US regulator moves to scale back crypto enforcement efforts

NEW YORK - The US Securities and Exchange Commission (SEC) is moving to scale back a special unit of more than 50 lawyers and staff that had been dedicated to bringing crypto enforcement actions, five people with knowledge of the matter said.

The move is one of the first concrete steps by US President Donald Trump and his administration to pull back on the regulation of cryptocurrencies and other digital assets. One of Mr Trump’s first executive orders was aimed at promoting the growth of crypto and “eliminating regulatory overreach” on digital assets.

Some of the lawyers in the crypto unit are being assigned to other departments in the SEC, the people said. One of the unit’s top lawyers was moved out of the enforcement division.

A spokesperson for the SEC declined to comment.

Mr Trump, once a cryptocurrency critic,

embraced digital assets during the 2024 presidential campaign

and welcomed the support of the crypto community, which had come to see the SEC’s previous chair, Mr Gary Gensler, as its No. 1 nemesis.

The acting chair of the commission, Mr Mark Uyeda, is a Republican who has tended to be supportive of the crypto industry. He has made a slew of appointments while shaking up other top jobs at the SEC.

One of the first things Mr Uyeda did was set up a team to review the SEC’s approach to dealing with digital assets. The task force is led by SEC commissioner Hester Peirce, an outspoken crypto supporter.

In a position paper published on Feb 4 on the SEC website, Ms Peirce wrote that the commission’s past approach to regulating crypto had “been marked by legal imprecision and commercial impracticality”. She said the goal of the task force would be to devise a regulatory framework that permits people “to experiment and build interesting things” without allowing crypto to become “a haven for fraudsters”.

It is unclear what effect the downsizing of the crypto unit will have on pending enforcement actions. NYTIMES