Former SEC Commissioner Paul Atkins was nominated by President Trump to take over as SEC chair. Meanwhile, the SEC is asking for public feedback on allowing in-kind creations and redemptions for Bitcoin and Ethereum ETFs, which could boost tax efficiency and institutional adoption. Additionally, Federal Reserve Chair Jerome Powell completely ruled out issuing a central bank digital currency (CBDC) during his term, which is similar to many Republican lawmakers' stance against a digital dollar.
SEC Cannot Set Crypto Agenda Without Confirmed Leadership
The US Securities and Exchange Commission (SEC) is expected to delay setting a regulatory agenda for digital assets until the Senate confirms a new chair, according to Commissioner Hester Peirce. At a Federalist Society panel on Feb. 11, Peirce said that it will be “a little premature” for the SEC to move forward without a confirmed chair who could lead the agency’s approach to cryptocurrency regulation.
The Federalist Society panel included:
Since the departure of former chair Gary Gensler on Jan. 20, Mark Uyeda has taken over as acting chair. However, the Senate is expected to vote soon on President Donald Trump’s nominee, former SEC Commissioner Paul Atkins. Peirce acknowledged that Uyeda was effectively managing the commission’s current agenda but suggested that a confirmed chair will need some time to establish their own regulatory priorities.
(Source: Donald Trump)
Trump nominated Atkins to serve as an SEC commissioner for a term ending in June of 2031, but the Senate Banking Committee has yet to advance his nomination. If approved, he will lead the financial regulator and set its course on key issues like cryptocurrency oversight. Peirce also pointed out that the SEC was still working to determine the best path forward for digital asset rulemaking, particularly in light of a recent appellate court ruling that criticized the agency’s handling of a rulemaking request from Coinbase.
After the creation of the SEC’s Crypto Task Force, the agency requested delays in at least two enforcement cases, which indicates that the ongoing regulatory deliberations could actually influence its approach. An Illinois judge granted the SEC a 30-day extension in its case against Cumberland DRW, while a request for a delay in its lawsuit against Binance was still pending in a District of Columbia court.
Peirce and Uyeda are both Republican commissioners, and currently serve alongside Democratic Commissioner Caroline Crenshaw. It is still unclear whether Trump plans to nominate a fifth commissioner to round out the SEC’s leadership if Atkins is confirmed.
SEC Considers Making Crypto ETFs More Efficient
The SEC is also seeking public comments on a proposal that will allow Bitcoin and Ethereum exchange-traded funds (ETFs) to create and redeem shares using spot cryptocurrency rather than cash. According to a filing on Feb. 10, the move could greatly impact ETF tax efficiency and institutional adoption. The proposal follows an amended application that was submitted on Feb. 5 by the Cboe BZX Exchange to permit in-kind creations and redemptions for the ARK 21Shares Bitcoin ETF and the 21Shares Core Ethereum ETF.
In-kind creations and redemptions allow ETF issuers to exchange shares directly for the underlying assets, which is a practice common in traditional ETFs for improved tax efficiency. Currently, the SEC has not allowed such a mechanism for spot cryptocurrency ETFs, which could change if regulators approve the proposal. Industry participants argue that allowing in-kind redemptions will boost after-tax performance and increase demand among institutional investors.
The request was made during a wave of crypto-related ETF proposals. In January, Nasdaq asked for SEC approval to enable in-kind creations and redemptions for BlackRock’s iShares Bitcoin Trust, which is the largest spot Bitcoin ETF with approximately $57 billion in assets under management. In contrast, ARK 21Shares Bitcoin ETF holds around $5 billion, while the 21Shares Core Ethereum ETF has $20 million.
As seen from some of the latest developments, the regulatory landscape for cryptocurrency ETFs could shift under the new US administration, especially as Donald Trump signaled a much more favorable stance toward the industry. After his election victory and inauguration on Jan. 20, expectations rose that US regulators may ease restrictions on crypto-based investment products. Asset managers have also already filed for several new ETFs holding altcoins like Solana, XRP, and Litecoin. Additionally, issuers are awaiting approval for crypto index ETFs that are designed to track baskets of digital assets.
Analysts at Bloomberg Intelligence believe that there is a very strong chance of approval for the proposed changes and new crypto ETF filings. If approved, the shift toward in-kind creations and redemptions could be a turning point in the evolution of crypto investment vehicles, and could pave the way for even more institutional participation.
Jerome Powell Rules Out CBDC Under His Leadership
Despite the optimism surrounding Trump’s regulatory picks, there are still limits to what this leadership is willing to do. Federal Reserve Chair Jerome Powell recently assured US lawmakers that the central bank will not issue a central bank digital currency (CBDC) while he is in charge.
At a Senate Banking Committee meeting on Feb. 11, Powell responded to questions from Ohio Senator Bernie Moreno, and confirmed that a digital dollar will not be introduced during his term, which runs until May of 2026. His statement was one of the strongest rejections of a CBDC from the Fed to date.
Powel during the Semiannual Monetary Policy Report to the Congress
The Senate hearing focused on a semiannual monetary policy report to Congress, and Powell also addressed concerns about debanking policies. Senators Tim Scott and Cynthia Lummis asked questions about financial institutions allegedly being pressured by government agencies to cut off services to crypto firms. Powell indicated that the Fed will reassess its approach to such policies.
Powell’s remarks are a shift from his previous stance. During a March 2024 hearing in a Democratic-controlled Senate, he stated that the US was "nowhere near recommending or let alone adopting a central bank digital currency in any form," but stopped short of an outright refusal. His latest statement aligns with the broader stance of Republican lawmakers, who have made preventing the launch of a digital dollar a policy priority.
With Republicans controlling the House, Senate, and White House, efforts to block a US CBDC have gained a lot of traction. President Donald Trump even issued an executive order on Jan. 23 that bans the establishment, issuance, and use of a digital dollar, though legal experts have debated the extent of his authority to enforce such a measure. Additionally, an anti-CBDC bill introduced by Representative Tom Emmer passed the House in May of 2024 along largely partisan lines and is currently awaiting action in the Senate Banking Committee. It is still uncertain if the legislation will advance during the 119th session of Congress.
