The SEC will fundamentally change its approach to enforcement with new leadership, according to Commissioner Hester Peirce.

“I hope we return to understanding that we are a regulatory agency within the executive branch of government, not an executive entity that avoids regulation,” Peirce said at the Blockchain Association Summit.

She noted that the SEC has historically leaned toward enforcement actions against the crypto industry, but she expects this approach to shift with new leadership at the agency.

After the departure of current SEC Chair Gary Gensler, Peirce aims to focus on clearly defining the SEC’s jurisdiction. Within this framework, she believes the agency must “help market participants find a path forward” that maintains the commercial appeal of businesses while ensuring compliance with the law.

“We have enough flexibility to make adjustments through exemptions, no-action letters, and other methods. […] I think we’ll see significantly more experimentation in this space,” she added.

Her colleague, Commissioner Mark Uyeda, who described the SEC’s previous approach as a “complete disaster,” views the change as an opportunity for the agency to fulfill its mandate.

“There’s a reason we engage in regulation, not pure enforcement,” he said.

According to Uyeda, a responsible regulator should create room for innovation, clearly communicate rules, and provide guidance on compliance.

He hopes the SEC will shed its reputation as a “scolding teacher” that blocks progress and return to its prescribed role as a regulator.

Uyeda emphasized that in ongoing legal proceedings initiated by the SEC, only staff members and defense representatives are involved, leaving the public uninformed. He argued that legislative issues often impact a broader audience that should participate in discussions.

“That’s why we have the Administrative Procedure Act — to allow public commentary on regulations. Ensuring transparency is our duty to the American public,” Uyeda said.

He also noted that even SEC commissioners sometimes lack input in the agency’s decisions because enforcement staff draft recommendations without sufficient consultation.

Both commissioners agreed that enforcement measures are appropriate in certain borderline cases but are unsuitable as a broad tool for creating comprehensive regulations.

They also pointed out that at the start of 2025, the SEC will operate with a reduced number of members until the Senate approves new appointments. With the departure of Gensler and Democratic Commissioner Jaime Lizárraga, the SEC will be led by Republicans Peirce and Uyeda, alongside Paul Atkins, who has been nominated as the new SEC Chair.

“Since three commissioners belong to the same party, I think Democrats expect Paul Atkins to swiftly appoint someone from another political affiliation after Senate confirmation,” said Theresa Goody Guillén, a former SEC litigation attorney.

Under SEC rules, no more than three commissioners can belong to the same political party. Atkins may appoint a Democrat, libertarian, or independent, but not another Republican.