Democratic Lawmaker Challenges SEC Direction
Congresswoman Maxine Waters, the top Democrat on the House Financial Services Committee, expressed serious concerns about the SEC’s current trajectory during a recent committee hearing. She directly addressed SEC Chair Paul Atkins, questioning what he meant by calling it “a new day for the SEC.”
“Did he really mean that this SEC is now putting Wall Street and billionaires first, and America’s investors last?” Waters asked during the February 11 hearing. Her comments came as the agency undergoes significant policy shifts under Republican leadership.
Waters specifically criticized the SEC’s approach to crypto enforcement, suggesting the agency has “dismissed cases and investigations against Trump’s crypto billionaire friends.” She argued that the SEC under Atkins hasn’t investigated “a single instance of the potential large-scale fraud and market abuse being brazenly carried out by this Administration and its allies.”
Structural Changes and Policy Rollbacks
The lawmaker highlighted what she sees as troubling structural changes at the commission. With Commissioner Caroline Crenshaw’s departure and no Democratic commissioners remaining, Waters noted this creates an “extraordinary” situation where the SEC operates as a 3-0 Republican commission.
“The SEC is not making policy in an open and bipartisan manner, with the usual public notice-and-comment process,” she stated. “Instead, Atkins’ SEC appears to take its orders directly from the President, and avoids public comment at all costs.”
Waters pointed to the withdrawal of 14 proposals introduced during the prior administration. These included measures addressing AI-related conflicts in investment advice, expanded custody protections for digital assets and crypto platforms, ESG and cybersecurity disclosures, and various other financial regulations.
Industry Response to Regulatory Shifts
Meanwhile, significant portions of the crypto industry have welcomed Atkins’ agenda, particularly the launch of “Project Crypto.” This initiative, detailed during Atkins’ February 11 testimony, represents a joint SEC-CFTC effort to create clearer regulatory frameworks.
The project introduces a token taxonomy distinguishing digital commodities, collectibles, and utility tools. It also outlines a forthcoming “innovation exemption” designed as a regulatory sandbox—something many in the industry have requested for years.
Recent policy changes include rescinding SAB 121 through SAB 122, which eases bank custody requirements for digital assets. The SEC has also issued interpretative guidance suggesting many DeFi protocols and liquid staking models don’t inherently constitute securities offerings.
Statements indicating meme coins generally aren’t treated as securities when purchased for entertainment purposes have further signaled a shift in approach. Legislative developments like the enacted GENIUS Act for payment stablecoins and Senate movement on the Digital Asset Market CLARITY Act have added to expectations of clearer jurisdictional lines between the SEC and CFTC.
Broader Implications
Supporters of the changes argue that replacing what they call “regulation by enforcement” with formal rulemaking could unlock institutional capital and accelerate broader adoption of digital assets. They see the current shifts as potentially creating more predictable regulatory environments.
But Waters remains skeptical. She concluded her remarks by stating, “Chairman Hill, it certainly is a new day at the SEC: a Wall Street and billionaire holiday.”
The tension reflects broader debates about how digital assets should be regulated in the United States. On one side, there’s concern about investor protection and market integrity. On the other, there’s desire for regulatory clarity that might encourage innovation and investment.
I think what’s interesting here is how these policy changes are playing out in real time. The crypto industry seems to be getting some of the regulatory clarity it’s wanted, but at what cost to traditional investor protections? It’s not clear yet whether this represents a fundamental shift or just temporary policy adjustments.
The absence of Democratic commissioners does raise questions about balance, I suppose. But maybe that’s just how these things go when administrations change. The real test will be whether these new approaches actually work—whether they protect investors while still allowing innovation to flourish.
We’ll need to watch how Project Crypto develops and whether those innovation exemptions materialize as promised. The industry seems optimistic, but regulatory changes often take longer to implement than people expect. And their effects can be unpredictable.
