In a major policy shift that could reshape the regulatory landscape for emerging technologies, the U.S. Securities and Exchange Commission (SEC) has replaced Gary Gensler’s Crypto Assets and Cyber Unit with a new Cyber and Emerging Technologies Unit (CETU). Announced on February 20, 2025, this change reflects the agency’s evolving priorities as it braces for budget cuts and turns its focus toward the growing threats in artificial intelligence (AI) and other Web3 technologies.
A New Regulatory Direction
The new CETU, led by Laura D’Allaird and staffed by a team of approximately 30 lawyers and fraud specialists, is tasked with investigating a wide range of crimes related to emerging technologies. While it will still collaborate with the SEC’s Crypto Task Force—overseen by Commissioner Hester Peirce—crypto-specific enforcement is now only one of many priorities. In fact, the CETU’s official priorities list features crypto as just the fifth of seven focus areas.
| Previous Unit | New Unit: CETU |
|---|---|
| Crypto Assets and Cyber Unit | Cyber and Emerging Technologies Unit |
| Focus on crypto enforcement and cybercrime | Broader mandate: AI crimes, social media, hacking, plus crypto |
| Created under Gensler’s tenure | Led by Laura D’Allaird, with ~30 specialists |
This pivot comes at a time when the SEC is under pressure to recalibrate its resources amid looming budget cuts. With less funding available, the agency is narrowing its scope, shifting from the broad and sometimes controversial crypto crackdowns of the past to a more generalized approach aimed at tackling high-priority emerging tech crimes.
The Rationale Behind the Change
Since Gary Gensler’s tenure, the SEC’s approach to crypto has been characterized by aggressive enforcement actions. However, the crypto landscape has matured considerably, and many in the industry argue that a more nuanced regulatory approach is needed. The SEC now appears to be taking this view, recognizing that a one-size-fits-all strategy for crypto may be counterproductive in fostering innovation and protecting investors.
Commissioner Hester Peirce, who has long advocated for a balanced regulatory framework, has been instrumental in this shift. In recent statements, she noted that while enforcement remains critical, the SEC must adapt to the rapid evolution of technology. By delegating responsibilities across a broader range of emerging tech areas, the new CETU aims to “protect investors and facilitate capital formation and market efficiency by clearing the way for innovation to grow.”
The SEC’s Acting Chair Uyeda emphasized that the unit is not meant to signal a retreat from crypto regulation altogether. Rather, it represents a strategic reallocation of resources to address the most pressing threats of our time—particularly those associated with AI-driven crimes, which are predicted to become increasingly sophisticated.
Balancing Enforcement with Innovation
The transition to a generalized Web3 enforcement model reflects a broader industry trend: regulators worldwide are striving to strike a delicate balance between cracking down on fraudulent activities and nurturing innovation. The SEC’s new unit will investigate offenses across a spectrum of emerging technologies, from AI misuse to social media manipulation, while still keeping an eye on crypto-related crimes.
Critics of the previous regime argued that the aggressive crypto crackdown under Gensler sometimes stifled innovation and created uncertainty in the market. The new CETU, by contrast, is designed to clear a path for technological advancement while targeting only those activities that pose a real risk to investors. In doing so, the SEC is seeking to rebuild trust within the financial system and encourage a more vibrant, innovative market.
| Enforcement Focus | Gensler’s Crypto Unit | New CETU Approach |
|---|---|---|
| Primary focus on crypto asset regulation | Crypto-centric investigations | Broader mandate including AI, social media, hacking, etc. |
| Aggressive enforcement style | Heavy-handed crypto crackdowns | Selective enforcement with emphasis on high-priority emerging tech crimes |
| Industry impact | Often led to market uncertainty | Aims to foster innovation while protecting investors |
Looking Ahead: What Does This Mean for the Industry?
With the formation of CETU, the SEC is clearly signaling its intent to evolve alongside the technologies it seeks to regulate. This move could have significant implications for the crypto industry and beyond. By reducing the intensity of broad crypto crackdowns, the SEC may pave the way for increased innovation within the sector, potentially attracting more institutional investment.
However, this new approach also carries risks. With the focus shifting toward AI and other emerging technologies, some worry that crypto-specific issues might not receive the dedicated attention they once did. The delicate balance between enforcement and innovation will be the key to ensuring that investor protection remains robust even as the regulatory landscape adapts.
Conclusion
The SEC’s decision to replace Gensler’s Crypto Assets and Cyber Unit with the new Cyber and Emerging Technologies Unit marks a watershed moment in financial regulation. With a broader mandate that encompasses AI-related crimes and other tech-driven offenses, the SEC appears poised to adapt to the evolving digital economy. As the new unit takes shape under the leadership of Laura D’Allaird, the crypto community—and indeed, all of Web3—will be watching closely to see how this shift impacts enforcement, innovation, and investor confidence.
In a rapidly changing technological landscape, this move by the SEC could well become a blueprint for other regulatory bodies around the world. As budget constraints force a more strategic allocation of resources, the focus on high-impact, high-priority areas promises to both protect investors and foster an environment where innovation can thrive.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Readers should conduct their own research and consult professional advisors before making any investment decisions.
