SEC scaling encryption enforcement, expanding focus on cyber fraud

The SEC is reorganizing its law enforcement approach by scaling down its cryptocurrency watchdog and using smaller teams focused on cyber fraud and technological threats.

what happened: The newly formed department will investigate crimes involving blockchain abuse, artificial intelligence, machine learning and social media-driven financial fraud, Bloomberg reported.

The new law enforcement team will have 30 experts Laura D’Allairdwas once a co-host of SEC cryptocurrency units.

This marks a significant reduction in workload for the new team, as the team will have 20 fewer staff than the department that specifically targets cryptocurrency law enforcement, which was established in 2022.

According to the Acting SEC Chairman Mark UyedaThe agency’s latest strategy is designed to protect investors while allowing innovation to develop safely.

He noted that financial criminals often use new technologies to mislead investors, which is crucial for the SEC to adapt to its execution priorities.

Also read: Czech central bank governor says learning bitcoin will strengthen us

Why it matters: SEC’s decision reflects the former chairman’s active enforcement strategy Gary Genslerhe took about 100 encryption-related enforcement actions during his tenure.

Gensler is a voice critic of digital assets, often questioning its fundamental value and portraying the industry as being too reliant on market sentiment rather than financial fundamentals.

Over the years, the SEC’s cryptocurrency monitoring approach has changed.

Soon after Donald TrumpDuring the inauguration, the agency formed a separate working group to create a clearer regulatory framework for digital assets.

While the program is designed to bring structure into the cryptocurrency industry, the SEC’s latest move shows a broader focus on network-related financial crimes rather than direct oversight of digital currencies.

With this shift in enforcement priorities, financial markets and cryptocurrency companies will monitor the development of regulatory oversight and whether the SEC’s scaling encryption approach affects future industry developments.

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