The SEC's Non-Monetary Settlements and Their Implications for Future Crypto Governance and Investor Trust

The collapse of FTX in late 2022 marked a turning point for cryptocurrency regulation, exposing systemic risks and triggering a wave of scrutiny from U.S. regulators. In the aftermath, the Securities and Exchange Commission (SEC) has intensified its enforcement efforts, with a notable shift toward non-monetary settlements that blend punitive measures with regulatory guidance. These actions, spanning high-profile cases like Gemini Trust Company and MyConstant, reflect a broader strategy to redefine the agency's role in the crypto ecosystem. By analyzing recent settlements and policy shifts, this article explores how the SEC's approach is shaping the future of crypto governance and investor trust.

A Pragmatic Enforcement Strategy: Balancing Accountability and Clarity

The SEC's post-FTX enforcement actions have prioritized resolving disputes through negotiated settlements rather than protracted litigation. A prime example is the tentative agreement with Gemini Trust Company in September 2025, which addressed allegations that its Gemini Earn program offered unregistered securities. This resolution, coupled with a 21 million settlement with Genesis Global Capital in March 2024, underscores the SEC's willingness to streamline enforcement while avoiding public adversarial battles. Such settlements not only reduce legal costs but also signal a pragmatic approach to accountability, allowing firms to realign operations without the reputational damage of prolonged litigation.

This strategy extends to smaller players as well. In August 2025, the SEC settled with Huynh Tran Quang Duy, founder of MyConstant, over misleading claims about the platform's crypto-backed loan model, which raised over $20 million from investors. While the case involved no monetary penalties, it required Duy to cease operations and disgorge ill-gotten gains. These actions highlight the SEC's focus on curbing fraud while providing clarity on what constitutes a securities violation-a critical step in a sector still grappling with regulatory ambiguity.

Jurisdictional Nuances: The SEC's Evolving Interpretation of the Howey Test

A key challenge for crypto regulation lies in applying the 1946 Howey Test-a framework for determining whether an asset qualifies as an investment contract-to decentralized and innovative financial models. The SEC's recent non-monetary settlements reveal a nuanced approach to this issue. For instance, the agency's Division of Corporation Finance issued a statement in 2025 clarifying that liquid staking arrangements typically do not meet the Howey Test's criteria, effectively narrowing its jurisdiction in certain crypto activities. This move signals a recognition of the sector's complexity and a desire to avoid overreach, which could stifle innovation.

Similarly, the SEC's no-action letters in 2025-such as those granting clarity on DePIN token distributions and crypto custody by state-chartered trusts-demonstrate a proactive effort to delineate boundaries between securities law and emerging crypto use cases. By offering such guidance, the SEC aims to foster a regulatory environment where firms can innovate within defined parameters, reducing the risk of unintentional violations.

Collaborative Governance: The "New Day" Vision and Interagency Coordination

Under SEC Chairman Paul Atkins, the agency has embraced a "New Day" vision for digital asset oversight, emphasizing collaboration with the Commodity Futures Trading Commission (CFTC) to reduce regulatory duplication. This shift is evident in the Gemini settlement, which aligns with broader efforts to harmonize enforcement priorities. By coordinating with the CFTC, the SEC seeks to create a cohesive framework for crypto assets, ensuring that oversight is neither fragmented nor redundant.

This collaborative approach also extends to policy development. The SEC's recent no-action letters and statements reflect a willingness to engage with industry stakeholders, a departure from the more adversarial tone of the previous administration. For example, the agency's decision to grant no-action relief for DePIN token distributions-a model where tokens incentivize network contributions-has been celebrated as a pragmatic accommodation of decentralized infrastructure. Such moves suggest that the SEC is recalibrating its role from a strict enforcer to a facilitator of innovation, provided risks to investors are mitigated.

Implications for Investor Trust and Market Stability

The SEC's non-monetary settlements and policy clarifications have significant implications for investor trust. By resolving cases swiftly and offering regulatory guidance, the agency is addressing one of the crypto sector's most persistent issues: uncertainty. Investors are now better equipped to assess risks, knowing that the SEC is actively clarifying what constitutes a securities violation. For instance, the no-action letter on crypto custody has provided much-needed clarity for institutional investors, who previously hesitated to allocate capital due to fears of regulatory exposure.

However, challenges remain. Critics argue that non-monetary settlements may lack the deterrent effect of fines, potentially enabling repeat offenders to evade meaningful consequences. The case of MCC International Corp., where the SEC secured a 46 million default judgment for a crypto mining scheme, illustrates the agency's ability to impose financial penalties when warranted. This duality-settling most cases while reserving punitive action for egregious violations-suggests a balanced approach that prioritizes both accountability and market stability.

Conclusion: A Regulatory Framework in Flux

The SEC's post-FTX enforcement actions reveal a regulatory body in transition. By favoring non-monetary settlements, issuing clarifying guidance, and collaborating with other agencies, the SEC is attempting to strike a delicate balance between investor protection and innovation. While these efforts have improved clarity for market participants, the long-term success of this approach will depend on consistent enforcement and adaptability to the sector's rapid evolution. For investors, the message is clear: the crypto space is no longer a regulatory gray zone, and understanding the SEC's evolving priorities will be critical to navigating future opportunities and risks.