SEC creates cyber and emerging tech unit to combat ‘bad actors’

The US Securities & Exchange Commission (SEC) has announced the creation of a ‘Cyber and Emerging Technologies Unit’.

The aim is to focus on ‘combatting cyber-related misconduct and protecting retail investors from bad actors in the emerging technologies space’, according to a SEC press release.

The new unit will replace the Washington DC-headquartered agency’s Crypto Assets and Cyber Unit, whose co-chair Laura D’Allaird will lead it.

It will consist of about 30 anti-fraud specialists and attorneys from multiple SEC offices using their ‘substantial fintech and cyber-related experience’ to tackle ‘misconduct’ as it relates to securities transactions in priority areas.

Those priority areas are: fraud involving artificial intelligence (AI), machine learning, blockchain and cryptoassets; use of social media, dark web and fake websites to perpetuate fraud; hacking to obtain ‘material non-public information’; ‘takeovers of retail brokerage accounts’; regulated entities’ compliance with cybersecurity rules; and fraudulent cybersecurity-related disclosures by public issuers.

RELATED ARTICLE US financial regulator sets up crypto taskforce as Trump returns to power – a news story (23 January 2025) on the SEC launching a taskforce to create a regulatory framework for cryptoassets as it seeks to bring legal clarity to what it described as a ‘confused’ environment that is ‘hostile to innovation’

‘Deploying enforcement resources judiciously’

SEC acting chairman Mark Uyeda said in the 20 February announcement that CETU would complement the crypto taskforce launched last month (January) by the agency to develop a ‘comprehensive and clear’ regulatory framework for cryptoassets.

“Importantly, the new unit will also allow the SEC to deploy enforcement resources judiciously,” Uyeda continued.

“The unit will not only protect investors but will also facilitate capital formation and market efficiency by clearing the way for innovation to grow,” he said. “It will root out those seeking to misuse innovation to harm investors and diminish confidence in new technologies.”

D’Allaird joined the SEC in 2016 as senior counsel in the Division of Enforcement (Cyber Unit) from law firm Arnold & Porter. She became co-chief of the Crypto Assets and Cyber Unit just over a couple of months ago.

Uyeda, a Republican member of the SEC, is filling a role previously occupied by Gary Gensler, who stepped down as Donald Trump returned to the White House for his second term as president. Crypto-related enforcement actions dominated headlines during Gensler’s tenure, which began in 2021. Trump has picked former SEC commissioner Paul Atkins to run the agency on a permanent basis. He awaits Senate approval.

The crypto taskforce is being led by commissioner Hester Peirce. She was first appointed to the SEC in January 2018 by Trump during his first presidential term.

RELATED ARTICLE Trump signs executive order on digital financial technology – a news story (24 January 2025) on an executive order on ‘Strengthening American Leadership in Digital Financial Technology’ (see below)

Trump’s fintech focus

CETU’s establishment comes as the whirlwind pace of implementation of president Trump’s orders to radically overhaul federal departments, agencies and ways of working shows no sign of slowing.

In respect of fintech-specific measures, Trump signed an executive order – eagerly awaited by the cryptoassets sector – just three days after his White House return to ‘establish regulatory clarity for digital financial technology’.

He also kicked off the work of a new presidential working group on digital asset markets. This is being be chaired by David Sacks in his new role as White House artificial intelligence (AI) and crypto ‘czar’ – an appointment announced in December by Trump, who said the former PayPal senior executive would ‘guide policy … in two areas critical to the future of American competitiveness.’

The executive order revoked an executive order on digital assets under Joe Biden’s administration in March 2022, as well as a Treasury Department ‘Framework for International Engagement on Digital Assets’ (July 2022) which – a White House ‘fact sheet’ on Trump’s executive order states – ‘suppressed innovation and undermined US economic liberty and global leadership in digital finance.’

Trump pledged to make the US the ‘crypto capital’ and ‘Bitcoin superpower’ of the planet during his pre-election campaigning. Bitcoin is the world’s best-known cryptocurrency.

RELATED ARTICLE ‘What did you do last week?’: US federal officials asked to detail their achievements – but agency responses differ – a news article (27 February 2025) from our sister title Global Government Forum on US federal officials’ receipt of an email asking them to list five major accomplishments during the past week

Consumer protection agency targeted

Among further fintech-related developments in the US, the future of the Consumer Financial Protection Bureau (CFPB) remains unresolved.

Most of the CFPB’s work has been paused and (at time of writing) its website’s homepage shows a ‘404 Page Not Found’ error message. Trump dismissed the agency’s head, Rohit Chopra, almost a month ago.

One of the most prominent first-day executive orders signed by Trump included the establishment of the Department of Government Efficiency (DOGE), which is tasked with ‘modernising federal technology and software to maximise governmental efficiency and productivity’ and led by Elon Musk. The billionaire Trump supporter has called for the CFPB’s closure, writing on X (formerly Twitter) in November 2024: ‘Delete CFPB. There are too many duplicative regulatory agencies’.

But in signs that the CFPB will continue to have a future, Jonathan McKernan has been nominated as Chopra’s successor. McKernan, most recently a member of the board of directors at the Federal Deposit Insurance Corporation (FDIC), told the Senate banking committee yesterday (27 February) that he would “fully and faithfully” enforce consumer financial protection laws at the agency.

‘The predicate to running a “more streamlined and efficient bureau” is that there will continue to be a CFPB,” the agency’s acting director Russ Vought said in a motion filed in Washington DC federal court, Politico reported earlier this week (25 February).

The CFPB has had a lead role in developing a framework for the introduction of open banking in the US, having formally presented a ‘Personal Financial Data Rights’ rule in October 2024.

RELATED ARTICLE Trump administration to cull 6,700 IRS jobs as part of federal layoffs – a news article (20 February 2025) from our sister title Global Government Forum on cutbacks at the Internal Revenue Service (IRS)

ESRB’s Rehn ‘concerned’

Lawmakers across the world are deciding how to react to developments in the US.

European Systemic Risk Board (ESRB) first vice-chair Olli Rehn said in a speech on 20 February that the ESRB – which is responsible for the macroprudential oversight of the European Union (EU)’s financial system and the prevention and mitigation of systemic risk – had been “monitoring developments on the other side of the Atlantic with concern.”

“The new US Administration is establishing new priorities, including significant deregulation of the financial system,” Rehn said in prepared remarks at a hearing of the European Parliament’s Committee on Economic and Monetary Affairs.

“This deregulation is also aimed at new sectors, such as private finance, non-bank financial intermediation and cryptoassets. We are vigilantly assessing its implications and the potential risks to the EU financial sector.

“Having said that, we [the EU] must not simply be on the defensive,” Rehn, whose main role is governor of Bank of Finland (central bank), continued. “I am convinced that the EU has the potential to deliver on the essential goals of competitiveness and productivity growth. I also remain convinced that building up a savings and investment union will be essential for enabling the EU to provide its citizens and businesses with the public good of a competitive and integrated financial system – one which can also foster their security.”

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