Trump-Era SEC Relaxes Crypto Regulations, Raising Worries Over Investor Safety

The U.S. Securities and Exchange Commission (SEC) is adjusting its regulatory strategy for cryptocurrencies, shifting its attention toward overall market stability and fiduciary responsibilities, while reducing its direct supervision of crypto asset services for 2026. This adjustment

, representing a shift away from the Biden administration’s focus on mitigating industry risks. The SEC's Division of Examinations, which usually monitors compliance among investment advisers and broker-dealers, such as safeguarding assets, protecting data privacy, and upholding conduct standards. Interestingly, the agency’s annual priorities report dedicated to crypto activities—a move that industry analysts see as a subtle approval of the sector’s expansion under Trump’s leadership.

This change signals a wider regulatory shift.

that the revised priorities are designed to encourage “open communication” with firms, promoting transparency without resorting to punitive measures. This approach stands in contrast to the previous administration’s more critical view, which regarded crypto as a sector prone to fraud and high risk. Instead, the SEC under Trump , aiming to bring crypto into the mainstream financial system while maintaining a balance between innovation and investor safety.

At the same time, the Commodity Futures Trading Commission (CFTC) is working to clarify its own responsibilities in overseeing decentralized finance (DeFi).

, CFTC chair nominee Michael Selig stressed the importance of establishing a clear regulatory framework for onchain applications and decentralized platforms. Senator John Boozman (R-AR) of digital commodity trading, underscoring a growing bipartisan push to clearly define regulatory roles in the crypto market. However, —with acting chair Caroline Pham expected to step down if Selig is confirmed—has sparked concerns about the agency’s ability to maintain consistent enforcement.

The need for regulatory clarity has become more urgent following recent DeFi setbacks.

in November 2025 revealed significant weaknesses in governance and regulatory oversight, especially in emerging markets. The token’s failure, attributed to leadership conflicts and insufficient investor protections, has intensified demands for unified regulations. , which aims to define AI-related tokens, has instead created more uncertainty due to its ambiguous language, while ongoing disagreements over whether crypto assets are securities or commodities have left regulatory gaps open for abuse.

Market observers are also paying close attention as major institutions test the limits of current regulations. for an Ethereum ETF that incorporates staking, potentially allowing investors to earn returns from staking rewards. This application, submitted under the 1933 Securities Act, signals the SEC’s growing acceptance of crypto ETFs, following the approval of spot ETFs in January 2024. Still, on overcoming significant operational and regulatory hurdles, such as custody and transparency standards.

As the SEC and CFTC continue to navigate these evolving issues, the cryptocurrency industry stands at a critical juncture. While the Trump administration’s more flexible regulatory stance has encouraged innovation, incidents like the COAI token collapse underscore the dangers of fragmented oversight. The months ahead are likely to feature intense debate over how to foster market development while ensuring investor protection—a challenge that will shape the regulatory environment for crypto in 2026 and beyond.