SEC’s Free Rein in Question as Probes Now Need Higher-Level Approval

Key Takeaways

• The SEC must now seek approval before launching investigations.
• Previously, the enforcement division had more autonomy in initiating probes and issuing subpoenas.
• The change marks a significant shift in how the agency polices financial markets, including crypto.

Donald Trump’s administration is moving to curb the Securities and Exchange Commission’s (SEC) unchecked enforcement power, a shift that could reshape regulatory oversight in financial markets, particularly for the crypto industry.

Under the new directive, the SEC’s enforcement division now needs approval from the agency’s top leadership before launching investigations.

Tighter Oversight: SEC’s Enforcement Power Curtailed

The policy change, first reported by Reuters , effectively strips lower-level SEC staff of their authority to independently initiate probes—marking a departure from the previous administration’s approach.

Although not made public, the move comes after years of criticism, particularly from the crypto sector, which saw a wave of aggressive enforcement actions under former SEC Chair Gary Gensler.

Under previous rules, SEC enforcement staff had broad discretion to open investigations, issue subpoenas, and demand documents without needing clearance from top officials.

Now, any formal order of investigation must first be approved by the SEC’s five-member commission, which includes politically appointed leadership.

The change reflects the Trump administration’s push for tighter oversight of regulatory agencies, particularly in how they exercise enforcement power.

In effect, the SEC’s ability to act swiftly and autonomously has been curtailed—giving politically appointed officials a greater role in determining which cases proceed.

Relief for the Crypto Industry

For the crypto industry, this shift is particularly significant.

Over the past four years, the SEC’s enforcement division, led by Gurbir S. Grewal , launched more than 100 actions against crypto firms as part of broader regulatory crackdowns.

In total, the division pursued over 2,400 cases across financial markets, resulting in more than $20 billion in penalties.

The new policy could mean fewer enforcement actions against crypto firms—or at least a slower, more deliberate approach to investigations.

The crypto industry has largely welcomed the change, viewing it as a safeguard against what they describe as unchecked regulatory aggression.

“For years, crypto has faced regulatory overreach through aggressive, unpredictable actions,” said Rick Tapia , a blockchain attorney.

“Now, with politically appointed commissioners having a say, there’s a higher bar for investigations, bringing much-needed oversight. This could mean fewer arbitrary crackdowns and a more predictable regulatory environment.”

However, critics warn that the move could weaken the SEC’s ability to police financial misconduct. Some argue that requiring higher-level approval could slow investigations and lead to selective enforcement, particularly if political interests influence decision-making.

One particularly vocal critique  came from opponents of Trump, who suggested that the rule change could shield his own business dealings—including the recent surge of crypto memecoins tied to his brand.

“Trump just made it so the SEC must seek permission from politically appointed leadership before launching an investigation… wonder if there’s a certain shitcoin that pumped to $85 billion that could benefit from that,” one user on social media posted.

The SEC is currently chaired by acting chief Mark Uyeda, a Republican commissioner who has generally been less aggressive in enforcement matters.

Trump’s nominee for the permanent role, Paul Atkins, is widely considered pro-crypto, and if confirmed by the Senate, his leadership could further cement a regulatory shift in favor of the industry.