SEC's Crypto U-Turn: Commissioner Crenshaw Slams Agency's Policy Shift

The US Securities and Exchange Commission (SEC) has faced criticism from Commissioner Caroline Crenshaw over its recent shift in crypto policy, which she argues threatens market trust and undermines the agency's enforcement efforts. In a series of statements, Crenshaw has taken issue with the SEC's decision to drop multiple crypto-related cases and its stance on memecoins, asserting that these moves lack legal foundation and clarity.

Over the past week, the SEC has dismissed lawsuits against major crypto firms such as Coinbase, Robinhood, and Gemini. The agency attributes these dismissals to ongoing regulatory considerations, but Crenshaw argues that enforcement should not be abandoned while new policies are still in development. She maintains that the SEC has a framework in place and that it should be applied and enforced equally to all participants.

Crenshaw has also criticized the SEC's recent guidance on memecoins, arguing that it presents an incomplete and legally unsupported view. She questions the lack of a clear definition for memecoins and the assumption that their prices move independently of managerial efforts. She warns that promoters could exploit the lack of definition to sidestep regulation, and that fraudulent schemes such as pump-and-dumps and rug pulls remain prevalent in the sector.

In her remarks, Crenshaw has emphasized that the SEC's current approach does little to protect investors or uphold the integrity of financial markets. Instead, it introduces ambiguity and weakens enforcement efforts, leaving room for regulatory gaps that bad actors could exploit. She argues that the agency's job is to do what is right for investors, issuers, and capital markets, and that the recent decisions fall short of this responsibility.