SEC’s “Crypto Road Trip” Begins after a Week of Executive Action

On January 21, 2025, Acting SEC Chairman Mark Uyeda launched the SEC’s Crypto Task Force with a mission “to [develop] a comprehensive and clear regulatory framework for crypto assets.” Acting Chairman Uyeda named Commissioner Peirce, nicknamed “crypto mom” in the digital asset industry, as Task Force lead. Commissioner Peirce then outlined priorities for the Task Force in her statement, and the Task Force moved quickly to set up a website that will host meeting logs, publicize milestones, permit public comment, and facilitate interaction and transparency with market participants. 

Following President Trump’s executive order making it the policy of the White House to support the responsible growth and use of digital assets and related technologies, the rescission of Staff Accounting Bulletin No. 121 which had been viewed as discouraging digital asset ownership, the scaling back of the previous administration’s SEC’s crypto asset enforcement unit, and SEC chair nominee Paul Atkins’s pro-crypto past, coupled with establishment of the Crypto Task Force, the SEC’s approach to digital assets is poised for significant change. 

In her statement, Commissioner Peirce makes it clear that the Task Force’s approach to crypto regulation will follow a thorough process of public engagement and reasoned rulemaking commensurate with the SEC’s processes and statutory authority. She emphasizes that the Task Force’s work will take time, as it will encompass a review of how to resolve outstanding SEC crypto litigation and stalled rule proposals in addition to establishing a new regulatory architecture. 

Commissioner Peirce included in her statement a non-exclusive list of 10 areas of focus for the Cyber Task Force, several of which address threshold issues for whether and how the SEC can regulate crypto. We highlight the following six:

1. Digital assets: securities or not? – Commissioner Peirce echoes the longstanding complaint of many proponents of cryptocurrency by saying that the SEC’s historical approach to digital assets has been “marked by legal imprecision and commercial impracticability,” leaving “market participants in limbo.” The Task Force is therefore examining different types of crypto assets to revisit and determine their status under the U.S. federal securities laws as this classification is fundamental to resolving the broader regulatory issues. 
2. Defining jurisdiction – The Task Force aims to clarify the boundaries of the SEC’s jurisdiction in the digital asset space. As a first step, the SEC is inviting requests for no-action letters, which outline specific scenarios where its staff will not recommend enforcement action. While these letters apply to individual cases, they also offer valuable insight into the SEC’s approach, helping market participants navigate compliance more effectively.
3. Temporary relief for token offers – The Task Force is considering recommending SEC action to provide temporary prospective and retroactive relief for certain coin and token offerings. Under this approach, tokens could be classified as non-securities if the issuing entity—or another responsible party—provides and updates specified disclosures while agreeing not to contest SEC jurisdiction in the event of alleged fraud in connection with the purchase and sale of the asset. Commissioner Peirce believes this would facilitate disclosure and clarify uncertainty about secondary market trading on unregistered platforms, offering a clearer path forward for existing tokens until permanent regulations or legislation are in place. 
4. Offering reform – The Task Force is exploring working with the SEC staff to recommend to the Commission modifications to existing paths to registration, including Regulation A and Regulation Crowdfunding, the registration exemptions that most digital assets have relied on, to create a more viable pathway to register token offerings with the SEC.
5. Crypto-lending and staking – The Task Force aims to clarify the regulatory status of crypto-lending and staking programs under the U.S. federal securities laws. If these activities fall within the SEC’s jurisdiction, the Task Force will work to establish clear guidelines on how they can be structured in compliance with existing regulations, providing much-needed certainty for market participants.
6. Cross-border sandbox – The Task Force is exploring international regulatory cooperation by facilitating cross-border experimentation in crypto on a limited and temporary basis, with the potential for long-term solutions. In the SEC’s final area of focus, the European Union’s Markets in Crypto-Assets Regulation (“MiCA”) framework may provide a reference point. Our colleagues have previously written about the implications of MiCA here, and please also listen to our previous Digital Transformation: The Influencers podcast episode, featuring Commissioner Peirce herself, in which we discuss Commissioner Peirce’s views at the time on facilitating cross-border innovation and a proposed U.S.-UK crypto regulatory sandbox here.

