwhile, Robert Cohen, a partner at Davis Polk who previously worked in the SEC’s enforcement division, highlighted that the regulator could reopen settlement negotiations in some ongoing cases.
He said crypto firms claim that under Gary Gensler, the SEC refuses to speak about outcomes that are based on settlement.
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