SEC enforcement dropped 60% in 2025, but all relief rests on executive actions. Stefan Muehlbauer warns one election cycle could reverse it. Legislative window is now open.
Alpha Score of 33 reflects weak overall profile with poor momentum, poor value, weak quality, strong sentiment.
The SEC launched only 13 crypto-related enforcement actions in 2025, a 60% decline from 33 in the prior year, according to Cornerstone Research. Cases against Coinbase, Binance, Kraken, Consensys and Ripple were dropped or resolved – most without financial penalties. Staff Accounting Bulletin 121 was rescinded. The new SEC Chair Paul Atkins issued a four-part taxonomy that carved stablecoins and memecoins out of securities treatment.
That welcome shift faces a structural weakness, argues Stefan Muehlbauer, Head of U.S. Government Affairs at CertiK. In a widely circulated op-ed, he warns that every piece of relief enacted since Donald Trump returned to the White House rests on executive and administrative pivots, not legislation. The crypto industry is now one election cycle away from a full return to the Gary Gensler-era hostility. For institutional allocators and builders deciding where to deploy capital, that distinction is existential.
The pivot began almost immediately after Trump's first week back in office. He signed an executive order titled "Strengthening American Leadership in Digital Financial Technology" that revoked Joe Biden's 2022 digital-asset directive, banned federal agencies from promoting CBDCs, and created a President's Working Group on Digital Asset Markets tasked with delivering a unified, technology-neutral framework within 120 days.
The SEC followed that political signal with a cascade of changes. Under Atkins, described by Muehlbauer as "a veteran crypto advocate," the Commission dropped or resolved the major enforcement actions against Coinbase, Binance, Kraken, Consensys and Ripple – all but one without financial penalties. It rescinded SAB 121, which had required companies holding crypto assets to register them as liabilities, a rule that had blocked banks from offering custody. It also issued a four-part categorization that split tokens into new buckets, signaling that U.S. dollar-backed stablecoins and memecoins would not be treated as securities.
| Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Crypto-related SEC actions | 33 | 13 | –60% |
| Major cases resolved (Coinbase, Binance, Kraken, Consensys, Ripple) | 0 | 5 | +5 |
| SAB 121 rescinded | No | Yes | – |
| Four-part crypto taxonomy issued | No | Yes | – |
Source: Cornerstone Research; SEC announcements.
The scale of the reversal is striking. Yet Muehlbauer's core argument is that none of this has a permanent foundation.
The mechanism that threatens the current calm is simple: political time. A new president could appoint a new SEC chair who reinstates Gensler's "calculated ambiguity that stifled domestic innovation," Muehlbauer argues. That ambiguity – deliberate refusal to provide clear compliance pathways – was the defining feature of the Gensler years, which saw lawsuits against major platforms and a cold war on token listings.
Today, the U.S. is "only one election cycle away from a return to the more hostile environment of the past," he warns. A change in administration could revive the same enforcement machine, undoing the progress the industry now takes for granted.
The SEC's new taxonomy treats U.S. dollar-backed stablecoins as outside securities law. That is a practical relief for banks and payment firms building on-chain rails. It was an SEC interpretation, not a statute. A future chair could simply reverse that interpretation and throw billions in stablecoin market cap back into legal limbo.
Practical rule: Until a congressional mandate codifies which agency controls which token, every regulatory concession is a political favor – and favors can be revoked.
The Digital Asset Market Clarity Act, advanced by the House with bipartisan support, would give the CFTC jurisdiction over "digital commodities," leave "restricted digital assets" to the SEC, and allow tokens to transition from securities to commodities once their networks are sufficiently decentralized. It would also impose strict initial disclosure rules and a provisional registration regime, replacing ad hoc enforcement with known boundaries.
That bill is stuck in the Senate. A rival Responsible Financial Innovation Act draft would keep more power with the SEC, and some Democrats warn that expansive deregulation risks a "financial meltdown." Muehlbauer's warning is blunt: if the Senate squanders the current window of alignment – a president and an SEC chair both sympathetic to crypto – "the 'Gensler years' may not remain a historical footnote" but become a recurring pattern every two to four years.
Key insight: The legislative window is open now precisely because the current administration is friendly. If a new administration hostile to crypto takes power before a bill passes, the window slams shut. That is the risk event.
Institutional capital allocators and builders are the most exposed. They require the kind of certainty that only a congressional mandate can provide. Venture capital into U.S.-based crypto startups, which already slowed during the Gensler era, could be chilled again if regulatory risk returns. Liquidity in U.S. markets could migrate to offshore venues as it did in 2022–2024.
What this means: The next 12–18 months are the decisive window. If the industry fails to convert executive relief into statutory protection, it is betting that every future administration will be as friendly as the current one. That bet has no historical precedent in U.S. financial regulation.
Muehlbauer's most pointed argument is directed at the industry itself. The current stability lulls builders and investors into treating the friendly regime as permanent. They stop lobbying, stop engaging with Congress, and assume the SEC will stay friendly. That assumption is the trap.
Bottom line for traders: The regulatory-easing trade is not priced with a political tail. If the Senate stalls and the next election flips control, the enforcement machine can restart faster than most market participants expect. Any portfolio with material U.S. crypto exposure should account for that tail, either through hedging or by favoring jurisdictions with statutory regimes already in place.
The decision is not about whether the current SEC is good for crypto. It is about whether the current relief is just a pause, not a settlement. As Muehlbauer puts it, only legislation can move digital assets "out of the realm of politics and into the realm of established commerce."
For more context on the legislative battle, see our coverage of the CLARITY Act Vote Math and the latest in crypto market analysis.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.