SEC Launches Comprehensive Review of Crypto Regulations Amid Trump’s Deregulation Push

The U.S. Securities and Exchange Commission (SEC) has initiated a sweeping review of its internal guidance on cryptocurrency regulation, signaling a potential shift in how digital assets are governed. This reassessment aligns with a new Executive Order on deregulation signed by former President Donald Trump and incorporates recommendations from the Department of Government Efficiency (DOGE), now under the leadership of Elon Musk.

A Fresh Look at Outdated Frameworks

Announced on April 5, Acting SEC Chair Mark Uyeda confirmed that the agency is reevaluating multiple staff directives, some of which could be revised or rescinded entirely.

“The purpose of this review is to identify staff statements that should be modified or rescinded consistent with current agency priorities,” the SEC said in a public statement.

Central to this initiative is the agency’s longstanding reliance on the Howey Test, a legal standard from the 1940s used to determine whether certain assets qualify as securities. The SEC’s application of this test — particularly its interpretation from a 2018 speech by then-director Bill Hinman — has shaped several high-profile enforcement actions, including the ongoing case against Ripple Labs over its XRP token.

Hinman’s view emphasized decentralization as a key factor in deciding whether a digital asset should be classified as a security. However, critics argue that this decades-old framework no longer fits the fast-evolving landscape of blockchain and decentralized technologies.

Possible Turning Point for Retail Investors

According to crypto analyst Jesus Martinez, the SEC’s reevaluation could prove pivotal for U.S.-based retail investors. Many have been excluded from participating in platforms like token launchpads and decentralized nodes, which are often limited to those with foreign identification or institutional workarounds.

“It’s been hurting retail for the longest time,” Martinez said. “We need to prioritize American citizens — this is a big step in that direction.”

Beyond the Howey Test

The SEC’s review goes beyond securities classification. Several other documents are under scrutiny, including:

• A bulletin on mutual funds investing in Bitcoin futures, which outlines potential risks for traditional financial products.
• A risk alert from the Division of Examination, highlighting the dangers digital assets may pose to investors, from cybersecurity threats to regulatory uncertainty.
• The Custody Rule, which the agency is reexamining to determine whether state-chartered banks and trust companies can serve as qualified custodians for crypto assets.

These steps suggest the SEC may be moving toward a more modern and flexible approach to regulation, which could open the door for more innovation — while still aiming to protect investors.