SEC crypto enforcement moves from courtroom to filing

Lawsuits die while rules grow

SEC crypto enforcement actions fell from 33 in fiscal 2024 to 13 in fiscal 2025, representing a 60 percent drop. Paul Atkins, sworn in as chairman in April 2025, dismissed marquee cases including Coinbase in February 2025 and Binance in May 2025. The agency abandoned the registration-based enforcement strategy used by Gary Gensler to focus on fraud, such as the Terraform Labs case which produced a $4.47 billion settlement after a 2024 jury verdict in the Southern District of New York. The Cyber and Emerging Technologies Unit, comprising 30 specialists, replaced the previous crypto unit in February 2025 to deploy resources toward fraud instead of registration theory. This shift follows a headcount reduction where the agency staff fell 15 percent from its 2024 peak. The Commission also dropped its appeals against Ripple in August 2025, leaving only the $125 million penalty for institutional sales. The agency’s total enforcement actions for fiscal 2025 reached 456, but the crypto-specific collapse is sharp.

The proposed offering framework

The failure of the CLARITY Act on September 15, 2026, forced the SEC to use its own authority to define digital asset boundaries. Regulation Crypto Assets, proposed on August 18, 2026, creates specific exemptions for issuers to bypass traditional registration. This proposal includes a mechanism where a token’s investment contract ends once the issuer finishes its essential managerial efforts. This rule preempts state registration requirements for certain transactions, which effectively replaces the regulatory authority that the Senate could not establish through the failed CLARITY Act legislation. You should track the October 20 deadline for public comments on these rules.

The Startup Exemption allows an issuer to raise $5 million over four years by filing a notice on Form NOR. This exemption is for non-accredited investors and requires no SEC qualification. The larger Fundraising Exemption requires a US nexus, including having a majority of officers as US residents and 50 percent of assets in the US. Tier 2 offerings require audited financial statements under US GAAP or PCAOB standards, while non-accredited investors face a 10 percent investment cap on their total annual income or net worth. Rule 103 requires issuers to provide 10 specific topics of disclosure, including mint-and-burn mechanics and source code links. This disclosure is consistent with all public whitepapers and social media accounts.

A commission with no room for error

Hester Peirce left the Commission on October 2, 2026, leaving only two members: Paul Atkins and Mark Uyeda. The two-person roster is without slack, meaning Atkins and Uyeda must agree on every single decision to prevent agency paralysis. A rule produced by two aligned appointees is not as durable as a federal statute because the June 2026 Supreme Court decision in Trump v. Slaughter allows the president to remove independent agency heads at will. The proposed Rule 400 provides a safe harbor for tokens that file a transition report on Form TR. This allows a token to graduate from securities status after the issuer satisfies the conditions of the investment contract. This safe harbor is available to issuers that never used the new exemptions. The September 17, 2026, Innovation Exemption also allows for the trading of tokenized NMS stocks in a permissioned environment. The agency’s headcount fell from 5,000 employees and 2,000 contractors in 2024 to 4,200 employees and 1,700 contractors. Will the two remaining commissioners reach a consensus on the final rule text?