SEC’s Missing Texts and Reversed Policies Spark Crypto Credibility Crisis

Gary Gensler Reinforces Crypto Enforcement Amid SEC Policy Shift

The U.S. Securities and Exchange Commission (SEC) under former Chair Gary Gensler faced significant scrutiny for its aggressive enforcement actions against crypto companies, a stance he recently defended despite the agency’s current leadership under Paul Atkins reversing many of his policies. Gensler, in a Wednesday interview with CNBC, expressed no regrets over his approach, emphasizing investor protection and highlighting enforcement actions against “fraudsters” like Sam Bankman-Fried. “We were consistently trying to ensure investor protection,” he stated, referencing lawsuits against crypto firms during his tenure from 2021 to 2025Gensler Doubles Down On Crypto Approach Amid SEC Sea Changes^[1].

The SEC’s policy shift under President Donald Trump’s administration has been marked by the withdrawal of several enforcement actions initiated under Gensler. Acting SEC Chair Mark Uyeda and incoming Chair Paul Atkins have dropped lawsuits against Coinbase, Kraken, and Consensys, while introducing streamlined rules for cryptocurrency exchange-traded fund (ETF) approvals. This reversal aligns with Trump’s broader agenda to position the U.S. as a “crypto capital of the world,” including proposals to eliminate quarterly reporting requirements for public companiesGensler Doubles Down On Crypto Approach Amid SEC Sea Changes^[1]Gary Gensler’s Texts Go ‘Missing’ From Crypto-Enforcement Era^[4]. Gensler criticized the potential shift, warning that reduced transparency could increase market volatilityGensler Doubles Down On Crypto Approach Amid SEC Sea Changes^[1].

The controversy over the SEC’s enforcement strategy has been further complicated by allegations of missing records. Coinbase has demanded court sanctions after nearly a year of text messages from Gensler—spanning critical periods like the FTX collapse and major enforcement actions—were deleted due to an agency policy involving device resets. The SEC’s Office of Inspector General (OIG) confirmed the loss of these texts, which could impact ongoing investigations into digital asset regulation. Coinbase argues the deletion violates the Freedom of Information Act (FOIA) and undermines the SEC’s credibilityUS SEC Faces Sanctions as Coinbase Accuses It of Deleting Gensler’s Texts^[2]US SEC Under Fire As Coinbase Flags Missing Gensler Crypto Texts^[3].

The SEC’s current leadership has also accelerated the approval of crypto ETFs by establishing generic listing standards, a move expected to spur a surge in new products. The agency’s September 2025 rule changes allow expedited approvals for ETFs tracking assets like Solana and XRP, reducing the filing-to-launch timeline from 240 days to 75 daysSEC Approved, Then Paused Bitwise Crypto ETF Conversion^[10]. However, the SEC recently paused Bitwise’s multi-asset crypto ETF, which included Ethereum and XRP, citing procedural concerns. This reversal has raised questions about regulatory consistency, with industry experts noting a pattern of delayed approvals under the Trump administration.

Gensler’s tenure at the SEC was characterized by a “regulation-by-enforcement” approach, resulting in over 80 lawsuits against crypto firms. Critics, including industry leaders like Coinbase CEO Brian Armstrong, argued this strategy stifled innovation and created legal uncertainty. The current SEC leadership, however, has shifted toward fostering collaboration, with Acting Chair Uyeda signaling openness to Trump’s proposed policy changesGary Gensler’s Texts Go ‘Missing’ From Crypto-Enforcement Era^[4]All SEC Enforcements Dropped So Far and What It Means^[5]. This transition reflects a broader effort to create a more predictable regulatory environment, as highlighted by the recent passage of the GENIUS Act, which establishes federal oversight for stablecoinsCrypto ETF Floodgates Open With SEC Listing Standards^[7].

The SEC’s evolving stance has significant implications for the crypto industry. While the agency’s previous enforcement actions drew criticism for their abruptness, the current administration’s focus on streamlined approvals and reduced litigation has been welcomed by market participants. However, the controversy over missing records and inconsistent regulatory decisions remains a challenge. As the U.S. competes with the EU’s MiCA framework and Asia’s fragmented policies, the SEC’s ability to provide clear, stable guidelines will be critical in shaping the future of crypto marketsCrypto ETF Floodgates Open With SEC Listing Standards^[7]SEC Paves Way for Crypto Spot ETFs With New Listing Rules^[8].