While the Securities and Exchange Commission once leaned heavily on enforcement to police crypto markets, recent leadership decisions signal a deliberate pivot toward rulemaking designed to integrate digital assets into the existing securities framework, clarifying custody, issuance, and trading standards for market participants. The agency dissolved its former crypto enforcement unit in Q2 2025 and replaced it with a reconstituted Crypto Task Force, an institutional reorientation that accompanies dismissal of nearly all pending enforcement cases initiated under the prior administration. That sequence of actions, coupled with the rescission of prior guidance that constrained custody practices, marks a deliberate move away from primarily punitive measures toward structured regulatory design intended to enable innovation while preserving investor protections. The SEC’s Project Crypto Initiative, launched July 31, 2025, frames this shift as a sweeping modernization of securities laws for on-chain markets, employing formal notice-and-comment rulemaking alongside interpretive and exemptive tools. This new approach also acknowledges the complex global regulatory challenges that cryptocurrencies like Kaspa face, highlighting the need for clearer policies.
Leadership under the Chair and a Commissioner who has championed differentiated treatment for certain digital assets has emphasized delineating securities from non-securities as a central objective, seeking clarity that market participants have long requested. The initiative signals explicit intent to permit tokenized securities to circulate within a regulated ecosystem, subject to defined market-integrity conditions aimed at preventing fraud and manipulation. Custody standards and institutional engagement are core components of the proposed framework. Formal rule proposals on crypto custody are forthcoming, and withdrawn prohibitions on special-purpose broker-dealer activities reopen potential pathways for large institutions to provide services with appropriate safeguards. Staff are exploring exemptions and relief mechanisms that would reconcile Investment Advisers Act and Investment Company Act obligations with crypto operational realities, while broker-dealer net capital and customer protection rules are being evaluated for adaptation to tokenized assets and on-ledger settlement. The task force also contemplates conditional exemptions to allow distributed ledger technology for issuing, trading, and settling securities, and transfer agent modernization that explicitly accounts for DLT. Coordination with Congress, the CFTC, banking regulators, Treasury, and the IRS underscores the multi-agency dimension of change, though statutory uncertainties and implementation details will determine how rapidly market participants can rely on the new architecture. A new Crypto Task Force replaces the prior enforcement unit, signaling a shift toward structured rulemaking and oversight that balances innovation with risk mitigation structured rulemaking. An additional focus is the Agenda’s explicit prioritization of crypto-focused rulemaking to clarify custody, issuance, and trading across markets.
