SEC Shrinks Crypto Enforcement Team Amidst Industry Shift

The U.S. Securities and Exchange Commission (SEC) is reportedly downsizing a special unit dedicated to cryptocurrency enforcement. The unit, established during the Trump administration, has grown significantly under former SEC chair Gary Gensler, who led a crackdown on the U.S. crypto industry. However, the current SEC leadership is now instructing officials to reduce the size of this team, according to a report by The New York Times.

The crypto enforcement unit, which consists of more than 50 lawyers and staff members, has been instrumental in bringing over 100 crypto-related actions during the Biden administration. The unit's work includes a high-profile case against Coinbase, which is accused of violating federal securities laws by operating an unregistered platform. However, it remains unclear whether the shake-up will impact pending enforcement actions.

The report suggests that the reorganization may be seen as an unfair demotion by some members of the unit. Corey Frayer, who served as a senior adviser to Gensler on crypto issues, criticized the SEC's friendlier stance on digital assets. He stated, "What the new SEC leadership proposes to do for crypto is remove the speed limits and guardrails that have made our capital markets the strongest in the world."

The SEC's decision to shrink the cryptocurrency enforcement team comes amidst a broader shift in the agency's approach to digital assets. The new leadership has signaled a more lenient stance on cryptocurrencies, which could have significant implications for the industry's future regulation and growth.