The SEC retreats on its view of Crypto Assets as Securities
As expected, under the new Trump administration, the Securities and Exchange Commission (the “SEC“) has reversed course on its approach to crypto enforcement. Donald Trump became a very strong supporter of digital assets and cryptocurrencies during his presidential run and has recently gone all out with crypto ventures.
On January 18, 2025, Trump launched his own meme coin, TrumpCoin (TRUMP), and on January 20, 2025, Trump and his wife, Melania, launched the Melania Meme coin (MELANIA).
In January of 2025, the Trump family took control of a 60% stake in World Liberty Financial, a decentralized finance protocol launched during the fall of 2024. Barron Trump is listed as the project’s “DeFi (decentralized finance) visionary”, and Eric Trump and Donald Trump Jr. each have the title “Web3 ambassador.” Steve Witkoff’s son Zach Witkoff is a co-founder of the company. World Liberty Financial has been marketed as a portal for traders to invest in cryptocurrency and use those cryptocurrency assets for both borrowing and lending. The most prominent buyer of World Liberty Financial tokens is Chinese businessperson Justin Sun, who has reportedly spent at least $75 million on tokens through the platform since Trump was elected in November 2024. Sun is also a World Liberty Financial advisor now. As of mid-March of 2025, World Liberty Financial has raised over $550 million from two rounds of WLFI token offerings, with the Trump family receiving 75% of token sale revenue (roughly $400 million) and 60% from company operations. On March 21, 2025, World Liberty Financial announced its plans to launch USD1, a stablecoin redeemable 1:1 for the US dollar (USD).
On March 24, 2025, Trump Media and Technology Group Corp (Nasdaq: DJT) announced a partnership with Crypto.com to launch a series of exchange-traded funds and exchange-traded products (collectively, “ETFs”).
And more recently, on March 31, 2025, American Data Centers, a business led by two of the president’s sons, Eric Trump and Donald Trump Jr, announced that it will invest in American Bitcoin, a new mining company controlled by Hut 8.
A timeline of significant events, marking a stark reversal in the SEC’s stance toward crypto assets under the Trump Administration, includes the following:
- On January 21, 2025, the SEC Acting Chairman Mark T. Uyeda launched a crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets.
- On January 23, 2025, Trump issues an executive order making it the policy of the White House to support the responsible growth and use of digital assets and related technologies, the rescission of Staff Accounting Bulletin No. 121 which had been viewed as discouraging digital asset ownership, the scaling back of the previous administration’s SEC’s crypto asset enforcement unit, and SEC chair nominee Paul Atkins’s pro-crypto past, coupled with establishment of the Crypto Task Force, the SEC’s approach to digital assets is poised for significant change.
- On February 4, 2025, SEC Commissioner Hester Peirce, chair of the SEC’s new Crypto Task Force, signaled a major shift in the SEC’s approach to digital asset regulation in a public statement outlining the Task Force’s priorities.
- On February 21, 2025, Coinbase Chief Legal Officer Paul Grewal announced via blog post that the SEC is set to drop its enforcement action against the company.
- On February 21, 2025, OpenSea, the largest NFT marketplace, announced via a post on X that the SEC had closed an investigation into its operations.
- On February 24, 2025, the crypto arm of trading platform Robinhood announced that the SEC had closed its investigation into the company.
- On February 26, 2025, the SEC asked a court to pause its fraud lawsuit against crypto entrepreneur Justin Sun and three of his businesses. On March 22, 2023, the SEC charged Sun with selling unregistered securities. Sun has reportedly spent at least $75 million on tokens through the Trump family-controlled platform World Liberty Financial since Trump was elected in November 2024. Sun has also been added as an advisor for World Liberty Financial.
- On February 27, 2025, the SEC’s Division of Corporation Finance issued guidance that meme coins — defined as speculative crypto assets inspired by internet memes, cultural trends, or social media phenomena — do not constitute securities under federal securities laws.
- On March 19, 2025, after five years of litigation against Ripple Labs for allegedly selling an unregistered security, the XRP token, Ripple announced that the SEC was dropping its appeal against Ripple. The SEC sued Ripple in December 2020, alleging that its XRP token was sold as an unregistered security. In August 2024, Ripple was ordered to pay $125 million in penalties, with the court reaffirming that secondary sales were not securities transactions. Both Ripple and the SEC appealed different parts of the ruling, but before briefings in the Appeal case began, Ripple announced the SEC’s intent to drop its appeal. On March 25, 2025, the SEC and Ripple reached a settlement agreement, which included the SEC returning $75 million of the $125 million fine it had collected from Ripple.
- On March 20, 2025, the SEC’s Staff of the Division of Corporation Finance issued a statement providing its views that crypto mining activities (as defined in the statement) do not involve the offer and sale of securities within the meaning of Section 2(a)(1) of the Securities Act of 1933, as amended (the “Securities Act”), and Section 3(a)(10) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Therefore, these activities do not require registration under the Securities Act, nor do they need to fall within one of the exemptions from registration.
- On March 27, 2025, the SEC dismissed its Civil Enforcement Action against Payward Inc. and Payward Ventures Inc., together known as Kraken. Kraken had been charged with operating its crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing agency. According to the SEC’s complaint, Kraken made hundreds of millions of dollars unlawfully facilitating the buying and selling of crypto asset securities. The SEC alleged that Kraken intertwined the traditional services of an exchange, broker, dealer, and clearing agency without having registered any of those functions with the SEC as required by law.
- On March 27, 2025, the SEC dismissed its Civil Enforcement Action against Consensys Software Inc. The SEC had charged Consensys Software Inc. with engaging in the unregistered offer and sale of securities through a service it calls MetaMask Staking and with operating as an unregistered broker through MetaMask Staking and another service it calls MetaMask Swaps. According to the SEC’s complaint, Consensys offered and sold tens of thousands of unregistered securities on behalf of liquid staking program providers Lido and Rocket Pool, who create and issue liquid staking tokens (called stETH and rETH) in exchange for staked assets.
- On March 27, 2025, the SEC dismissed its Civil Enforcement Action against Cumberland DRW LLC. The SEC had charged Cumberland DRW LLC with operating as an unregistered dealer in over $2 billion of crypto assets offered and sold as securities.
It is clear that the SEC has significantly changed its attitude about crypto assets as securities and has greatly eased back on its regulation of crypto. Other regulators, both in the US and globally, may follow suit.
This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes. For more information about this securities law blog post or to speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected].
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