The Securities and Exchange Commission announced today the creation of a new Cyber and Emerging Technologies Unit (CETU), replacing the agency’s Crypto Assets and Cyber Unit in a move that signals a fundamental shift in how the federal government will approach cryptocurrency enforcement going forward.
The reorganization, announced February 20, comes just weeks into the Trump administration’s tenure and reflects the new leadership’s promise to move away from what the crypto industry called “regulation by enforcement” toward a more balanced approach focused on protecting investors from fraud while allowing legitimate innovation to proceed.
A Smaller, Refocused Team
CETU will be comprised of approximately 30 fraud specialists and attorneys drawn from various SEC offices—a notable reduction from the roughly 50 enforcement personnel who staffed the Crypto Assets and Cyber Unit under the previous administration.
The new unit will be led by Laura D’Allaird, who previously served as co-chief of the Crypto Assets and Cyber Unit. Her appointment provides continuity while the unit’s mission undergoes significant revision.
According to the SEC’s announcement, CETU will prioritize combatting cyber-related misconduct and protecting retail investors from bad actors in the emerging technologies space, with specific focus areas including:
Fraud using emerging technologies: Cases involving artificial intelligence, machine learning, or other new technologies deployed to defraud investors
Social media and dark web fraud: Scams perpetrated through social platforms, fake websites, or dark web channels that target retail investors
Cybersecurity disclosures: False or misleading statements by public companies about their cybersecurity posture or data breaches
Customer information protection: Violations involving the safeguarding of sensitive investor data
Cyber intrusions and hacking: Cases involving unauthorized access to systems or theft of digital assets
The emphasis on fraud represents a deliberate narrowing from the previous unit’s broader mandate, which included pursuing registration violations and technical compliance issues that the crypto industry argued stretched the SEC’s authority beyond what Congress intended.
What Changed: From 50 to 30
The reduction from 50 to 30 enforcement personnel reflects more than simple downsizing—it signals a fundamental reorientation of SEC priorities under Acting Chairman Mark T. Uyeda’s leadership.
The Crypto Assets and Cyber Unit, which had been expanded to 50 positions in May 2022 under then-Chair Gary Gensler, brought more than 80 enforcement actions related to crypto assets and generated over $2 billion in monetary relief. However, many of these cases targeted companies for alleged registration violations rather than fraud, creating what industry participants described as a hostile regulatory environment that pushed innovation overseas.
The new 30-person CETU represents a more targeted approach focused specifically on fraud and investor protection, leaving registration and compliance questions to be addressed through the separate Crypto Task Force led by Commissioner Hester Peirce.
Acting Chairman Uyeda emphasized in the announcement that CETU will “complement” the work of the Crypto Task Force, suggesting a division of labor where the task force develops clear regulatory frameworks while enforcement focuses on bad actors rather than technical violations by good-faith market participants.
Complementing the Crypto Task Force
The creation of CETU represents the second major crypto-related organizational announcement from the SEC in recent weeks, following the January 21 formation of Commissioner Hester Peirce’s Crypto Task Force.
That task force is charged with developing “a comprehensive and clear regulatory framework for crypto assets”—work that Commissioner Peirce acknowledged on February 4 “will take time” given the complexity of distinguishing securities from commodities, creating viable registration paths, and resolving numerous pending enforcement cases.
The dual-track approach—task force for regulation, CETU for fraud enforcement—aims to address a longstanding industry complaint that the SEC under previous leadership failed to provide clear rules while simultaneously bringing enforcement actions for alleged rule violations.
“The formation of CETU under Laura D’Allaird’s exceptional leadership will complement the efforts of the Commission’s recently created Crypto Task Force,” Acting Chairman Uyeda stated in today’s announcement, signaling coordination between the two initiatives.
Industry Immediately Feels the Impact
The practical implications of the SEC’s strategic shift became apparent within 24 hours of the CETU announcement, as multiple high-profile crypto companies received news that investigations into their operations were being closed without enforcement action.
