In February, Government Efficiency (DOGE) began recruiting public opinions related to the US Securities and Exchange Commission (SEC). This is a move that suggests that institutional reform is imminent.
Since then, alongside President Trump, the SEC has been far less hostile towards the cryptocurrency industry, as evidenced by the appointment of crypto-friendly staff and the abandonment of numerous lawsuits and investigations against crypto companies. However, Doge has the potential to implement further changes, and interest in the SEC is increasing pressure on regulators to reassess its approach to digital assets.
Coinbase Chief Legal Officer Paul Growal has proposed a policy that requires Paul Grewal, one of the companies that no longer face SEC litigation, to reimburse legal costs for companies that have successfully implemented enforcement efforts. The motivation for his proposal is clear, but Doge’s impact on cryptography would be a little more broad.
As Joel Khalili summed up in Wired, the SEC’s recent retreat represents “an early signal of the institution’s intention to work together with the industry to devise a set of rules for managing crypto transactions and products.”
Depending on the current situation, the SEC lack of aggressive guidance makes it difficult for businesses to plan long-term compliance strategies, and enforcement actions take place after years of operation, exposing companies and their investors to unexpected legal risks. This will likely change in the future.
Relying on enforcement instead of aggressive guidance has forced companies like Coinbase, Ripple and celsius to spend millions of cases to clarify their regulatory status. However, in one case against the debt box, the SEC recognized the inaccuracy of the statement and ordered the court to cover the company’s legal costs. This is a preview of Coinbase’s suggestion. The ruling questioned the agency’s credibility and highlighted concerns about its enforcement practices.
In the future, we hope that regulators, including the SEC, are putting pressure on them to match the approach of the US Treasury. The Treasury’s digital asset guidelines are much more structured and address key areas such as tax reporting, compliance and AML measurement. Standardized definitions of what constitutes the security of the crypto space are essential to helping businesses build their products properly from the start.
In addition to taking notes from the Treasury, the SEC can also seek inspiration from the IRS. The “safe harbor” provision for early stage projects, similar to the proposal previously discussed by SEC Commissioner Hesterperth, could encourage innovation while ensuring compliance over time. The IRS has already embraced this approach, and in January 2025 issued a temporary transition relief to crypto taxpayers.
Historically, the IRS relied on voluntary disclosure programs to guide taxpayers to compliance rather than imposing punitive actions in advance. Similar models should also be applied to cryptographic regulations.
Some people assume that regulations inherently hinder innovation, but the opposite may be true. This is because well-defined guardrails will seduce more risk aversion entities, enter the ecosystem and support their growth. A light adjustable touch requires robust back-end enforcement, which can lead to unnecessary friction between regulators and businesses.
Overall, better coordination between the SEC, Treasury Department, and the IRS will help prevent regulatory disputes and streamline compliance obligations for digital asset companies and stakeholders. The Ministry of Finance’s Digital Asset Guidelines already provide a strong foundation for the integrity of this type of ministries. Current regulatory uncertainty and the SEC’s reactive enforcement approach will curb growth, but a clearer, more coordinated framework will benefit the entire ecosystem.
Between Doge’s input demands, the new administration’s broader commitment to digital asset reform, and Coinbase’s proposal, this stage is set for reforms aimed at making regulatory oversight more predictable. While we are in the early stages of the new administration, there is already a change at an incredible pace. It is clear that the impact on Doge’s SEC policy will have an impact. In particular, public discourse on these issues further strengthens cases of clearer guidelines rather than enforcement regulations.
Of course, it is worth noting that Doge’s SEC’s plans are likely to expand beyond Crypto, as efforts to regulate the industry expand beyond the SEC. Ultimately, it would be beneficial for the new administration to create an industry legislative framework alongside Congress, so businesses and individual taxpayers understand what constitutes products, security and digital assets. In other words, you have to learn to walk before you run. In the meantime, the SEC will need to adopt strategies that can promote growth while maintaining investor protection.
