Key changes under a second Trump administration
Leadership and structural changes
The recent appointments of a new SEC chair and enforcement director are expected to significantly influence the agency’s priorities and enforcement strategies, signaling a significantly more business-friendly approach.
President Donald Trump has chosen former SEC Commissioner Paul Atkins to head the agency. Atkins, who is awaiting Senate confirmation, is known as a strong backer of cryptocurrencies, indicating the start of a new era for crypto regulation and enforcement.
Mark Uyeda was named acting chair of the SEC on January 21, and will continue to serve until Atkins is confirmed by the Senate. Uyeda has worked for the SEC for 15 years.
Uyeda named Sam Waldon as the acting director of the SEC’s Division of Enforcement on January 27. Waldon has worked for the SEC for over 14 years and served as chief counsel for the SEC prior to his current appointment.
The SEC may soon become the target of structural changes implemented by Elon Musk and the Department of Government Efficiency (DOGE). DOGE has repeatedly emphasized its objective of streamlining government operations by eliminating duplicative agencies and wasteful spending, and this could potentially justify a merger of the SEC and the Commodity Futures Trading Commission (CFTC). The two agencies frequently wrestle with jurisdictional questions about whether certain assets fall under the jurisdiction of one agency or the other, and merging the two is argued by some to be a step toward a more efficient regulatory environment.
The return of Wells meetings
Although the SEC has previously stated that it will not conduct Wells meetings unless novel or factual questions are at issue, the new administration has suggested that it will begin using Wells meetings more often. Wells meetings refer to conversations between the SEC and defense counsel at the conclusion of SEC investigations before the agency commences enforcement. These meetings afford defense counsel a chance to explain why charges should not be brought. The resurgence of Wells meetings signals a less aggressive approach to enforcement under the new administration.
Potential reduced use of penny stock bar
The Eleventh Circuit recently ruled in SEC v. Almagarby et al., case number 21-13755, that the district court abused its discretion by imposing a permanent bar on penny stocks where the defendant voluntarily ceased unlawfully converting penny stock debt and dealing in penny stocks and had not shown that he was unlikely to comply with the law going forward. Although the defendant was permanently enjoined from transacting in securities without registering as a dealer or associating with a registered broker-dealer, the Eleventh Circuit reversed as to the penny stock bar, finding that the bar prohibited both lawful and unlawful penny stock transactions. In addition, recently, the SEC’s acting deputy director of Enforcement has indicated that the SEC would place a “more thoughtful” focus on whether penny stock bars would serve the public interest.
A new approach to crypto enforcement
Only days before Gary Gensler’s last day as chair of the SEC, the SEC reluctantly approved 11 spot Bitcoin exchange-traded funds (ETFs), stating that it was “the most sustainable path forward.” Spot Bitcoin ETFs allow investors to speculate on Bitcoin without the need to interact with digital wallets or crypto asset exchanges. In Gensler’s statement on the approval, he specifically noted that, despite the approval, “we did not approve or endorse Bitcoin.”
The Trump administration has signaled an entirely new approach to cryptocurrency regulation, showing stark differences between its objectives and those of the SEC under the Biden administration. While Gensler was more focused on enforcement, the new SEC administration appears to be taking a much less restrictive approach, encouraging innovation and seeking to provide guidance and a regulatory framework for institutional investors to adopt strategies involving cryptocurrencies.
On January 21, 2025, the SEC announced the creation of a Crypto Task Force to develop a regulatory framework for crypto assets. This initiative represents a significant departure from the SEC’s previous regulatory approach, which had been criticized as using ”regulation by enforcement” with respect to crypto. The task force’s goals include creating clear registration pathways, sensible disclosure frameworks, and engaging with various stakeholders to foster innovation while ensuring investor protection. The task force will be led by SEC Commissioner Hester Peirce.
The Crypto Task Force will collaborate with the SEC to help “draw clear regulatory lines, appropriately distinguish securities from non-securities, craft tailored disclosure frameworks, provide realistic paths to registration for both crypto assets and market intermediaries, ensure that investors have the information necessary to make investment decisions, and make sure that enforcement resources are deployed judiciously.”
Other stated goals of the Crypto Task Force include evaluating the viability of a national digital asset stockpile and promoting access to public blockchain networks by both the public and private sectors.
President Trump has also appointed a White House AI and Crypto Czar, David Sacks, a venture capitalist and former PayPal COO, to collaborate with lawmakers on developing cryptocurrency and digital asset regulations. Sacks has stated that his priority is to develop legislation for stablecoins, or crypto assets pegged to real-world assets such as the U.S. dollar.
Additionally, the Trump administration’s pivot away from the policies of the prior administration, particularly with regard to the crypto sector, is exemplified in the SEC’s recent decision to scrap the controversial SAB 121 accounting rule, which required banks and companies to list customer crypto asset holdings as a liability in their financial statements, even if the bank was not in control of the crypto assets. This made holding crypto assets costly for banks, especially those looking to custody large volumes of crypto assets.
The repeal of SAB 121 demonstrates the new administration’s positive attitude toward crypto and is expected to spur participation by institutional investors. Many traditional financial institutions elected to stay away from offering crypto holdings due to the requirements imposed by SAB 121. SAB 122, which repeals SAB 121, allows banks to provide custody for digital assets, and notes that companies should assess the risk of loss relating to their custody activities and put that assessed amount as a contingent liability on the balance sheet. With this repeal, it will be easier for banks and other traditional financial institutions, including Wall Street firms, to offer crypto services to their customers.
