The Securities and Exchange Commission is moving to scale back a special unit of more than 50 lawyers and staff members that had been dedicated to bringing crypto enforcement actions, five people with knowledge of the matter said.
The move is one of the first concrete steps by President Donald Trump and his administration to pull back on the regulation of cryptocurrencies and other digital assets. One of Trump’s first executive orders was aimed at promoting the growth of crypto and “eliminating regulatory overreach” on digital assets.
Some of the lawyers in the crypto unit are being assigned to other departments in the SEC, the people said. One of the unit’s top lawyers was moved out of the enforcement division. Some of the people briefed on the shake-up described that move as an unfair demotion.
A spokesperson for the SEC declined to comment.
Trump, once a cryptocurrency critic, embraced digital assets during the 2024 presidential campaign and welcomed the support of the crypto community, which had come to see the SEC’s previous chair, Gary Gensler, as its No. 1 nemesis.
The acting chair of the commission, Mark T. Uyeda, is a Republican who has tended to be supportive of the crypto industry. He has made a slew of appointments while shaking up other top jobs at the SEC, which employs more than 1,000 lawyers.
One of the first things Uyeda did was set up a team to review the SEC’s approach to dealing with digital assets. The task force is led by Hester Peirce, an SEC commissioner and an outspoken crypto supporter.
In a position paper published Jan. 28 on the SEC website, Peirce took issue with the commission’s past approach to regulating crypto and likened it to a car careening down the road.
“The commission’s handling of crypto has been marked by legal imprecision and commercial impracticality,” Peirce wrote. She said the goal of the task force would be to come up with a regulatory framework that permits people “to experiment and build interesting things” without allowing crypto to become “a haven for fraudsters.”
It is unclear what effect the downsizing of the crypto unit will have on pending enforcement actions. One of the more prominent cases was filed in 2023 against Coinbase, charging the crypto platform with violating federal securities laws by operating as an unregistered exchange.
The Coinbase case is a test of Gensler’s position that most digital assets are securities contracts and subject to SEC oversight, a position that Coinbase and the crypto industry adamantly reject.
Corey Frayer, who was senior adviser to Gensler on crypto issues and recently left the agency, said Tuesday, “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 crypto enforcement unit was created in 2017 during the first Trump administration, but it greatly expanded during Gensler’s tenure. In May 2022, the agency announced that it was nearly doubling the team’s size to 50 dedicated positions. The unit had brought more than 80 enforcement actions “related to fraudulent and unregistered crypto asset offerings and platforms,” the SEC said at the time. A recent tally shows it brought more than 100 crypto-related actions during the Biden administration.
Trump has nominated Paul Atkins, a lawyer with close ties to the crypto industry, to succeed Gensler. Atkins, who was an SEC commissioner under President George W. Bush, long has favored a lighter approach to regulation and enforcement. The Senate Banking Committee has yet to schedule a date for his confirmation hearing.
Since Trump’s victory, crypto companies have mobilized to try to punish SEC officials who brought legal cases against them. Brian Armstrong, CEO of Coinbase, said on social media that his company would not work with law firms that hired senior SEC officials who had been involved in the crypto crackdown.
Gensler, who left the SEC the day Trump was inaugurated, joined the faculty of the Massachusetts Institute of Technology, where he had taught before President Joe Biden tapped him.
After the announcement, Tyler Winklevoss, one of the founders of the Gemini crypto exchange, said his company would not hire any MIT graduates, even as interns.
c.2025 The New York Times Company. This article originally appeared in The New York Times.
