What it is
The U.S. Securities and Exchange Commission (SEC) is a federal regulator founded in 1934, tasked with protecting investors, maintaining fair and orderly markets, and facilitating capital formation. It oversees stock exchanges, brokerage firms, investment advisers, and securities offerings within the United States. Under the Howey Test, a Supreme Court precedent, the SEC determines whether a crypto asset qualifies as a security. In 2025, the agency rescinded SAB 121, easing rules on crypto custody, and established a Crypto Task Force under Commissioner Hester Peirce. The SEC’s enforcement-first posture under former Chair Gary Gensler has shifted toward a rulemaking-oriented approach under current Chair Paul Atkins.
Crypto framework and stance
The SEC’s authority over crypto hinges on the 1946 Howey Test: an asset is a security if it involves an investment of money in a common enterprise with an expectation of profits derived from the efforts of others. This framework has been applied to scores of tokens, ICOs, and platforms. In 2025, the agency rescinded Staff Accounting Bulletin 121 (SAB 121), which had required banks to report custodial crypto holdings as liabilities, removing a significant barrier for institutional custody. Concurrently, the SEC launched a Crypto Task Force headed by Commissioner Hester Peirce, a long-time advocate for clearer rules. The task force aims to provide regulatory clarity through rulemaking rather than relying on ad-hoc enforcement. By 2026, the SEC’s stance is one of recalibration: it acknowledges that many crypto assets do not fit neatly into existing securities categories, and it is working to define which tokens are outside its jurisdiction, cooperating with the CFTC ↗ on dividing oversight. The agency is also engaging with Congress to design tailored legislation.
Notable actions
The SEC’s pivot is best illustrated by key events over 2024–2025. In January 2024, it approved the first spot Bitcoin exchange-traded funds (ETFs), allowing mainstream investors to gain BTC exposure through regulated vehicles. This was followed by the approval of spot Ether ETFs in May 2024, cementing ETH’s status as a non-security commodity in the SEC’s eyes. The enforcement landscape changed dramatically in 2025: the agency dropped or paused major lawsuits against crypto exchanges Coinbase, Binance, and Kraken that alleged unregistered securities offerings. The Ripple case, which had been a bellwether, was settled after a court partially ruled that XRP sales on secondary markets were not securities transactions—a blow to the SEC’s bid for wide token classification. These actions signal a strategic retreat from aggressive litigation and a focus on rulemaking to define compliance paths, reducing legal uncertainty for the industry.
Key figures
The SEC’s direction is shaped by its leadership. Chair Paul Atkins, who took office in 2025, is a known proponent of innovation-friendly regulation and has publicly favored clear rules over enforcement actions. His predecessor, Gary Gensler (2021–2025), led a crackdown on crypto, famously asserting that most tokens are securities. Commissioner Hester Peirce, heading the Crypto Task Force, has long called for a safe harbor for token projects and is often labeled “Crypto Mom” for her supportive views. The task force under her includes staff from across the agency, aiming to draft workable frameworks for token issuance and trading platforms. This leadership transition marks a significant tone shift—from adversarial to collaborative.
What it means for users and builders
For everyday investors, the SEC’s evolution brings both opportunities and caution. Spot Bitcoin and Ether ETFs offer SEC-regulated, familiar investment wrappers, potentially lowering risk. For crypto exchanges and token projects, the environment is less hostile: the paused enforcement cases suggest that platforms operating in good faith have some breathing room. However, the Howey Test still stands; any token that markets itself as an investment or relies on a centralized team’s efforts could face scrutiny. Builders should monitor the Crypto Task Force’s proposed rulemaking, which may introduce registration pathways for token offerings or define safe harbors. Custodians and banks benefit from the SAB 121 rescission, making it cheaper to offer crypto custody. DeFi remains a gray area, but the SEC’s current posture leans toward distinguishing truly decentralized protocols from centralized actors. Until rules are codified, legal risk persists.
Outlook
Under Chair Atkins, the SEC is poised to propose rulemakings that delineate securities from commodities in the crypto space, potentially collaborating with the CFTC ↗ on registration and oversight. Congressional efforts like the FIT21 bill may finally give the SEC explicit authority over digital commodity transactions while clarifying distinctions. The agency will continue to police fraud, but expect less litigation over classification unless a project clearly resembles a traditional security. The overall trajectory is toward a more permissive, framework-driven regime that balances investor protection with innovation. The SEC’s 2026 agenda likely includes finalizing token offering rules and expanding exemptive relief for certain crypto activities.