Contents
Article Summary
SEC Commissioner Caroline Crenshaw criticizes the SEC’s approach to crypto regulation, describing it as a “game of regulatory Jenga” that could topple market stability. She highlights the abandonment of enforcement actions, particularly in crypto markets, and the danger of reversing rules without proper analysis or public comment.
What This Means for You
- Greater awareness of the potential risks and complexities of crypto markets and their entanglement with traditional finance;
- Concerns about regulatory scrutiny and the need for serious consideration of crypto’s potential impact on traditional finance;
- Urgent call for crypto companies and traditional finance to prioritize risk management and regulatory compliance;
- Potential for renewed regulatory focus and enforcement actions under a future administration.
Original Post
The US Securities and Exchange Commission’s (SEC) sole Democratic Commissioner, Caroline Crenshaw, has criticized the agency’s approach to the crypto industry and market regulation under the Trump administration. At the SEC Speaks event in May 2025, Crenshaw cautioned against the dismantling of “discrete but interrelated rules” on crypto and the wider market, comparing market stability to a “Jenga tower” that could topple if rules were removed.
Crenshaw noted the loss of staff and the SEC’s use of staff guidance to reverse rules without proper analysis or public comment, especially around crypto. She highlighted the regulator’s abandonment of enforcement actions, particularly in crypto markets, which she refers to as “regulation by non-enforcement.”
Crenshaw also addressed the impact of the SEC’s “about-face” on its reputation in court, credibility, and “longstanding and fundamental case law.”
Related: SEC is scaling back its crypto enforcement unit: Report
Crenshaw, the SEC’s last remaining Democrat commissioner, warned that the 2022 FTX collapse was an example of a “large-scale crypto crisis.” She emphasized the need for regulatory scrutiny, saying, “Failing to appreciate and address these risks and complexities destines us to repeat hard lessons with high stakes as crypto becomes increasingly entangled with traditional finance.”
Meanwhile, remarks from the SEC’s Republican commissioners welcomed the agency’s embrace of the crypto sector.
Crypto was “languishing in SEC limbo”
SEC chair Paul Atkins said at the SEC Speaks event that “crypto markets have been languishing in SEC limbo for years” and that the agency should not be in the business of stifling innovation.
Commissioner Hester Peirce, who heads the SEC’s Crypto Task Force, said that the agency’s approach under the Biden administration has “evaded sound regulatory practice and must be corrected.” She also claimed that crypto did not come under the purview of securities laws because “most currently existing crypto assets in the market” were not securities.
Commissioner Mark Uyeda echoed the sentiment of his peers, stating that the SEC “should undertake efforts to provide assurances that regulation by enforcement will not be a tool used for future policymaking.
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Key Terms
- Regulatory Jenga
- Staff guidance
- Regulation by non-enforcement
- Crypto markets
- Securities laws
- Crypto regulation
- Enforcement unit
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