Crypto industry gains favor from revised SEC, as asserted by Hester Pierce
The Securities and Exchange Commission (SEC) is set to undergo a significant change in its enforcement approach, with the appointment of a new chairman, Paul Atkins, and the departure of current chairman Gary Gensler. Under Atkins' leadership, starting in 2025, the agency is expected to adopt a more restrained and clarity-focused approach, particularly in emerging areas such as cryptocurrency.
Commissioner Hester Peirce, one of the key figures in this transition, hopes to help the SEC be understood as a regulatory agency within the executive branch, rather than an enforcement agency that avoids regulation. Peirce plans to focus on clearly defining the agency's jurisdiction, aiming to provide a clear path for market participants to comply with the law while maintaining business appeal.
The new leadership under Atkins is emphasizing a "back-to-basics" paradigm, with a primary focus on investor protection and clearer definitions of the SEC's jurisdiction. This shift away from more aggressive regulatory expansions seen previously is intended to hold accountable those who engage in fraud, but avoid broader, less predictable regulatory expansion.
In the crypto industry, the SEC and other regulators like FINRA are signalling a more cautious and measured stance. While vigorous enforcement actions were pursued under the prior leadership, the new leadership signals a more experimental approach, emphasizing clarity in disclosures and regulatory boundaries. This points to continued regulatory attention but with an eye toward balancing innovation and investor protection.
The SEC's new approach under Atkins also includes a reduced focus on aggressive enforcement in cybersecurity and data privacy. The leadership is opting to work more cooperatively with entities impacted by cyber incidents, reflecting a general trend of focusing enforcement resources on core securities fraud rather than peripheral regulatory areas.
Commissioner Mark Wetjen, another key figure in this transition, believes the changes present an opportunity to fulfill the agency's mission. Wetjen emphasizes the need for transparency in SEC proceedings, citing the Administrative Procedure Act. He also believes a responsible regulator should create conditions for innovation, clearly formulate rules, and explain how to follow them.
Both Peirce and Wetjen agree that coercive measures are not suitable for creating broad regulations. They believe the new leadership will shift the SEC's focus from coercive measures against the crypto industry, towards a more collaborative and experimental approach.
With the departures of Gensler and Democratic commissioner Jaime Lizárraga, Republicans Peirce, Wetjen, and Atkins will remain in charge. It is expected that Atkins will appoint a Democrat, Libertarian, or independent candidate, but not another Republican, to maintain the required party diversity within the SEC.
In early 2025, the SEC will operate with a limited number of members until the Senate approves new appointments. During this time, the agency will firm up its jurisdictional boundaries and experiment with a more restrained, clarity-focused approach in crypto and other emerging areas, reflecting a strategic pivot from the prior administration’s aggressive regulatory expansion and enforcement style.
- The new leadership under Atkins plans to focus on providing clear definitions of the SEC's jurisdiction, particularly in emerging areas such as cryptocurrency and technology, while ensuring a balance between innovation and investor protection in business.
- Commissioner Peirce and Wetjen, part of the new leadership, are advocating for a more collaborative and experimental approach towards regulation, moving away from coercive measures against the crypto industry and emphasizing clarity in disclosures and regulatory boundaries.
