SEC’s Evolving Approach to Cryptocurrency Regulation: From Enforcement to Innovation
The U.S. Securities and Exchange Commission (SEC) has historically maintained a stringent stance on cryptocurrencies and digital assets, characterized by rigorous enforcement and frequent crackdowns. However, a transformative shift seems to be underway as the SEC exhibits a newfound openness to engage with the crypto industry. This could signify the commencement of a meaningful experiment in regulatory evolution. SEC Chair Paul Atkins has prioritized crypto and tokenization, signaling a transition towards a more innovation-friendly approach.
SEC Under Gensler: A Focus on Enforcement
Under the leadership of former Chair Gary Gensler, the SEC adopted an enforcement-centric strategy, treating most cryptocurrencies as “securities.” This approach was marked by assertive regulatory actions and legal proceedings. During Gensler’s tenure, the SEC initiated over 125 enforcement actions related to crypto, resulting in substantial financial settlements. A significant portion of these actions, approximately 64%, involved allegations of unregistered securities offerings, with a notable 37% gaining unanimous approval from the Commissioners.
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Between late 2020 and 2024, the SEC pursued legal action against prominent cryptocurrency firms such as Ripple, Bittrex, Coinbase, Binance, and Kraken. These lawsuits centered on accusations of unregistered securities offerings and operation of unlicensed exchanges. Ripple’s Chief Legal Officer, Stuart Alderoty, criticized Gensler’s approach as prejudiced and detrimental to the growth of the crypto industry in the U.S.
The stringent regulatory environment prompted some crypto businesses to exit the U.S. market. Even firms registered with the SEC faced challenges in sustaining operations under the prevailing regulations.
SEC Under Atkins: Innovation as a Strategic Objective
With Gensler’s departure in January 2025, Acting Chairman Mark T. Uyeda introduced the Crypto Task Force, led by Commissioner Hester Peirce, to adopt a more balanced approach to the crypto sector. This marked a significant policy shift, including the revocation of Staff Accounting Bulletin (SAB) 121 in January 2025, which eased restrictions on financial institutions offering crypto custodial services.
Since assuming office in April 2025, Chair Paul Atkins has guided the SEC towards withdrawing or pausing certain crypto lawsuits. In July 2025, the agency initiated Project Crypto, aimed at modernizing securities regulations and enabling on-chain financial market operations in the U.S. During DC Fintech Week on October 15, Atkins underscored the objective of constructing a future-proof crypto framework to attract those who had left the U.S. market. By humorously referring to the SEC as a “Securities and Innovation Commission,” Atkins signaled a commitment to an innovation-friendly agenda.
Ultimately, the SEC, under Atkins’ leadership, plans to advance rulemaking aligned with its “innovation exemption” vision by the end of 2025 or early 2026, contingent on the status of the ongoing U.S. government shutdown.
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