New Administration Outlook: SEC Crypto Task Force Leader Outlines Regulatory "Journey"

On February 4, 2025, Commissioner Hester Peirce—head of the SEC's new Crypto Task Force—authored a Statement, posted on the SEC's website, titled "The Journey Begins." Her Statement analogizes from early childhood road trips to Maine to make the point that crypto regulation too is some kind of a road trip, or journey. Mincing no words, she describes the last decade of regulation as one where the commission "refused to use regulatory tools at its disposal and incessantly slammed on the enforcement brakes as it lurched along a meandering route with a destination not discernible to anyone." Not a favorable description of the journey up to now, but one that certainly suggests use of more regulatory tools and fewer enforcement actions going forward.

In outlining the work ahead, Peirce starts by mentioning the first step in a new direction (and presumably, in her view, more correct direction), which was the rescission of Staff Accounting Bulletin 121 (SAB 121). That Bulletin suggested that financial institutions should reflect client crypto assets they hold as balance sheet liabilities. This guidance was animated by concerns that there could be significant risks relating to these assets that make it appropriate to recognize them as balance sheet liabilities (encouraging institutions to also reflect in notes the nature and amount of such assets and the specific vulnerabilities they represented). SAB 122, rescinding this rule, was issued on January 23, 2025—the same day the White House issued an executive order titled "Strengthening American Leadership in Digital Financial Technology," discussed further in this previous post.

Commissioner Peirce goes on to offer many self-described "gruff" disclaimers that the work ahead of her Task Force will be arduous and time-consuming but ultimately aimed at providing space for innovation, while also protecting investors. She then outlines some specific areas that the Task Force is working on, including:

• Identifying types of crypto assets falling outside the Commission's jurisdiction, welcoming requests for no-action letters to aid that process;
• Creating a temporary "relief" provision for entities who voluntarily provide information about themselves and their offerings (a reporting obligation)—with a view toward specifically identifying those products as non-securities until "more permanent" rules or legislation can be finalized;
• Creating avenues to registration through Regulation A and crowdfunding rules;
• Considering how the special purpose broker-dealer no-action statement can work to allow greater custodying of crypto assets at broker-dealers (including specifically crypto assets that are not securities);
• Ascertaining whether crypto-lending and staking are covered by the securities laws;
• Providing guidance and reaction to proposed SRO rules to list new types of crypto exchange-traded products;
• Working with clearing agencies and transfer agents to deal with crypto assets; and
• Allowing temporary and limited cross-border experimentation with the possibility of more permanent, long-term approaches.

Commissioner Peirce's Statement ends with an invitation that may create major advocacy opportunities for interested parties. The Task Force established a new website that invites the industry to submit comments for consideration (which will be made public) or requests for in-person or virtual meetings (with an agenda that will also be made public).

As someone who worked on rule-writing around conflicts of interest in asset-backed securities—the poster child of the financial crisis—I remind you that all points of view are taken into consideration through a painstakingly methodical process. As this issue is of such vital importance to many (whether crypto pioneers or the most zealous investor protection advocates), all interested parties should make their views heard as this Task Force embarks on its journey forward.

For further analysis of the regulatory landscape under the new administration, please see our New Administration Outlook homepage.