The Securities and Exchange Commission (SEC) is significantly downsizing its Crypto Assets and Cyber Unit by reassigning more than 50 lawyers and staff members to other departments, according to sources familiar with the changes reported by the New York Times.
The specialized crypto unit, which was expanded just two years ago with 20 additional positions, is now seeing a major restructuring under new leadership. At least one senior lawyer is reportedly moving completely out of the enforcement division.
This shift comes alongside broader changes in the SEC's enforcement approach. The agency has implemented new policies requiring staff to obtain commissioner approval before launching formal investigations or issuing subpoenas - a departure from previous practices where enforcement staff had more autonomy.
The restructuring aligns with the current administration's push to reduce regulatory oversight of the cryptocurrency industry. A newly established crypto task force, led by Commissioner Hester Peirce, aims to review and revise the agency's digital asset regulations. Peirce has previously criticized the SEC's approach to crypto regulation as lacking precision and practicality.
The downsizing affects a unit that was responsible for protecting investors in crypto markets and enforcing securities law violations in the digital asset space. This change raises questions about ongoing cases, including the SEC's high-profile lawsuit against Coinbase.
Industry reactions have been mixed. Former SEC senior advisor Corey Frayer expressed concern, suggesting the move removes necessary market protections. However, cryptocurrency industry advocates view the changes as a positive step toward more balanced regulation.
The restructuring reflects a broader shift in regulatory philosophy, as the administration seeks to establish new frameworks that support innovation while maintaining market integrity in the digital asset space.