US SEC's Crenshaw takes aim at crypto in final weeks at the agency

SEC Commissioner Caroline Crenshaw, expected to leave the agency in less than a month, used one of her final public speaking engagements to address the regulator’s response to digital assets.

Speaking at a Brookings Institution event on Thursday, Crenshaw said standards at the SEC had “eroded” in the last year, with “markets [starting] to look like casinos,” and “chaos” as the agency dismissed many years-long enforcement cases, reduced civil penalties and filed fewer actions overall.

The commissioner, expected to depart in January after her term officially ended in June 2024, also criticized many crypto users and the agency’s response to the markets.

“People invest in crypto because they see some others getting rich overnight,” said Crenshaw. “Less visible are the more common stories of people losing their shirts. One thing that consistently puzzles me about crypto is what are cryptocurrency prices based on? Many, but not all, crypto purchasers are not trading based on economic fundamentals.”

She added:

“I think it’s safe to say [crypto purchasers are] speculating, reacting to hysteria from promoters, feeding a desire to gamble, wash trading to push up prices, or, as one Nobel laureate has posited, ‘betting on the popularity of the politicians who support or stand to benefit from the success of crypto.’”

In contrast to Crenshaw’s remarks, SEC Chair Paul Atkins, Commissioner Hester Peirce and Commissioner Mark Uyeda have all publicly expressed their support for the agency’s approach to digital assets and the Trump administration’s direction of policy.

Peirce and Atkins spoke at a Blockchain Association Policy Summit this week to discuss crypto regulation and a path forward on market structure under consideration in the Senate.

Related: Crypto industry fears ‘vehemently anti crypto’ Caroline Crenshaw SEC vote

During the Thursday event’s question-and-answer session, Crenshaw expanded on her views of crypto, stating that it was a “tiny piece of the market,” and suggested that the SEC focus on other regulatory concerns. In addition, she expressed concern that the agency was heading toward giving crypto companies an exception from policies that applied to traditional finance.

“I do worry that as the crypto rules are perhaps implemented, or perhaps we just put out more guidance [...] where we say they are not securities, where we loosen the basic fundamentals of the securities laws so that they can operate in our system, but without any of the guardrails that we have in place. I do worry that that can lead to more significant market contagion,” said Crenshaw.

The final throes of bipartisan financial regulators under Trump?

The departure of Crenshaw would leave the SEC with three Republican commissioners, two of whom were nominated by US President Donald Trump. As of Thursday, Trump had not made any announcements signaling that he ever planned to nominate another Democrat to the SEC, and Crenshaw said the agency’s staff had been reduced by about 20% in the last year.

The Commodity Futures Trading Commission also faces a dearth of leadership, with many commissioners leaving the agency in 2025. As of December, acting Chair Caroline Pham was the sole remaining CFTC commissioner and a Republican. However, the US Senate is soon expected to vote on Trump’s nominee, Michael Selig, to chair the agency after Pham.

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