The US Securities and Exchange Commission (SEC) on Jan. 5 launched a Crypto Task Force aimed at providing regulatory clarity for digital assets while balancing innovation and investor protection.

On Jan. 4, Commissioner Hester Peirce, a longtime advocate for clearer crypto regulations, acknowledged that the SEC’s past approach to crypto has been “marked by legal imprecision and commercial impracticality.”

“The crypto road trip on which the newly announced Crypto Task Force has embarked should be more enjoyable and less risky than the crypto road trip the Commission has taken the industry on for the last decade,” Peirce said. “On that last trip, the Commission refused to use regulatory tools at its disposal and incessantly slammed on the enforcement brakes.”

The task force will engage with industry stakeholders, regulatory bodies, and the public to develop a framework for crypto asset classification, exchange-traded products, staking, custody rules, and more.

What will the crypto task force do?

The SEC’s Crypto Task Force will tackle some of the most pressing issues in crypto regulation.

The task force will clarify how existing securities laws apply to digital assets, helping distinguish crypto securities from non-securities. The SEC will explore temporary relief measures for crypto tokens and exchanges, ensuring a structured pathway to compliance.

The agency will determine if staking and lending programs fall under securities laws and create legal guidelines for these services. The task force will assist in evaluating new exchange-traded products (ETPs) and proposed modifications, including staking-based ETFs.

It will develop safe and legal frameworks for institutions to hold and manage crypto assets on behalf of clients.

According to Peirce, the goal is to end the current regulatory uncertainty and promote innovation while ensuring proper investor protection.

Peirce: A long journey, but worth it

Peirce noted that the task force’s work will not be an overnight fix.

“It took us a long time to get into this mess, and it is going to take us some time to get out of it,” she said.

However, she reassured the industry that the SEC is committed to working with crypto builders, investors, and legal experts to craft rules that foster innovation and protect markets.

“Although the obstacles to getting to our final destination of a sensible, clear ruleset are daunting, if we collaborate, the journey will be exhilarating and rewarding,” Peirce added.

Gary Gensler, appointed as Chair of the SEC on April 17, 2021, adopted a stringent "regulation by enforcement" strategy toward the cryptocurrency industry. Under his leadership, the SEC increased its oversight, initiating numerous enforcement actions against crypto firms like Binance and Coinbase for alleged violations of securities laws.

This approach led to heightened scrutiny and substantial penalties within the crypto sector. On Nov. 21, 2024, Gensler announced his resignation, effective January 20, 2025.