SEC Tightens Crypto Investigation Oversight
SEC Requires Top-Level Approval for Crypto Investigations
The Securities and Exchange Commission (SEC) has implemented a new policy requiring its lawyers to obtain top-level approval before initiating formal investigations. This significant change affects how the SEC handles investigations, particularly within the cryptocurrency sector. According to sources speaking to Reuters, this means enforcement staff now need permission from politically appointed commissioners to issue subpoenas, demand documents, and compel testimony.
Key Changes and Implications
- Increased Oversight: Previously, SEC staff could independently launch formal investigations, although commissioners maintained oversight. Now, commissioner approval is mandatory.
- Potential Delays: This new process could slow down investigations and potentially delay actions against fraudulent activities.
- Reduced "Rogue Attacks": Proponents argue the change prevents hasty investigations lacking substantial evidence.
This policy shift follows leadership changes at the SEC, including the departure of former Chair Gary Gensler. Mark Uyeda, appointed Acting Chair, leads a commission with three commissioners: Uyeda, Hester Peirce, and Caroline Crenshaw. The commission's composition plays a vital role in the direction and enforcement of these policies.
Tyler Warner, an NFT market analyst, suggests the new system could curb "rogue attacks," resulting in more discerning investigations. However, critics like Marc Fagel, a retired SEC enforcement attorney, express concern that legitimate fraud cases might be overlooked or delayed, hindering investor protection.
Impact on the Crypto Industry
The SEC’s increased regulatory scrutiny under Gensler’s leadership, focusing on alleged fraud and securities law violations at major crypto exchanges, sparked controversy. While Gensler defended the SEC’s role in safeguarding investors, critics argued his approach was overly broad and might stifle innovation. This new policy adds another layer to this ongoing debate.
Codeum understands the complexities of navigating the regulatory landscape in the blockchain industry. We offer comprehensive services to mitigate risks, including smart contract audits, KYC verification, custom smart contract and DApp development, tokenomics and security consultation, and partnerships with launchpads and crypto agencies. Contact us to learn how we can help your project thrive in this evolving regulatory environment.