WASHINGTON — A sharp debate over the future of U.S. cryptocurrency regulation played out on Capitol Hill as senators clashed over whether the Securities and Exchange Commission under the Trump administration is easing enforcement while pressing Congress to establish a new legal framework for digital assets.
SEC Chairman Paul S. Atkins on Thursday defended the agency’s shift away from what Republicans have called “regulation by enforcement” toward clearer statutory rules designed to bring certainty to the fast-growing crypto sector.
Senate Banking Committee Chairman Tim Scott argued that digital asset innovation must remain anchored in the United States and said Congress has a responsibility to create “clear rules of the road for digital assets” to protect investors and preserve American competitiveness.
Scott criticized the previous regulatory approach, saying it relied heavily on enforcement actions rather than transparent guidance, leaving “businesses, builders and investors” facing uncertainty, subpoenas, and lawsuits.
Atkins supported legislative efforts to clearly divide oversight responsibilities between the SEC and the Commodity Futures Trading Commission, saying crypto innovators have long been caught between overlapping jurisdictions.
He likened the situation to “two fortresses on either side of a no man’s land,” where companies were stuck amid regulatory crossfire and unable to bring products to market.
“The real issue that is so important about this legislation is to future-proof things so that there’s clarity to innovators as between the SEC and the CFTC,” Atkins said.
He also said the SEC had previously failed to update its rules, filings, and forms to account for emerging digital technologies, contributing to prolonged uncertainty across the sector.
Democrats on the committee pushed back strongly. Ranking Member Elizabeth Warren accused Atkins of rolling back oversight and claimed the SEC under his leadership was “unleashing a golden age of fraud.” She pointed to what she said was a decline in enforcement activity and questioned decisions to drop certain cases involving crypto companies and executives.
Atkins rejected the accusation, saying, “Fraud is fraud, whether it be in the crypto area or not.” He said the SEC is refocusing its enforcement efforts on core principles, including rooting out fraud and remedying investor harm, and emphasized that crypto-related enforcement cases have continued under the current administration.
The hearing also touched on broader issues, including the use of artificial intelligence in financial markets, listings of China-linked companies on U.S. exchanges, and whether enforcement staffing levels have been reduced.
Atkins said the SEC is recommitting to its core mission of protecting investors, maintaining fair and orderly markets, and facilitating capital formation. He also argued that excessive disclosure requirements are imposing heavy costs on companies, noting that public firms spend an estimated $2.7 billion annually on filing reports, and said the agency should modernize and streamline its reporting regime.
The debate comes as Congress moves forward with digital asset market structure legislation, including a Senate version of the Clarity Act, which aims to define regulatory jurisdiction and establish a federal framework for cryptocurrency markets.
Pressure on lawmakers has intensified in recent years as digital assets and decentralized finance have expanded rapidly, placing the question of how to balance innovation with investor protection at the center of the policy debate in Washington. (Source: IANS)
