Democratic Commissioner Criticizes SEC’s Retreat from Crypto Enforcement Under Trump Administration
Caroline Crenshaw, the U.S. Securities and Exchange Commission’s sole Democratic commissioner, has raised alarms over the agency’s shifting stance on crypto regulation, claiming it’s destabilizing the entire market oversight framework.
Speaking at the SEC Speaks event on May 19, Crenshaw described the current regulatory approach as “playing a game of regulatory Jenga”, dismantling foundational securities law through selective enforcement rollbacks and ambiguous policy statements.
“Our statements on these crypto-related issues are the equivalent of a wink and nod,” Crenshaw said, warning that the agency risks losing credibility and clarity by refusing to apply longstanding rules to crypto.
Crenshaw Criticizes “Regulation by Non-Enforcement”
Crenshaw, a vocal opponent of the SEC’s recent crypto settlements, said she was “deeply troubled” by the agency’s apparent abandonment of critical enforcement programs, especially in the wake of high-profile crypto failures like FTX.
“Those risks have not gone away,” she warned. “But the calls for serious regulatory scrutiny are a lot quieter these days.”
Crenshaw emphasized that the agency’s current trend of rolling back crypto oversight through internal staff guidance — without formal rulemaking or public comment — undermines market integrity, threatens legal precedent, and leaves the SEC vulnerable to judicial setbacks.
Republican Commissioners Defend SEC’s New Crypto Path
In stark contrast, SEC Chair Paul Atkins, appointed by President Donald Trump, praised the agency’s recent moves as overdue progress.
“Crypto markets have been languishing in SEC limbo for years,” Atkins said. “We should not be in the business of stifling innovation.”
Commissioner Hester Peirce, head of the SEC’s Crypto Task Force, echoed this sentiment, calling for a reset of crypto policy and insisting that most crypto assets do not fall under securities laws.
“Many of these crypto assets are functional,” she said, arguing that tokens may have originally been issued under investment contracts, but now trade outside the scope of securities law.
Commissioner Mark Uyeda also weighed in, stating that the SEC should “reassure the public” that regulation by enforcement would not be the future model for policymaking.
Crenshaw: SEC’s “About-Face” Erodes Credibility
Crenshaw warned that the current posture could undermine the SEC’s reputation in the courts and destabilize the regulatory landscape that has governed capital markets for decades.
“Market stability is like a Jenga tower,” she said. “Remove the wrong pieces, and the whole thing could collapse.”
She pointed to the 2022 collapse of FTX as a cautionary tale of what a “large-scale crypto crisis” can look like, stressing that the risks have not disappeared — even if the political will to address them has.
Final Thoughts: A Divided Commission in a Shifting Regulatory Era
The rift within the SEC reflects the broader debate now playing out in Washington over how aggressively crypto should be regulated. As the Trump administration’s crypto-friendly posture redefines the agency’s priorities, internal critics like Crenshaw warn of long-term consequences.
With stablecoin legislation advancing, and the SEC dropping numerous enforcement actions against crypto firms, the road ahead for U.S. crypto regulation appears wide open — but also more uncertain than ever.
