Advocacy Group Pushes SEC to Reset Crypto Policies Under New Leadership
As the U.S. prepares for a new administration, the Digital Chamber’s Token Alliance is urging the Securities and Exchange Commission (SEC) to reset its approach to cryptocurrency regulation. The advocacy group calls for a comprehensive review of all ongoing investigations and policies, aiming to repair what it describes as a historically strained relationship between the SEC and the crypto industry. With pro-crypto nominee Paul Atkins set to lead the SEC, the group emphasizes the need for mutual trust and a balanced regulatory framework that recognizes the efforts of responsible industry participants.
The coalition is advocating for the SEC to reassess and potentially pause current crypto investigations and lawsuits that do not involve fraud or imminent risks, enabling the agency to establish a more consistent regulatory framework. It also calls for rescinding the 2019 guidance on applying the Howey test to digital assets, citing concerns over inconsistent token classification. Additionally, the group seeks to eliminate reliance on a contentious 2018 speech by former SEC director William Hinman, which they argue has unfairly created disparities within the industry.
Industry representatives are also pushing for the incoming SEC leadership to repeal Staff Accounting Bulletin 121 (SAB 121), which critics claim has driven innovation offshore by requiring companies to classify custodial crypto assets as liabilities. Although a bipartisan repeal bill passed in Congress, it was vetoed by the Biden administration, presenting a renewed opportunity for policy revision. Additionally, the Digital Chamber has urged the SEC to reconsider proposed Rule 3b-16, arguing that its expanded definition of “exchanges” to include decentralized finance (DeFi) platforms could stifle growth and innovation in the emerging sector.
As the SEC transitions leadership, outgoing Chair Gary Gensler’s enforcement-heavy approach will give way to Paul Atkins, a former commissioner known for his collaborative stance on financial policy. Atkins is poised to bridge the gap between the crypto industry and regulators, offering a more transparent framework. Following the Biden administration’s aggressive regulatory actions against major players like Binance and Coinbase, the incoming administration, supported by a GOP-controlled Congress, is anticipated to promote a regulatory environment that balances innovation with oversight.
Representative French Hill, the newly appointed chairman of the House Financial Services Committee, is advocating for clear and cohesive cryptocurrency regulations that balance innovation with investor protection. Leveraging his extensive background in finance and foreign policy, Hill aims to work closely with the SEC and other regulators to navigate the complex intersections of digital currencies with global payments, sanctions, and trade, shaping a forward-thinking U.S. policy framework for the crypto economy.
The SEC’s approach to crypto regulation is at a crossroads. With a pro-crypto leadership team incoming, there is potential for a significant policy shift. Whether this results in a balanced framework that fosters innovation while protecting investors remains to be seen, but the recommendations by advocacy groups like the Digital Chamber offer a clear roadmap for reform.