The U.S. SEC appears to be rethinking its approach to cryptocurrency regulation, with signs pointing toward a major shift in how digital assets are classified, the Business Insider reports.
Amy Lynch, a regulatory expert and founder of FrontLine Compliance, believes that the agency is working to establish its precedent for crypto oversight.
She anticipates that most crypto assets will eventually be treated as commodities rather than securities, effectively moving them out of the SEC’s jurisdiction.
Expert Predicts Most Digital Assets Will Be Regulated As Commodities
This change in regulatory outlook comes amid a series of developments suggesting that the SEC is softening its stance on the crypto industry.
According to a report by Business Insider, the recent dismissal of the SEC’s lawsuit against Coinbase and the termination of its investigation into Robinhood’s crypto division indicate that the agency may be reassessing its legal approach.
SEC Dropping Lawsuits Signals a Broader Regulatory Shift
The SEC’s decision to drop its case against Coinbase, was seen as a turning point. The lawsuit, which accused Coinbase of operating as an unregistered brokerage, was one of the agency’s most high-profile legal battles against the crypto industry.
Just days later, Robinhood announced that the SEC had also ended its investigation into its crypto business, further fueling speculation that regulators were stepping back.
Lynch suggested that the SEC may be taking time to develop a more coherent strategy under the new administration. She also noted that enforcement actions based on positions taken by previous leadership could be scaled back or abandoned.
Industry experts believe this could have broader implications for ongoing legal battles, particularly in cases against Binance and Kraken, two other major crypto exchanges facing SEC scrutiny.
One case that remains uncertain is the SEC’s lawsuit against Ripple Labs. The agency previously argued that XRP was an unregistered security, a claim that could have set a precedent for treating most cryptocurrencies as securities. However, with the SEC now reconsidering its regulatory framework, it remains unclear whether it will continue to pursue the case.
Also Read: US SEC Dismisses Quest to Regulate DeFi Market, What’s Next For The Industry?
Legislation Could Provide Long-Term Clarity
As the SEC reevaluates its enforcement actions, lawmakers are working toward establishing a formal regulatory framework for cryptocurrencies.
According to Business Insider, experts predict that a market structure bill could be passed within the next few years, potentially clarifying the legal status of digital assets.
A stablecoin bill, which would set rules for cryptocurrencies pegged to fiat money, is also expected to gain traction. The White House has signalled its support for stablecoin regulations, seeing them as essential for maintaining the dominance of the U.S. dollar in the digital economy.
Zack Shapiro, head of policy at the Bitcoin Policy Institute, believes that such regulatory clarity would attract major financial institutions eager to compete with existing stablecoin issuers like Tether.
Market Volatility Likely Amid Policy Changes
With regulatory uncertainty still looming, analysts expect fluctuations in crypto prices as the landscape evolves. Lynch pointed out that legal and policy changes often trigger short-term market reactions, as seen in past instances where new regulations caused temporary price declines.
However, she also emphasized that market shocks are usually followed by recoveries. “Prices could dip due to a sudden regulatory shift, but they would likely rebound once the market adjusts,” she noted.
So while the SEC’s recent actions suggest a shift toward a more lenient regulatory approach, uncertainty remains.
Also Read: SEC Pauses Fraud Lawsuit Against Geosyn Crypto Mining After Federal Charges Against Executives