SEC and FINRA Highlight Crypto Risks Despite Recent SEC Pullbacks
On Monday, March 24, 2025, Law360 reported that heads of enforcement at the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) indicated that both agencies are maintaining vigilance over cryptocurrency, despite the SEC’s recent withdrawal from several crypto-related cases and investigations.
During a panel discussion at the Securities Industry and Financial Markets Association’s annual Compliance & Legal Seminar, acting SEC Enforcement Director Sam Waldon outlined the regulator’s enforcement priorities. These include tackling fraud cases related to crypto securities, addressing issues surrounding artificial intelligence and emerging technologies, and continuing to focus on traditional SEC matters such as insider trading and accounting violations, as well as disclosure and offering fraud.
Waldon emphasized that individual liability cases will be a key focus for the SEC, noting that while this has always been a priority, the current administration is likely to receive such cases more favorably. His remarks come as the SEC, under acting Chair Mark Uyeda, has stepped back from various crypto investigations and cases. Uyeda has also established a cryptocurrency task force led by Commissioner Hester Peirce to develop clearer policies regarding cryptocurrencies.
On the same panel, FINRA’s enforcement head Bill St. Louis reported that the brokerage regulator has started to receive referrals concerning crypto-related enforcement issues. These include marketing materials that inaccurately compare cryptocurrencies to cash and communications that obscure details about the entities issuing crypto assets. St. Louis noted that some communications may misleadingly imply investor protections for cryptocurrencies or fail to adequately address the risks involved.
“We’re working on those referrals,” St. Louis said, adding that decisions on whether to proceed with enforcement actions would be made soon. He advised firms to closely monitor their registered broker-dealers participating in crypto activities, even if the firms believe they have no involvement with cryptocurrencies.
Last year, FINRA conducted a targeted sweep of crypto assets, revealing potential violations of its communications and advertising rules in 70% of the reviewed materials. This included finding false and misleading statements regarding the protection of cryptocurrencies under federal securities laws. St. Louis mentioned that the results of the crypto sweep are nearing conclusion.
Source: Law360
