Reuters reported on Wednesday that the U.S. Securities and Exchange Commission has indicated plans to reassess cryptocurrency policies, as Donald Trump prepares for his inauguration next week.
Hester Peirce, a Republican SEC commissioner, and Mark Uyeda, a Republican SEC commissioner are likely to make changes to the way cryptocurrencies are classified.
The SEC’s new approach towards the crypto industry could result in a reversal of some of the strict enforcement measures taken by the outgoing SEC chair Gary Gensler.
Possible policy shifts under new SEC leadership
According to Reuters, Peirce and Uyeda are expected to review a range of cryptocurrency-related enforcement actions and clarify when digital assets should be considered securities.
Gensler led the SEC to bring 83 enforcement actions related to crypto against companies such as Coinbase and Kraken. The SEC argued that many tokens are securities and therefore must adhere SEC regulations.
Peirce & Uyeda, known crypto-advocates, have criticised Gensler for his strict stance.
They will have a majority of the SEC commissioners who are appointed by politicians and they can reevaluate enforcement actions that are pending, possibly freezing or withdrawing those cases which do not involve fraud allegations.
Many industry participants have called for more clear regulations. They argue that many cryptocurrencies are more like commodities rather than securities.
Both commissioners have a close relationship with Paul Atkins Trump’s nominee for SEC chair who is known for his crypto friendly outlook.
Atkins’ confirmation to the Senate is still pending. However, his influence can already be seen in Peirce’s and Uyeda’s expected policy direction.
The incoming administration will also prioritize tackling regulatory obstacles. While enforcement reviews are the top priority, they’ll be a part of the agenda for the next few months.
Rescinding SAB No. 121: Possible Relief for Public Companies
The potential revocation of Staff Accounting Bulletin No. 121 is another focus area for the SEC in the new administration. The SAB No. 121 has significantly increased the costs of public companies that hold cryptocurrencies for third parties.
SAB No. 121, issued in March 2022 requires companies to record digital assets held for customers as liabilities on their balance sheets. SAB No. 121 mandates that companies record digital assets owned by customers on their balance sheet as liabilities, and corresponding assets in the same amount.
The purpose of this guidance is to increase transparency and reduce risks associated with digital assets.
It has been criticized for preventing companies from offering cryptocurrency custody services because of increased regulatory burdens.
Rescinding SAB No. The repeal of SAB No.
There are still concerns about the existence of sufficient safeguards to protect investors as well as the financial system in general.
While the commissioners will solicit feedback from industry and the public as they draft new regulations, it is likely that finalizing comprehensive rules could take several months.
SAB No. 121 will be revisited. The Trump administration has stated plans for prioritizing executive orders that address issues such as cryptocurrency de-banking.
