The country's top securities regulators support crypto enforcement and climate disclosure initiatives as they are expected to take a more friendly and receptive approach to businesses.
But not everyone on the Securities and Exchange Commission is in line with this change in priorities under the Trump administration.
When the SEC announced last month that it would not police Mecoins' sales, Caroline Crenshaw, the SEC's sole Democratic chief, was quickly weighted with a remarkably different opinion on these novel digital assets of often questionable value.
“This guidance is not a reasonable interpretation of existing law,” Crenshaw wrote in a statement. “I raise more questions than answers.”
After working for the SEC for over a decade, Crenshaw suddenly became a loyal opposition from his agency. This may not affect the SEC's immediate ruling, but it is a role that will help shape securities regulations in the long term.
Crenshaw's dissent over the authority of the agency to regulate Mimecoin is the first of several oppositional positions she has adopted in six weeks since Republican Mark Ueda became the acting chairman of the SEC, troubled by Weda's overall handoff approach to coordinate crypto, making his move to kill his move.
The opposite-directional policy statement issued by Ms. Crenshaw has no power in the law. However, they may help stem policy differences with colleagues, and opponents are sometimes cited by private court litigators.
“We've seen where the commission's opponents can move on to court decisions,” said Tyler Gellasch, a former SEC attorney who runs the Healthy Markets Association, an organization seeking greater securities regulations. “The job of minority committee members is to expose areas where government agencies have given a short reduction in dissent.”
Crenshaw, 42, has become the only Democratic chief in the SEC after former chairman Gary Gensler and former chairman Gary Gensler, who resigned in January, and commissioner Jaime Lizaraga. Her term, which began in 2020, could run until the end of this year. There are three Republicans on the committee when the Senate voted for Paul Atkins and President Trump was named as the SEC's permanent chairman. Five seats are open, and it is unclear whether Trump will fill it.
“We want to be the voice of common sense during this race to ease this race,” Crenshaw said in a recent interview. “Yes, companies may see some cost savings, but what is the price for investors and our market?”
Before becoming a commissioner, Crenshaw cut his teeth as an attorney for two former democratic supervisors. After graduating from Harvard, she received a law degree from the University of Minnesota. She has worked in private practice for a Washington state defense company in a securities law investigation. A Washington area native, she majors in the Army Reserve Advocacy Generals.
Until mid-January, when Trump took office, Crenshaw was a majority on the committee and was pleased to follow Jensler's lead. But that has changed now, and Weda is in favor of Trump's pledge to curb regulators.
In line with that pledge, the SEC under Ueda announced new rules on Monday. According to the new rules, decisions to issue subpoena will require a committee member to vote from 2009 onwards to terminate the 2009 and later policies that allow the executive director to take this action without committee approval. Crenshaw voted against the change in rules.
Already, Weeda has reduced the number of SEC lawyers working on crypto enforcement cases. He dismissed two notable enforcement actions filed by the SEC against the crypto trading platform, suspending the lawsuit in two other crypto cases, and shutting down at least half a dozen investigations.
In addition to trying to kill climate change disclosure rules, the SEC under Uyeda said it would cease to require brokers to report their names, addresses and date of birth on their customers to their domestic trading database. A database called the integrated audit trail is used by the SEC and other financial regulators to ferret illegal transactions in the stock market.
At a meeting sponsored by the Wall Street Journal last week, Weda said the SEC during Gensler's tenure should be “overly ambitious” and regulations should be “very systematic.”
However, critics say that a setback by the committee will weaken investors' protection and market transparency, particularly with regard to trading databases.
In a policy statement, Crenshaw said the decision to remove personally identifiable information about customers from the transaction database would “make it more difficult to understand suspicious activities, unlock events and resolve market disruptions.”
In another objection, she labeled the SEC's rejection of enforcement against Coinbase, the case of the “regulatory whip,” the country's largest crypto exchange.
There is a natural decline and flow to regulations with changes in administration. However, some are concerned that an unproactive approach to financial regulation will roll back changes made after the 2008 financial crisis.
Dennis Kelleher, chief executive of Better Markets, a nonprofit that increases transparency on Wall Street, said the SEC's guidance on Memecoins would “send a horrifying message,” leaving excessive risk open to investors.
The SEC issued hands-off guidance on regulating memocoin weeks after Trump issued Mimecoin$Trump.
In serving as an SEC opponent, Crenshaw takes pages from the playbook of her fellow Hester Perth. Perth, who is now part of the current two-seat majority on the Republican committee, has played a prominent role during the Biden administration in asserting a more comprehensive and less hostile approach to regulating the crypto industry.
Perth's tenacity in pointing out frequent policy statements paid off when he pointed out frequent policy statements that were different from Gensler, and tapped her to lead a new crypto task force that was supposed to create a regulatory framework that would protect investors without thwarting innovation.
Gerasch said Perth gave Crenshaw a “roadmap on how to become an active and shocking opponent.” Perth was extremely powerful with issues with Gensler about how to regulate cryptography, and some in the industry lovingly called her a “crypto mom.”
The push to roll back regulations in the SEC can be rushed when Atkins, the SEC committee member, takes over as chairman during the administration of former President George W. Bush. Republican parent Atkins has long opposed the big fines for businesses found to be violating securities laws and is a big supporter of the code.
But until Atkins is confirmed, Crenshaw has some leverage in dealing with his Republican colleagues. To have a quorum to vote for settlement or approval of regulations, Crenshaw must attend committee meetings. In theory, she could refuse to attend the meeting to prevent the committee from voting for measures they deemed particularly unfavourable.
For the moment, at least, that means that Weda is limited to the aggression that allows him to roll back measures adopted under Mr. Gensler.
Crenshaw wants to not only eat up policy differences, but also put strong defenses on SEC employees. Especially because the Trump administration is working to significantly reduce the federal workforce.
“The federal civil servants in this country are decent and hardworking men and women,” she said. “These civil servants deserve to be grateful for their everyday courage, but instead they meet despair and light corn. They don't deserve it.”
