SEC scales back crypto enforcement unit amid regulatory shift

The U.S. Securities and Exchange Commission (SEC) is reportedly downsising its crypto enforcement unit, which was previously composed of over 50 staff members dedicated to regulating digital assets.

According to a report by The New York Times on February 4, some lawyers from this unit will be reassigned to other departments within the agency.

This restructuring includes the reassignment of a top lawyer from the crypto enforcement division, which some interpret as an unfair demotion. 

A spokesperson from SEC declined to comment on these changes.

This development follows recent statements by SEC Commissioner Hester Peirce, who outlined a new regulatory approach for the crypto markets.

Peirce criticised the previous enforcement-heavy strategy, comparing it to "careening down the road while incessantly slamming on the enforcement brakes." 

In 2024, the SEC initiated 33 enforcement actions against 90 defendants related to cryptocurrency, according to Cornerstone Research.

The downsising of the crypto enforcement unit comes amid a broader leadership transformation at the SEC since President Donald Trump took office on January 20.

In October 2024, former chief enforcement officer Gubir Grewal stepped down, leading to speculation about a softer regulatory stance toward cryptocurrencies.

Sanjay Wadhwa, previously the deputy director of the enforcement division, also left shortly after being promoted to acting director.

Trump's administration has signaled a shift toward fostering cryptocurrency growth and reducing regulatory oversight, including an executive order aimed at encouraging innovation in digital assets.

Mark Uyeda, the acting SEC chair, has established a task force led by Commissioner Hester Peirce to review and clarify digital asset regulations.