US Congressman Claims SEC Has Abandoned Crypto Enforcement Role
Congressman Stephen Lynch expressed alarm over the SEC's trajectory during the Trump administration, pointing to abandoned probes and enforcement measures against cryptocurrency firms.
Contrasting perspectives regarding how regulatory authorities should adapt to technological advancement were displayed during a Thursday session of a US House panel that scrutinized various methodologies for digital asset oversight at the Securities and Exchange Commission (SEC).
One particular perspective presented during the House Financial Services Committee's Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence hearing came from ranking member Stephen Lynch, the Massachusetts Representative, who indicated he "wholly embraced" the concept that cutting-edge technology has potential for "tremendous good," while simultaneously raising alarms about "recent regulatory developments" occurring within the United States.
"Under the Trump administration [...] the SEC has dismantled several of the teams that are responsible for managing the incidents of scams and frauds, the White House has dismantled FinHub, which is the dedicated office that built the agency's technical expertise on digital assets and fintech," said Lynch, adding:
"Related to crypto, there's no cop on the beat. The SEC has dropped most of the cases that they've had against firms that had been charged with misconduct."
Lynch's comments referenced the SEC's decision under President Donald Trump to abandon investigations or enforcement proceedings against multiple cryptocurrency firms such as Ripple Labs and Coinbase, certain executives of which maintain close relationships with the current administration. Trump selected Paul Atkins to lead the SEC following the exit of previous chair Gary Gensler in January 2025.
Representative Bryan Steil, serving as the subcommittee's chairman, raised questions about whether regulatory bodies were "prepared to meet the moment" regarding technologies such as digital assets. He further stated that Congress bore responsibility for establishing clarity and removing "fragmentation and uncertainty," making reference to the cryptocurrency market structure legislation currently advancing through the Senate.
Regulators are coordinating on crypto in the absence of market structure
Earlier this month, the SEC and Commodity Futures Trading Commission (CFTC) signed a memorandum of understanding as part of measures to coordinate oversight of financial markets, including digital assets. Days later, the SEC issued an interpretative notice on how it intended to treat crypto assets under federal securities laws.
SEC Chair Paul Atkins said that the commission's approach would represent a "bridge" to clarify crypto regulation with Congress stalled on the passage of the CLARITY Act, a bill to establish a market structure framework for digital assets. The legislation is expected to give the CFTC more authority in overseeing cryptocurrencies.