On February 21—just one day after the CETU announcement—OpenSea revealed that the SEC had informed the NFT marketplace it was closing its investigation without filing charges. The company had received a Wells Notice last August indicating the SEC staff believed OpenSea’s platform facilitated trading of unregistered securities, prompting widespread concern that NFT marketplaces would face the same aggressive enforcement approach applied to cryptocurrency exchanges.
OpenSea CEO Devin Finzer welcomed the news, stating the company was “grateful” for the decision and emphasizing OpenSea’s commitment to working with regulators “to forge a path forward for NFTs and digital ownership.”
Also on February 21, Coinbase announced that the SEC had agreed in principle to dismiss its enforcement action against the publicly-traded cryptocurrency exchange. Chief Legal Officer Paul Grewal shared the news on social media, calling it “good news for Coinbase, good news for the industry, and good news for the country.”
The SEC formally announced the Coinbase dismissal on February 27, filing a joint stipulation to dismiss the case that had alleged Coinbase operated as an unregistered securities exchange, broker, and clearing agency.
By February 24, the wave of closed investigations had expanded to include Robinhood, which announced the SEC had closed its investigation into the company’s crypto business without taking action. Robinhood had received a Wells Notice in May 2024 related to its cryptocurrency listings and custody services.
The pattern continued with Uniswap Labs announcing February 25 that the SEC was closing its investigation without enforcement action, sparing the decentralized exchange protocol from what would have been a landmark case on whether DeFi platforms constitute securities exchanges.
A Dramatic Reversal
The rapid dismissal of these high-profile investigations represents a dramatic reversal from the enforcement approach that characterized the previous administration’s relationship with the cryptocurrency industry.
Under Chair Gary Gensler, who led the SEC from April 2021 through January 2025, the agency took an aggressive stance toward crypto companies, arguing that most digital assets qualified as securities under existing law and that platforms trading them needed to register with the SEC or face enforcement action.
This “regulation by enforcement” approach—as critics labeled it—generated substantial friction with the industry, which argued that applying 1930s-era securities laws to novel digital assets without providing clear guidance or practical registration pathways was unfair and ultimately harmful to American competitiveness.
The industry’s frustration manifested in various ways, including substantial donations to pro-crypto political candidates in the 2024 election cycle. Crypto-focused political action committees spent over $130 million supporting candidates who pledged to pursue clearer, more favorable cryptocurrency regulation—contributions that appeared to influence electoral outcomes and policy priorities.
President Trump, who campaigned on promises to end what he called the Biden administration’s “war on crypto,” appointed Acting Chairman Uyeda and directed the formation of the Crypto Task Force as early priorities following his January 20 inauguration.
The dismissal of enforcement cases against Coinbase, OpenSea, Robinhood, and Uniswap—all of which were initiated under the previous leadership—reflects the new administration’s commitment to delivering on those campaign promises by resetting the SEC’s relationship with the cryptocurrency industry.
What CETU Won’t Do
Perhaps as significant as what CETU will focus on is what it apparently will not prioritize: non-fraud enforcement actions targeting registration or compliance violations by cryptocurrency platforms and projects.
Legal analysis from multiple law firms interpreting the CETU announcement emphasizes that the new unit’s focus on “fraud” and “bad actors” represents a meaningful departure from the previous unit’s broader mandate. The Crypto Assets and Cyber Unit brought numerous cases alleging unregistered securities offerings or unregistered exchange operations—technical violations that could be committed by well-intentioned companies attempting to comply with unclear rules.
CETU’s stated focus on fraud suggests these types of cases will no longer be prioritized for enforcement, with registration and compliance questions instead being addressed through the regulatory framework the Crypto Task Force is developing.
This shift aligns with Acting Chairman Uyeda’s regulatory philosophy, which emphasizes providing clear rules before bringing enforcement actions. In various speeches and statements before becoming Acting Chairman, Uyeda criticized enforcement approaches that penalized companies for failing to comply with rules that had never been clearly articulated.
