The SEC And Crypto Under Trump: The Biggest Changes So Far

The SEC is almost unrecognizable under the new US administration.

Gary Gensler, who led the SEC for four years, was famous for his anti-crypto perspective and increased enforcement of crypto-based businesses. Although under the previous administration, the SEC made some optimistic moves, such as approving Bitcoin and Ethereum ETFs, the overall regulatory space was very unfriendly and grim.

For instance, the SEC constantly failed to provide a clear definition of which assets are considered securities and which are not. This led to several high-profile lawsuits against major crypto companies such as Ripple and Coinbase. At the same time, there are reports of the FDIC intentionally debanking crypto companies and investors.

However, it seems that the regulatory chokehold is gone. Since Gensler’s exit in January, the SEC has vowed to lower crypto enforcement. The optimism is evident, as over 40 crypto ETF applications were filed after Gensler’s departure.

So, let’s take a look at some of the major pro-crypto developments that have already occurred under the new SEC and what other initiatives are expected.

Overturning the controversial SAB 121 bulletin

The SEC’s original SAB 121 was a guidance document issued in 2022 that directed companies — especially crypto custodians, exchanges, and banks holding digital assets on behalf of their customers — to record those assets on their balance sheets as both an asset and a corresponding liability.

In practice, SAB 121 meant that even though a bank or crypto platform did not own the crypto, it still had to ‘book’ the full fair‐value of those assets as liabilities. This on‐balance‐sheet treatment was a significant departure from conventional custody practices, where assets held for clients are generally not reflected as liabilities on the custodian’s financial statements.

Why SAB 121 was bad for crypto companies

Because SAB 121 forced financial institutions to record the entire value of client-held crypto as a liability, it had several adverse consequences:

• Increased capital requirements: Banks and crypto custodians had to hold additional capital against these liabilities, making it more expensive and less attractive for them to offer crypto custody services.
• Balance sheet burdens: The artificial inflation of liabilities disrupted standard financial ratios and reporting metrics. This was especially problematic for regulated institutions that must comply with strict capital adequacy and risk management rules.
• Industry disincentives: By treating crypto assets differently from other custodial assets, SAB 121 created a ‘chilling effect’ that discouraged many banks and traditional financial firms from entering or expanding into the digital asset space.

The new SAB 122 policy

Under active chair Mark Uyeda, the SEC issued SAB 122 on 23 January 2025, which rescinds SAB 121. Under SAB 122, companies that safeguard crypto assets are no longer required to automatically record the full fair value of these assets as liabilities.

Instead, they must assess — using established accounting standards such as those in ASC 450-20 (for loss contingencies) or IAS 37 — whether a liability should be recognized based on the actual risk of loss.

This change brings several key benefits:

• Reduced capital and reporting burdens: By allowing companies to measure any liability based on the estimated risk of loss (rather than the total asset value), SAB 122 aligns crypto asset reporting with standard custodial accounting practices. This eases the capital requirements and makes it more financially practical for banks and other institutions to offer custody services for digital assets.
• Enhanced flexibility: The new guidance directs allows to apply existing GAAP or IFRS principles to determine and measure any safeguarding obligations. This approach offers more flexibility and is better suited to the unique risk profile of digital assets, rather than imposing a one-size-fits-all rule
• Banks can custody Bitcoin: With the removal of SAB 121’s punitive requirements, traditional financial institutions are more likely to engage in crypto custody, potentially leading to broader market participation and innovation in the digital asset space. This regulatory rollback has been welcomed by the banking sector and crypto industry advocates alike, as it removes a key barrier to entry and growth.

The SEC’s new Crypto Task Force

The new SEC crypto task force is a dedicated team formed by the SEC to help clarify uncertainty about how digital assets are regulated.

The task force is an initiative launched by SEC Acting Chairman Mark Uyeda and is led by Commissioner Hester Peirce, a well‐known advocate for clearer crypto regulation. It’s part of the SEC’s broader move — often referred to as ‘SEC 2.0’ — to update and streamline the agency’s approach toward digital assets.

What will it do?

• Clarify the rules: The group is charged with drawing clear regulatory lines for crypto assets. In other words, it will work on defining when and how cryptocurrencies are treated under existing securities laws.
• Create registration paths: It will explore realistic paths for crypto-related firms to register with the SEC, making it easier for these companies to operate legally.
• Develop disclosure frameworks: The task force will craft sensible guidelines on what information companies must disclose, so investors better understand the risks and opportunities in the crypto space.
• Focus enforcement: It aims to use enforcement resources more judiciously — meaning that the SEC will focus on clear, rule-based actions rather than broad, reactionary measures.

Reassigning lawyers from crypto cases

In early February 2025, the SEC began shifting its approach to crypto enforcement by reassigning many of the lawyers and staff who had been dedicated exclusively to crypto cases. Here are the key points:

The SEC moved its top crypto litigator — Jorge Tenreiro, who had overseen several major lawsuits against crypto firms — to an IT role, effectively taking him out of active crypto enforcement duties. In total, over 50 lawyers and staff members from the SEC’s crypto enforcement unit have been reassigned to other departments within the agency. Some insiders see this large-scale reshuffling as a demotion and a signal that the SEC is deliberately reducing its aggressive stance on digital asset enforcement.

These internal changes come as part of a broader policy shift under the Trump administration. The SEC is moving away from the previous approach — which relied heavily on enforcement actions — and is instead favoring a regulatory framework that encourages compliance through clear rules rather than litigation.

Upcoming changes from the SEC in 2025

For the rest of 2025, industry observers expect the SEC to move beyond its recent internal shifts and offer more concrete regulatory clarity for digital assets. Key anticipated initiatives include:

1. Finalizing the Crypto Task Force’s roadmap:

Led by Commissioner Hester Peirce, the newly formed Crypto Task Force is expected to work on a comprehensive framework that:

• Defines which crypto assets qualify as securities versus other types of assets.
• Proposes safe harbor provisions and clearer registration pathways for token offerings.
• Sets out disclosure standards that help investors understand risks without overburdening compliant companies. This effort aims to replace a reactive, enforcement-driven approach with predictable, technology-neutral rules.

2. Issuing no-action letters and updated guidance:

The SEC is likely to begin issuing no-action letters, which would allow crypto issuers and broker-dealers to verify in advance that their new products or services would not violate securities laws. Updated guidance on areas such as crypto custody, lending, staking, and exchange-traded products is also expected, helping firms navigate compliance without resorting to lengthy litigation.

3. Settling or dropping outstanding cases:

Following the internal reshuffle, the SEC appears to be shifting its enforcement priorities. There is an expectation that some of the agency’s long-running cases — such as those involving major platforms like Ripple and Coinbase — will be settled on more favorable terms or even dropped. This would reduce the uncertainty and capital costs associated with prolonged litigation.

4. Coordinating with other regulators on stablecoin and cross-border issues:

Stablecoin regulation is also on the agenda. In tandem with other federal agencies (like the CFTC and banking regulators), the SEC is expected to work toward a more coherent regulatory regime that:

• Eases capital and operational burdens for banks involved in crypto custody.
• Harmonizes US rules with international standards to support innovation while maintaining investor protection.

Together, these efforts represent a broader regulatory shift — moving from aggressive enforcement toward an environment of clearer, predictable rules. This shift should benefit the crypto industry by lowering compliance costs, encouraging innovation, and increasing market participation from traditional financial institutions.