SEC and Crypto Regulation: Between Stability and Innovation

Jakarta, Pintu News – During the “SEC Speaks” conference on May 19, 2025, Commissioner Caroline Crenshaw expressed her concerns about the United States Securities and Exchange Commission’s (SEC) latest policy direction regarding cryptocurrency regulation. She described the SEC’s new approach as a game of “regulatory Jenga” that risks undermining the foundations of financial markets that have been built over decades.

Regulatory Easing and Market Risk

Crenshaw highlighted that the SEC has begun to remove or relax a number of important rules without going through an adequate process of analysis and public consultation. He emphasized that these actions could weaken the regulatory structure that has been maintaining financial market stability. According to him, this approach ignores the lessons of the 2008 financial crisis, where deregulation contributed to the crisis.

One example cited was the SEC’s decision to settle the case with Ripple (XRP) without strict enforcement. Crenshaw considers this a form of “regulation by not enforcing the law”, which could create legal uncertainty and damage the SEC’s credibility in the eyes of the public and the courts.

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Impact on Law Enforcement and Resources

Crenshaw also expressed concern over staff attrition at the SEC, where approximately 15% of employees have left the agency due to retirement, resignation, or fear of dismissal. This loss of human resources could hamper the SEC’s ability to oversee and enforce laws in increasingly complex markets, including the crypto market.

He added that this reduction comes at a time of increasing market complexity and volatility, and the emergence of new risks that are not yet fully understood or regulated. Crenshaw warned that failure to identify and address these risks could lead to substantial losses for retail investors and small businesses.

Different Views within the SEC

Crenshaw’s views differ from his Republican counterparts at the SEC. SEC Chairman, Paul Atkins, stated that the crypto market has been in regulatory limbo for too long and that the SEC should be encouraging innovation, not stifling it. Commissioner Hester Peirce also stated that most crypto assets do not currently fall under the category of securities and therefore do not need to be regulated by the SEC.

These differing views reflect the broader debate on how crypto should be regulated. While some are pushing for deregulation to support innovation, others, like Crenshaw, emphasize the importance of maintaining market integrity and protecting investors from risks that are not yet fully understood.

Implications for the Future of Crypto Regulation

Crenshaw’s statement suggests that the future of crypto regulation in the United States remains uncertain. With differing views among policymakers, the direction of regulation will largely depend on the evolving political and economic dynamics. Investors and market participants will need to monitor these developments closely to adjust their strategies according to possible regulatory changes.

In a global context, the United States’ approach to crypto regulation will also influence policies in other countries. As one of the largest financial markets in the world, the SEC’s decision can be a reference for regulators in other countries in formulating their policies towards crypto and other digital assets.

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Reference:

• Cointelegraph. SEC’s Crenshaw says agency playing ‘regulatory Jenga’ with crypto. Accessed May 21, 2025.
• Featured Image: Zerocap