1. “Rules-over-enforcement” approach

Under the previous administration, the SEC employed a “regulation-by-enforcement” approach, establishing regulatory precedent through numerous enforcement and litigation actions. Digital asset proponents criticized the SEC both for this and for what many perceived as a lack of clarity in its classification of which digital assets constituted an “investment contract” under the Howey Test, and thereby a “security” under the U.S. federal securities laws, and which did not. Commissioner Peirce and others argue that this ambiguity and regulation-by-enforcement contributed to regulatory uncertainty, unfair “gotcha” enforcement, and industry paralysis. The clear and unambiguous message in Commissioner Peirce’s position paper is that the SEC is replacing enforcement-driven “rule” making with industry input, targeted relief, and more supportive policies aimed at fostering an investor market in digital assets. This may already be bearing out, as the SEC and Binance on February 10, 2025 filed a joint motion to stay a lawsuit that the SEC had previously filed against the crypto exchange and its founder, noting in the motion that “the work of [the Crypto Task Force] may impact and facilitate the potential resolution of this case.”

However, despite expectations of deregulation and reduced compliance burdens among some in the digital asset industry, the Task Force will seek to establish clear rules of the road for digital assets, with Commissioner Peirce identifying rules that protect investors and market integrity as a key reason for the “robust, efficient, and effective” nature of the U.S. capital markets. Antifraud protection, rather than enforcement actions against unregistered offerings (as we discuss below), will be a primary focus of the Task Force, as we expect it to be for the Republican-led SEC as a whole. 

Commissioner Peirce declared that the Task Force’s approach will be “orderly, practical, and legally defensible,” indicating that the Task Force will work within the Commission’s legislated powers and processes to produce a framework akin to that provided for equity, debt, and other instruments by existing SEC regulations and guidance. While the Task Force’s aim is to provide greater certainty for market participants, Commissioner Peirce’s statement makes clear that new regulation, when it arrives, “will impose costs and other compliance burdens that some may find irritating” and the SEC will not hesitate to resort to enforcement “when necessary.”

2. Expanded exemptions & pathway to registration 

The historical SEC position that most digital assets qualify as securities, coupled with the impracticability of digital asset issuers registering the offerings of such assets with the SEC, has meant that most digital asset issuers that have tried to comply with the U.S. federal securities laws have relied on exemptions from registration to facilitate U.S. capital raising. However, these exemptions come with notable size and process limitations. For example:

• Regulation D allows issuers to raise unlimited capital only from accredited investors with general solicitation, provided they take reasonable steps to verify investors’ accredited status. 
• Regulation A allows issuers to raise up to $75 million in a 12-month period from both accredited and non-accredited investors. This exemption requires filing Form 1-A with the SEC and obtaining qualification, which involves more rigorous disclosure and ongoing reporting compared to other exemptions. 
• Regulation crowdfunding allows issuers to raise up to $5 million in a 12-month period from both accredited and non-accredited investors. 

Based on Commissioner Peirce’s statement, we expect the Task Force’s proposals in this area may take two primary forms: (i) establishing a bespoke regime that enables the registration of digital asset offerings with the SEC and (ii) modifying existing exemptions from registration to facilitate larger offering sizes subject to fewer restrictions. This aligns with proposals made by other Republicans to facilitate greater capital formation more generally through amendments to the small offering exemptions, or by offering a clearer path to registration for non-exempt offerings. If the Task Force is successful, this will provide digital asset issuers with greater regulatory certainty and expanded pathways for compliant capital raising in the U.S. market. In parallel with the SEC’s work in this area and its offer of exemptive relief discussed below, we expect a significant reduction in SEC enforcement actions related to unregistered token offerings as the SEC refines its approach. 

3. Bridging to regulatory clarity through no-action and exemptive relief

 While many in the digital asset industry are keen to move forward with asset offerings on the crypto-friendly wave ushered in by the new administration, Commissioner Peirce was clear in her statement that it will take time to clarify the specifics of the SEC’s position and to develop and implement the regulatory infrastructure necessary to enable greater capital formation in the digital asset space. 

 However, as Commissioner Peirce highlighted, the SEC has tools at its disposal to enable and permit digital asset offerings before final rulemaking is promulgated. Commissioner Peirce has welcomed the submission of no-action requests to enable issuers to understand the SEC’s evolving thinking in the space and has committed to using the Commission’s exemptive authority where appropriate. In one of the most significant parts of her statement, Commissioner Peirce highlights that the Task Force is considering recommending that the Commission use its authority to provide targeted relief for digital asset offerings where issuers (or other responsible entities) make disclosure commitments and agreement not to contest the SEC’s jurisdiction in the event of fraud in connection with the offering. Should this approach be recommended and adopted, it would provide a novel way for offerings to begin proceeding outside of the typical offering exemptions.