Since the beginning of 2025, movements made by the Securities and Exchange Commission (SEC) have signalled the adoption of a new regulatory relationship with cryptocurrency firms, marking a change from its previous stance. But what does the Commission’s regulatory “uno reverse” mean for future – and current – crypto regulation?
How it started
Former SEC Chair Gary Gensler presided over a period that saw several large cryptocurrency exchanges, including Binance and Coinbase, taken to court by the regulator for a range of perceived noncompliance, including failures to register under securities laws. Gensler was not shy in stating his belief that the SEC and other regulators should treat crypto as they did any other asset class when it came to oversight and enforcement:
“This is an asset class that belongs inside public policy frameworks of looking after investors, guarding against illicit activity, thinking about how to facilitate capital formation. It’s just getting too large to leave it off the grid.”
Indeed, Gensler went so far as to say that the entire crypto industry was “built on non-compliance.” Unsurprisingly, Gensler’s rhetoric and the SEC’s willingness to litigate won him few fans in the crypto community, with Coinbase’s Chief Legal Officer Paul Grewal stating:
“The SEC’s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness, and companies like Coinbase that have a demonstrated commitment to compliance. The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation.”
Gensler pushed back against firms that criticized the SEC for not providing clarity on how they could remain compliant by reiterating that “the rules have already been published.”
How it’s going
Changes at the top of the SEC have resulted in noticeably fast-paced shifts in its stance on crypto, especially when it comes to enforcement. The Commission has quickly closed or paused several investigations into crypto firms, including a suit against Binance and its lawsuit against Coinbase.
This altered course has been hailed by crypto industry figures, with Blockchain Association CEO Kristen Smith remarking that:
“The era of regulation by enforcement — and intimidation — is coming to an end.”
In court filings, the SEC has pointed to the formation of its new crypto task force as the rationale behind the pausing of legal actions, as this “may impact and facilitate the potential resolution” of cases.
Task (en)force
The COn January 21, 2025, acting-chair Mark Uyeda announced the formation of a dedicated crypto task force, helmed by commissioner Hester Peirce. Uyeda set out that the task force’s aim is:
“Developing a comprehensive and clear regulatory framework for crypto assets.”
Echoing the sentiments of Kirsten Smith and other crypto market participants, the press release announcing the tasks force’s formation said:
“To date, the SEC has relied primarily on enforcement actions to regulate crypto retroactively and reactively, often adopting novel and untested legal interpretations along the way. Clarity regarding who must register, and practical solutions for those seeking to register, have been elusive. The result has been confusion about what is legal, which creates an environment hostile to innovation and conducive to fraud.”
As a result, the task force will work to “draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously.”
However, there are dissenting voices within the SEC. Commissioner Caroline Crenshaw raised concerns about the dismissal of cases, stating that market participants should not be able to evade current laws on the basis of future recommendations the task force may make:
“Far from clarity, today’s action creates more uncertainty. What exactly is the law as it applies to crypto assets? … Are we poised to give special treatment to crypto assets over traditional assets, or even other emerging assets?”
Playing her own “uno reverse” card, Crenshaw described the SEC’s recent movements as amounting to “regulation by non-enforcement.”
The known knowns
While the SEC’s new stance may see some firms breathe a sigh of relief, there are other regulatory areas – and regulators – that crypto firms need to be wary of, not least when it comes to marketing and communications compliance.
In November 2022, the Financial Industry Regulatory Authority (FINRA) issued a request for data from firms relating to “all retail communications that were distributed or made available by the firm … that refer to, relate to, or concern a crypto asset”.
The scope of this request included providing information on a “firm’s written supervisory procedures concerning the review, approval, recordkeeping and dissemination of Communications” and “any compliance policies, manuals, training materials, compliance bulletins, and any other written guidance” relevant to the communications in the given period. This suggests that FINRA was looking to ensure that crypto-related communications were being included in firm’s overall communications monitoring and recordkeeping workflows.
Through 2024, FINRA ran a review of the “marketing material, blog posts, and other publicly distributed information” of member firms that “actively communicate with retail customers concerning cryptoassets and cryptoasset-related services”. This review identified “potential violations in 70% of the broker-dealer’s communications about crypto,” with those violations related to FINRA rule 2210, which requires that firms avoid issuing materials making “claims that are false, exaggerated, promissory, unwarranted, or misleading.”
Crypto firms will also need to ensure their marketing efforts align with the SEC’s own Marketing Rule. With the Rule “prohibiting any false or misleading statements in advertisements,” we have seen the SEC take action against firms making use of “hypothetical performance.” While crypto is not specifically cited in the Rule, it’s broad classification of advertising products includes “complex or high-cost investments” and “unconventional strategies,” which, combined with the SEC’s goal of investor protection, suggests crypto advertisements would be covered.
Crypto clarity or crypto confusion?
Regardless of individual attitudes towards crypto products, they are now a fixture of the finance landscape, and regulatory rules must provide firms with enough guidance to ensure they can remain compliant. While firms might not have 100% clarity on the SEC’s new crypto stance, they must still understand that crypto exchanges are not exempt from expectations set out by other clear-cut regulatory rules, including responsibilities around recordkeeping, compliant communications, and marketing.
The SEC has begun to set out a road ahead, including scheduling roundtables to discuss areas of interest, and other regulators like the Office of the Comptroller of the Currency (OCC) are also rallying. The OCC rescinded a previous advisory around what crypto-related activities are permissible for the federal banking system, with Acting Comptroller of the Currency Rodney E. Hood saying the new advisory will “reduce the burden on banks to engage in crypto-related activities and ensure that these bank activities are treated consistently by the OCC, regardless of the underlying technology.” Regulated banks are no longer required to “receive supervisory nonobjection and demonstrate that they have adequate controls in place before they can engage in these cryptocurrency activities.”
Though currently, there are more questions than answers around the future of crypto regulation, the SEC seems to be engaging in an effort to establish a focused rules, and may well be reverting to the words of former Chair Gensler (if not his views on crypto and enforcement) – “it takes time to do things by the book.”