The practical implication is that cryptocurrency companies operating in good faith—seeking to comply with applicable law but uncertain about how securities regulations apply to their specific activities—are less likely to face enforcement action under the new approach, while clear fraud cases will continue to be pursued aggressively.
Broader Context: A Crypto-Friendly Administration
The CETU announcement and subsequent case dismissals represent just the latest developments in what has been a remarkably crypto-friendly first month for the Trump administration.
On January 23, President Trump signed an executive order titled “Strengthening American Leadership in Digital Financial Technology,” which directed federal agencies to develop clear regulatory frameworks for cryptocurrency and blockchain technology. The order explicitly called for “promoting U.S. leadership in digital financial technology” and ensuring that regulation supports rather than stifles innovation.
The same day, the SEC rescinded Staff Accounting Bulletin 121 (SAB 121), which had required banks to treat cryptocurrency held on behalf of customers as a liability on their balance sheets—a rule that effectively prevented many financial institutions from offering crypto custody services.
On February 4, White House Special Advisor for AI and Crypto David Sacks held a press conference outlining the administration’s short-term regulatory priorities, emphasizing the need to distinguish securities from commodities, create clearer rules for DeFi protocols, and streamline paths to regulatory compliance for crypto companies.
Commissioner Peirce, leading the Crypto Task Force, has solicited input from industry participants through multiple channels, including a February 21 statement inviting public comment on a wide range of issues related to crypto assets and blockchain technology—an unusually broad request for feedback that resembles a concept release.
The cumulative effect of these actions has been to create optimism in the cryptocurrency industry that the regulatory environment is shifting from hostility to at least neutrality, if not active support. Token prices have responded positively to regulatory developments, and companies that had considered moving operations overseas are reconsidering those plans.
Questions Remain
While the CETU announcement and case dismissals have been welcomed by the industry, significant questions remain about how the new regulatory framework will ultimately take shape.
The Crypto Task Force faces complex challenges in distinguishing securities from commodities, particularly for tokens with characteristics of both. Bitcoin and Ether have been identified as commodities by regulators, but thousands of other tokens exist in a gray area where reasonable legal experts disagree about their classification.
Creating “viable” paths to registration for crypto assets and platforms—one of the task force’s stated goals—requires reconciling securities laws designed for traditional financial instruments with the technical realities of blockchain-based assets. Disclosure requirements that make sense for corporate stock offerings may be impossible or nonsensical for decentralized protocols with no identifiable issuer.
The timeline for developing this regulatory framework remains uncertain. Commissioner Peirce has acknowledged the work “will take time,” and the complexity of the issues suggests comprehensive rulemaking could stretch into 2026 or beyond.
In the meantime, crypto companies must navigate an environment where the threat of enforcement has diminished but clear affirmative guidance remains limited. The CETU announcement suggests fraud cases will still be pursued, but the line between fraud and good-faith regulatory uncertainty may not always be clear.
Looking Ahead
As CETU begins operations and the Crypto Task Force continues its work, the cryptocurrency industry faces a period of significant regulatory transition.
The immediate effect of the CETU announcement and case dismissals has been to remove the threat of enforcement action that hung over many companies, allowing them to focus on building products and serving customers rather than managing regulatory risk.
Over the longer term, the success of the new approach will depend on whether the Crypto Task Force can deliver on its mandate to create clear, workable regulations that protect investors without stifling innovation—a balance previous regulators struggled to achieve.
For now, the industry is experiencing a regulatory environment dramatically different from what existed just weeks ago. The shift from a 50-person enforcement unit bringing cases against platforms and protocols to a 30-person fraud-focused team complementing a task force developing clear rules represents a fundamental change in the government’s approach to cryptocurrency regulation.
Whether this change ultimately proves beneficial for investors, the industry, and American competitiveness in the global digital economy remains to be seen. But the direction of travel is now clear: less enforcement, more rulemaking, and a focus on fraud rather than technical compliance violations.
This article reflects information available as of February 20, 2025.
