SEC Dismantles Crypto Enforcement, Lawmaker Warns
A significant shift in U.S. crypto regulation is underway as the Securities and Exchange Commission (SEC) under the Trump administration de-emphasizes its enforcement-led approach. During a House Financial Services subcommittee hearing, Representative Stephen Lynch stated the agency is “no longer a cop on the beat,” citing the dismantling of critical oversight teams like FinHub. Lynch expressed alarm that the SEC has dropped investigations and enforcement actions against major crypto firms, including Ripple and Coinbase, under its new chair, Paul Atkins, who was appointed after Gary Gensler's departure in January 2025.
Related to crypto, there’s no cop on the beat. The SEC has dropped most of the cases that they’ve had against firms that had been charged with misconduct.
— Stephen Lynch, U.S. Representative.
Internal Conflict Revealed in $10M Settlement With Trump Ally
The policy reversal has fueled internal conflict at the agency, culminating in the recent resignation of Enforcement Division Director Margaret Ryan. Reports indicate Ryan clashed with SEC Chair Paul Atkins over a perceived lack of aggression in pursuing misconduct, particularly in cases involving individuals with ties to the administration. One flashpoint was the handling of charges against crypto entrepreneur Justin Sun. In 2023, the SEC, under previous leadership, sued Sun for generating over $31 million through fraudulent trades. The case was recently settled with one of Sun's companies paying just $10 million without admitting or denying the findings, a resolution that Ryan reportedly did not sign off on.
Regulators Pivot From Lawsuits to New Crypto Frameworks
Instead of prioritizing litigation, the new leadership at the SEC and other agencies is moving to establish regulatory clarity through published guidance. The SEC and the Commodity Futures Trading Commission (CFTC) recently signed a memorandum of understanding and issued a joint interpretive notice on how they will classify different crypto assets under federal law. SEC Chair Paul Atkins described this approach as a “bridge” to clarify regulations while the CLARITY Act, a comprehensive market structure bill, remains stalled in Congress. This strategic pivot aligns with the CFTC's launch of an Innovation Task Force on March 24th, further signaling a coordinated administrative effort to foster innovation through defined rules rather than enforcement actions.
