The U.S. Securities and Exchange Commission (SEC) has introduced a significant policy shift, requiring its legal staff to obtain approval from politically appointed leadership before initiating formal investigations. This move is expected to influence the pace and nature of regulatory actions, particularly in the cryptocurrency sector.
A Major Shift in SEC Enforcement Procedures
Previously, SEC enforcement attorneys could independently launch investigations, with commissioners providing oversight later in the process. However, the newly implemented rule mandates that investigators must now secure explicit permission from top agency officials before issuing subpoenas, compelling testimony, or requesting documents.
This change comes amid leadership transitions at the SEC, including the departure of former Chair Gary Gensler and Commissioner Jaime Lizárraga. The agency is currently led by Acting Chair Mark Uyeda, a Trump appointee, alongside Commissioners Hester Peirce and Caroline Crenshaw. Sources indicate that this policy update was communicated internally but has not yet been publicly announced.
Impact on Cryptocurrency Regulation
The revised rule is seen as a potential relief for the crypto industry, which faced aggressive enforcement under Gensler’s leadership. His tenure was marked by numerous lawsuits and investigations targeting major crypto firms, drawing criticism from industry stakeholders and lawmakers alike.
While the new rule may encourage a more measured and deliberate approach to enforcement, some experts express concerns. Former SEC Division Chief Marc Fagel criticized the move, arguing that it could weaken the agency’s ability to respond swiftly to fraudulent activities. Fagel highlighted that the previous system, designed after the Madoff scandal, was intended to streamline investigations and improve regulatory efficiency.
XRP’s Price Rebounds Following SEC Policy Shift
The SEC’s procedural adjustment has already had a notable market impact. On February 3, XRP surged 4.81%, recovering from a sharp 10.46% decline the previous day. Closing at $2.57, XRP outperformed the broader crypto market, which rose by 3.23% to a total valuation of $3.29 trillion.
XRP’s rebound came after dipping below $2, hitting a session low of $1.77 before regaining ground. This price volatility reflects shifting investor sentiment amid growing speculation about the SEC’s evolving enforcement stance.
Key Focus: Ripple Case and Upcoming SEC Meeting
The SEC is scheduled to hold a closed meeting on February 6, with discussions expected to center around the Ripple case. The Commission, now holding a 2-1 Republican majority, may vote on whether to withdraw its appeal regarding the Programmatic Sales of XRP ruling.
For any decision to be made, at least three commissioners must be present to meet quorum requirements. Analysts believe that a withdrawal of the appeal could significantly boost XRP’s market position, while continued litigation may lead to further price swings.
Conclusion: A Turning Point for Crypto Regulation?
The SEC’s new enforcement rule signals a potentially more lenient regulatory environment, which could foster increased investor confidence and stimulate growth in the crypto sector. However, critics warn that reduced regulatory scrutiny might embolden bad actors, posing risks to market integrity.
As XRP regains momentum, traders are closely watching the upcoming SEC meeting for potential developments. The outcome could have far-reaching implications, not just for XRP but for the broader cryptocurrency landscape.
Victor Swaezy
Victor Swaezy is a crypto-journalist with more than 3 years of experience in covering blockchain technology and digital currencies news. Known for his comprehensive reporting, Victor has contributed to leading industry publications, providing market participants with the required knowledge to make informed decisions. When he is not working, he loves to watch movies and have a good time.