Advocacy group urges SEC rethink crypto probes and lawsuits from ‘day one’

A crypto advocacy group has called for the United States Securities and Exchange Commission to initiate an immediate review of all existing crypto-related investigations, Wells notices, and ongoing lawsuits from “day one” of the new Trump administration. 

The Digital Chamber’s Token Alliance, which lists Trump’s nominee for SEC Chair Paul Atkins as an advisory board member, said the new administration will give an opportunity for the SEC to reset its “historically troubled relationship” with the digital asset industry. 

“We need to foster a culture of mutual trust – where the digital asset industry can have confidence in the SEC’s intentions, and the SEC can recognize that most digital asset participants are striving to operate responsibly,” it said in a Dec. 18 statement.

The SEC is currently still engaged in legal battles with industry heavyweights, including Binance, Coinbase, Consensys and Ripple. It has also sent Wells notices against the likes of Uniswap and Immutable, the outcomes of which could have major implications for tokens and the industry. 

Ending “policy” of regulation by enforcement

The recommendation to review all existing investigations forms just one part of a long list of proposed priorities for the SEC during the first 90 days of the new administration. 

It also calls for the SEC to seek stays for ongoing litigation cases that don’t involve actual fraud, investor loss or risk of imminent harm, which would allow time to finalize the Commission’s approach. 

Another priority for the SEC is to rescind the 2019 framework on how the Howey test’s investment contract prong applies to digital assets and for the SEC to formally declare that it no longer refers to the Hinman speech to conduct such analyses.

The speech, by William Hinman, former SEC Director in the Division of Corporate Finance, has improperly created a winner and loser dynamic, The Digital Chamber said.

The Digital Chamber also wants the SEC’s Staff Accounting Bulletin 121 (SAB 121) rule to be rescinded.

SAB 121 would mandate SEC-reporting entities that custody cryptocurrencies record those holdings as liabilities on their balance sheets.

The Digital Chambers said such a rule would be burdensome on market participants, while House Representative Wiley Nickel thinks it could push US investors offshore to “riskier” custodial solutions.

A SAB 121 repeal bill received bipartisan support in the House and Senate before being vetoed by President Joe Biden.

The new SEC will also consider whether it should withdraw from the proposed Rule 3b-16, which proposed to expand the definition of “exchange” to include decentralized finance protocols, among many others. 

Related: SEC lists crypto as an examination priority in 2025

Gensler, largely viewed as the orchestrator behind the SEC’s regulation by enforcement approach, is set to step down on Jan. 20 and is tipped to be replaced by Paul Atkins, who previously served as an SEC commissioner from 2002 to 2008.

The proposal from The Digital Chamber could hold some weight, as Atkins serves as an advisory board member of The Digital Chamber.

The Digital Chamber said that members of the Token Alliance leadership committee also met with SEC Commissioners Hester Peirce and Mark Uyeda to present the 2025 digital asset policy priorities. 

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