The U.S. Securities and Exchange Commission (SEC) is scaling back its dedicated crypto enforcement unit, reassigning staff and restructuring its approach to digital assets. This move, initiated under the Trump administration, reflects a broader effort to ease regulatory pressure on the crypto industry.

Trump Administration’s Pro-Crypto Push

President Donald Trump, once a vocal critic of cryptocurrencies, has taken a pro-crypto stance since his 2024 re-election campaign. One of his early executive orders focused on reducing regulatory constraints on digital assets to foster industry growth. Acting SEC Chair Mark T. Uyeda, known for his crypto-friendly views, has made significant leadership changes within the agency.

SEC Commissioner Hester Peirce, a long-time advocate for a lighter regulatory approach, has been tasked with reassessing the commission’s handling of crypto. In a position paper, she criticized the SEC’s previous enforcement-heavy strategy, advocating for a framework that allows innovation while preventing fraud.

Impact on Pending Crypto Cases

The SEC’s decision to scale back its crypto enforcement team raises questions about ongoing legal battles. A key case is the 2023 lawsuit against Coinbase, where the SEC accused the exchange of operating as an unregistered securities platform. The case is pivotal, as it challenges former SEC Chair Gary Gensler’s stance that most digital assets fall under securities law.

With regulatory oversight weakening, some fear that fraud and manipulation could rise. Corey Frayer, a former senior adviser to Gensler, warned that relaxing crypto regulations could undermine the stability of U.S. financial markets.

Crypto Industry’s Reaction

The crypto sector has welcomed the shift, seeing it as a long-overdue correction. Industry leaders, including Coinbase CEO Brian Armstrong, have taken a hard stance against former SEC officials involved in past enforcement actions. Armstrong announced that Coinbase would refuse to work with law firms that hire ex-SEC officials linked to the crypto crackdown.

Meanwhile, Gemini co-founder Tyler Winklevoss made headlines by declaring his company would not hire MIT graduates, following news that Gensler had returned to the university.

What’s Next for Crypto Regulation?

Trump’s nominee for SEC Chair, Paul Atkins, is expected to adopt a more lenient regulatory approach. A former SEC commissioner under George W. Bush, Atkins has long advocated for minimal government intervention in financial markets. His potential confirmation could further reshape crypto regulations in the U.S.

With a more industry-friendly SEC, crypto firms may find it easier to operate without the constant threat of legal action. However, critics argue that deregulation could invite bad actors and increase risks for investors. The coming months will reveal whether this policy shift benefits the broader financial ecosystem or leads to new regulatory challenges.