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SEC Policy Reversals and Crypto Case Dismissals
SEC | Feb 25, 2025
Image: Freepik/jcomp
The SEC’s New Direction Under the Trump Administration
Since President Trump took office for the second term, the U.S. Securities and Exchange Commission (SEC) is undergoing major transformation. Not a week passes without key changes being announced from cost cutting to reversing key regulations away from policies set by the previous administration.
See: Trump Shuts CFPB Weakening Consumer Financial Protections
This changes impact corporate disclosures, shareholder rights, market regulations, and the SEC’s new approach to cryptocurrency to name a few. Here's a quick run-down to stay plugged in with what's going on.
Budget Cuts and Structural Changes
The SEC overseas $100 trillion U.S. capital markets and is getting their budgets slashed according to the Reuters exclusive, including the just announced removal of regional directors from ten offices. While the offices themselves remain open, the restructuring aims to centralize decision making to reduce overhead. For example, the Trump administration has ordered independent agencies like the SEC to submit draft regulations, strategic plans, and budget requests to the White House for review, increasing executive oversight over regulatory actions.
Leadership Changes
While NCFA already reported on the changes below, it's worth reiterating the following key leadership changes at the SEC:
- Paul Atkins nominated as SEC Chair - he was a former SEC commissioner and advocate for deregulation and currently awaits confirmation by the Senate.
- Mark Uyeda as Acting Chairman. He currently leads the SEC while Atkin's nomination is awaiting approval.
- Hester Peirce leads the Crypto task force - affectionately known as 'Crypto Mom' and for her pro-crypto views, is spearheading SEC efforts to create a clear regulatory framework for digital assets, which ill replace prior enforcement driven approaches.
Key Regulatory Rollbacks
1. Climate Disclosure Rule Rescinded
The SEC is no longer supporting the climate disclosure rule that required companies to disclose their greenhouse gas emissions. Acting Chair Uyeda questioned whether the SEC had the legal power to enforce this rule, signaling a move away from climate-related financial reporting. (Source)
2. Shareholder Proposal Restrictions Reinstated
Companies now have more power to reject shareholder requests, especially those about environmental, social, and governance (ESG) topics. This change rolls back previous rules that gave shareholders more say in company decisions.
3. Treasury Market Dealer Rule Withdrawn
A rule that required certain traders in the U.S. Treasury market to register as broker-dealers has been cancelled. This happened after legal challenges claimed the SEC had gone beyond its authority.
4. Crypto Custody Accounting Rule Reversed
The SEC has rescinded its prior guidance requiring crypto custodians to record digital asset liabilities on their balance sheets, reducing financial burdens for institutions handling cryptocurrency.
5. Increased Oversight of SEC Investigations
SEC staff must now obtain leadership approval before launching formal investigations, centralizing enforcement decisions and potentially slowing new probes.
New Approach to Crypto Regulation
The SEC has cancelled or dropped several high profile cases established during the prior administration, reflecting a dramatic shift in crypto regulations moving forward:
- The SEC has dropped its investigation into Robinhood’s crypto operations with no enforcement action. (see wells notice)
- Paul Grewal, Coinbase's chief legal officer said federal regulators/SEC will drop its lawsuit against Coinbase, which had accused the exchange of operating without proper registration.
- The SEC has also closed its investigation into OpenSea’s NFT marketplace.
- The SEC has concluded its investigation into Uniswap Labs with no enforcement action, providing a positive signal for DeFi platforms.
- The SEC and Binance have requested a 60-day pause in their legal battle, signalling potential negotiations for a settlement or case dismissal.
- Ripple CEO Brad Garlinghouse believes the SEC will drop its case against Ripple Labs. He pointed to the SEC’s recent shift in approach and the dismissal of other cases as positive signs. Further, the SEC has also recently removed any mention of the Ripple lawsuit from its website, suggesting the case could soon be resolved
- The SEC has agreed in principle to drop all pending securities charges against ConsenSys
Outlook
With fewer enforcement actions, reduced oversight, and a more favourable stance on crypto, the U.S. financial industry is entering a new phase. While these moves could encourage innovation and investment, they also raise concerns about market integrity and investor protection. Time will tell if these changes bring stability and growth or create new risks for the industry.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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