SEC’s Paul Atkins questioned regarding the agency’s reduced enforcement on cryptocurrency, including matters involving Justin Sun and Tron.

The chairman of the U.S. agency indicated in a House hearing his willingness to consider a confidential briefing for lawmakers on the matter.

Justin Sun was a key subject in Representative Maxine Waters’ inquiries directed at the U.S. SEC chairman during the hearing. (CoinDesk)

Key points:

• U.S. Securities and Exchange Commission Chairman Paul Atkins informed a senior Democratic lawmaker that he could not discuss the halted enforcement case involving Justin Sun and his Tron Foundation, but he indicated he would contemplate a confidential briefing for lawmakers.
• While Democrats scrutinized the SEC’s approach to crypto enforcement in an oversight hearing of the House Financial Services Committee, Republicans concentrated on Atkins’ plans to introduce crypto regulations.
• Atkins mentioned he is advancing rules that will closely align the agency with the Clarity Act concerning crypto market structure, despite the uncertain outcome of that bill in the Senate.

The leading Democrat on the U.S. House Financial Services Committee pressed the SEC chairman during a Wednesday hearing for clarification on the agency’s enforcement interest in Tron Foundation founder Justin Sun and whether his connections to President Donald Trump have influenced the situation.

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Representative Maxine Waters emphasized the abandonment of nearly all prior crypto enforcement actions by U.S. securities regulators following Trump’s assumption of the presidency and the subsequent restructuring of the agency’s leadership last year. She highlighted the investigation into Sun, wherein the agency examined him and his company over various allegations, including the improper inflation of their token’s price (TRX).

SEC Chairman Paul Atkins stated to the committee that he was unable to address specifics of individual cases, but he expressed a readiness for further discussions in a confidential briefing “to the extent the rules permit me to do that.”

In 2023, the SEC formally charged Sun with attempting to artificially boost TRX’s trading volume through a so-called “wash trading” scheme, purportedly involving his employees “engaging in over 600,000 wash trades of TRX between two accounts under his control.” However, the agency opted to pause that case in court a year ago “while they evaluate a potential resolution.” No conclusion has yet been disclosed.

“While you were exploring a potential resolution, Mr. Sun has been actively engaging within Trump’s circle,” Waters remarked to Atkins, alluding to Sun’s connections with the Trump family’s World Liberty Financial Inc.

Waters also noted a recent incident where an alleged former girlfriend of Sun publicly claimed to possess evidence of TRX manipulation.

Representatives for Tron and Sun did not immediately reply to requests for comments regarding the dialogue during Wednesday’s hearing.

“Chairman Atkins, you have stated that under your leadership, the SEC will prioritize genuine fraud,” she inquired. “Does your assertion encompass fraud within the crypto market?”

“Anything that involves securities,” Atkins replied.

Last year, his agency dropped several high-profile enforcement actions against Binance, Ripple, Coinbase, Kraken, Robinhood, and various other firms, with the new management criticizing the “regulation-by-enforcement” strategy employed under the previous leadership.

In response to another Democratic lawmaker’s question about whether his agency ever protects investors at the expense of Trump’s businesses, Atkins remarked, “Regarding what the Trump family does or does not do, I cannot comment on that.”

While Democrats have concentrated on the SEC’s reversal of its earlier crypto enforcement actions, Republicans on the committee focused on Atkins’ commitment to provide the crypto industry with regulatory guidance to clarify — alongside the Commodity Futures Trading Commission — how businesses can function in the U.S.

Atkins indicated that the agencies are collaborating on rules “consistent with what is included in the Clarity Act that you all passed here in the House, and hopefully what will emerge from the joint efforts you are undertaking with the Senate. Thus, we will proceed, and it will essentially provide clarity regarding the jurisdictions of the two agencies.”

As the SEC and CFTC work on that collaborative initiative under their Project Crypto designation, the CFTC has also recently moved to adopt the new U.S. stablecoin framework by updating an earlier so-called “no action” letter to clarify that national trust banks are authorized to issue payment stablecoins, thus broadening the list of eligible tokenized collateral to include tokens issued by such banks.

Additionally, on Wednesday, the U.S. credit union regulator, the National Credit Union Administration, introduced a proposal outlining how companies can apply to become stablecoin issuers. This marks an initial step toward enacting last year’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act — the first major legislative victory for the crypto industry.

Currently, the crypto sector is observing a policy competition between Atkins’ SEC and Senate lawmakers developing the Clarity Act to regulate U.S. crypto markets. With recent delays hindering the Senate’s progress, Atkins’ agency may take the lead in formulating digital asset regulations.

Read More: House Democrats criticize SEC for discontinuing crypto cases involving Trump connections