The U.S. Securities and Exchange Commission (SEC) has implemented a new rule requiring its lawyers to obtain approval from politically appointed leadership before launching formal investigations. This change marks a shift in enforcement procedures and could slow regulatory actions against cryptocurrency firms.
Major Shift in SEC’s Enforcement Authority
Previously, SEC enforcement staff had the authority to initiate probes independently, though commissioners retained oversight. Under the revised rule, investigators must secure permission from top officials before issuing subpoenas, compelling testimony, or requesting documents.
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This development follows recent leadership changes at the agency, including the departure of former SEC Chair Gary Gensler and Commissioner Jaime Lizárraga last month.
Acting SEC Chair Mark Uyeda, appointed by President Donald Trump, leads the agency alongside Commissioners Hester Peirce and Caroline Crenshaw.
Speaking anonymously, sources familiar with the matter stated that this procedural shift had not been publicly disclosed but had already been communicated to enforcement staff. The move could significantly impact ongoing and future crypto-related investigations.
Cryptocurrency Regulation
The SEC’s decision to implement stricter oversight over new investigations is a potential relief for cryptocurrency firms. Under Gensler’s leadership, the agency aggressively pursued regulatory actions against major crypto companies, often drawing criticism from industry participants and lawmakers.
The new rule could lead to a more measured approach to assessing violations and enforcement.
Former SEC Division Chief Marc Fagel criticized the policy change, arguing that it weakens enforcement capabilities and slows investigations.
He noted that the previous delegation of authority was implemented after the Madoff scandal to streamline the regulatory process. Critics warn that the new rule could delay identifying and addressing fraudulent activities.
XRP Rebounds Amid SEC Policy Shift
Following the SEC’s policy adjustment, XRP’s price surged by 4.81% on Monday, February 3, reversing part of its 10.46% loss from the previous day. The cryptocurrency closed at $2.57, outperforming the broader market, which gained 3.23% and pushed the total crypto market capitalization to $3.29 trillion.
XRP had sharply declined, plunging below the $2 mark before rebounding strongly. Market volatility remained high as XRP dropped to a session low of $1.7738 before recovering. The price movement reflected shifting investor sentiment amid regulatory uncertainty, particularly concerning the SEC’s enforcement strategy.
While global economic factors influence crypto markets, the SEC’s approach to enforcement plays a crucial role in investor confidence. The requirement for commissioner approval before launching investigations may signal a more lenient regulatory environment, benefiting XRP and other digital assets.
Upcoming SEC Meeting and Its Impact on Ripple Case
With the SEC set to hold a closed meeting on February 6, discussions will likely focus on the Ripple case. The Commission, currently holding a 2-1 Republican majority, may vote on whether to withdraw its appeal against the Programmatic Sales of XRP ruling.
Internal SEC rules require a quorum for such decisions, meaning at least three commissioners must be present to proceed with any action.
The shift in enforcement procedures comes amid broader changes in the SEC’s leadership and regulatory stance. Market analysts believe a more restrained approach to crypto regulation could increase investor confidence.
However, some experts caution that a reduced emphasis on enforcement might also embolden bad actors within the industry.
Conclusion
As XRP regains momentum after its drop below $2, traders will closely monitor the SEC’s upcoming meeting for further developments. A decision to withdraw the appeal could strengthen XRP’s market position, while continued litigation may introduce further price fluctuations.
Regardless of the outcome, the agency’s evolving stance on crypto enforcement will likely shape the industry’s regulatory landscape in the months ahead.
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