U.S. Lawmakers Sound Alarm: Is SEC Enforcement Drop Tied to National Security Threats?
Washington's watchdog might be looking the other way—and some in Congress think they know why.
The Enforcement Gap
A noticeable chill has settled over the Securities and Exchange Commission's enforcement division. Case filings are down. Settlements have slowed. The usual flurry of press releases announcing fines and charges has become a trickle. On paper, it looks like regulatory calm. Behind closed doors, lawmakers are whispering about a far more concerning possibility: that national security considerations are quietly dictating the SEC's agenda.
Security Over Scrutiny?
The theory goes like this. In a high-stakes global tech race, particularly around blockchain and digital assets, aggressive enforcement could inadvertently cripple American companies. The fear? That overzealous regulation might hand the competitive edge to foreign adversaries, allowing them to dominate the foundational tech of the next internet. So, the hammer rests—not out of neglect, but by strategic design. It's industrial policy disguised as regulatory restraint. After all, why bankrupt the home team when the real game is against overseas rivals?
The Unintended Consequences
This shift creates a dangerous gray area. Markets thrive on clear rules. When enforcement becomes selective—or worse, politically malleable—it breeds uncertainty. It tells bad actors in the crypto wild west that the sheriff might be preoccupied. It creates a two-tier system where some firms operate with a silent nod while others face the full force of the law. It’s the kind of opaque maneuvering that usually ends with a congressional hearing and a lot of very angry voters.
A Balancing Act or a Blunder?
Protecting national interests is paramount. But sidelining core regulatory functions to do it is a perilous trade-off. It risks the integrity of the very markets the SEC is sworn to protect. It assumes that a temporarily unpunished domestic innovator will always outpace a foreign rival, a gamble that ignores the sheer volatility and occasional fraudulence of the space. Sometimes, the most patriotic move is to clean up your own backyard—even if Wall Street winces at the compliance costs.
The silence from the SEC's enforcement division isn't just quiet—it's deafening. And in Washington, silence is rarely just silence. It's a policy. Whether it's a shrewd strategy or a catastrophic misstep, one thing's clear: when regulators stand down, someone always steps in to fill the void. Let's hope it's not the people we're supposedly protecting ourselves from.
Lawmakers fear U.S. SEC enforcement drop linked to national security
A notable development cited in the discussion involved the LINK between Abu Dhabi-based Aryam Investment 1, backed by Sheikh Tahnoon bin Zayed Al Nahyan, and Trump family-backed World Liberty Financial (WLFI). Aryam Investment 1 allegedly has a 49% stake in the startup behind WLFI.
In this regard, Rep. Lynch argued that such ties could undermine trust in the crypto sector and complicate consumer protection. Democratic lawmakers have repeatedly raised concerns about the Trump family’s involvement in the crypto space and its potential to compromise U.S. national security.
Cryptopolitan previously reported that Atkins, appointed by Trump, ended aggressive U.S. SEC enforcement for technical violations. The agency also dropped several crypto investigations tied to Trump donors.
Rep. Waters, a well-known vocal critic of crypto and Trump, noted that nearly all of the crypto industry moguls who benefited from the dismissed regulatory suits and the pardons dished out millions of dollars to POTUS and his family. She described Trump’s family’s involvement in the crypto space as a potential backdoor for foreigners to bribe officials to influence Executive Branch policy.
U.S. SEC enforcement shrinks under Trump and Atkins
A recent Cornerstone Research report showed that 2025, which marked Paul Atkins’s first phase of tenure as the agency’s chair, saw a decline in crypto enforcement by the U.S. SEC, with only 13 actions initiated in 2025 after bringing a total of 33 crypto-related actions in 2024. 5 of the 13 actions were brought under former U.S. SEC chair Gary Gensler before he left office in January. Specifically, seven out of the 29 actions resolved in 2025 were dismossals under Atkins.
Meanwhile, monetary fines imposed in 2025 against crypto market participants dropped to $142 million, representing less than 3% of the penalties imposed in 2024. The report noted that the U.S. SEC’s focus has shifted away from broad registration theories and toward fraud cases grounded in clear consumer harm, which are easier to argue in court.
Robert Letson, a principal at Cornerstone Research and one of the report’s authors, also noted that the drop in enforcement actions under Chair Atkins’ tenure reflects a shift in the U.S. SEC’s approach to digital asset oversight. Letson added that his research firm will continue to watch digital asset regulation closely as it evolves in 2026, consistent with the priorities laid out in early 2025.
According to Cornerstone Research, legal observers have tracked a broader reset in tone across the U.S. SEC since the leadership change in April 2025, when Atkins took office. However, the research firm also observes that the next phase of U.S. crypto oversight may hinge more on the regulatory guidance or negotiated standards the agency chooses to bring to the table in 2026, rather than on surprise lawsuits.
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