The new leadership of the US SEC is rumored to reform cryptocurrency policy and may freeze some lawsuits that do not involve fraud

According to a report by Reuters citing three people familiar with the matter, senior Republican officials at the U.S. Securities and Exchange Commission (SEC) are preparing to launch a comprehensive overhaul of the agency's cryptocurrency policy, which could begin as early as next week, after Donald Trump's inauguration as president. Two of the sources said that SEC Commissioners Hester Peirce and Mark Uyeda are considering measures that include initiating a process that will eventually produce guidance or rules clearly defining the circumstances under which the agency will deem a particular cryptocurrency a security, as well as reviewing some pending court cases involving cryptocurrency enforcement. Paul Atkins, a former SEC commissioner, is Trump's nominee for the new SEC chairman, and it is widely expected that he will end the crackdown on cryptocurrencies initiated by the current chairman, Gary Gensler. Gensler has stated that he will step down on January 20th when Trump is sworn in, but it is unclear when the Senate will confirm Atkins' appointment. The sources revealed that Peirce and Uyeda are poised to gain a majority of the politically appointed seats on the SEC next week and are prepared to push for reforms during this period. The two commissioners, like Atkins, are reported to be supporters of cryptocurrencies and have criticized Gensler's tough stance on the industry, and have previously proposed more crypto-friendly alternatives. According to SEC data, the SEC under Gensler's leadership has launched at least 83 enforcement actions related to cryptocurrencies, prosecuting several well-known companies, including Coinbase and Kraken, due to concerns about fraud and market manipulation. The two sources said that in the first few days of the new administration, the SEC is expected to begin reviewing these court cases, and some lawsuits that do not involve fraud allegations may be frozen, with some potentially being withdrawn. The sources said Peirce and Uyeda are expected to initiate the early stages of the rulemaking process, potentially calling for feedback from the industry and the public. Seward & Kissel partner and former SEC lawyer Philip Moustakis said that withdrawing dozens of enforcement actions would be unprecedented and could set a risky precedent of politicizing the enforcement process. Other lawyers said that in some cases, the courts may object. Davis Polk partner and former SEC enforcement division member Robert Cohen said one option for the SEC is to reopen settlement negotiations.