On February 20, the SEC announced the creation of the CETU, which will replace the Crypto Assets and Cyber Unit and be led by its former co-chief, Laura D’Allaird. In 2022, the SEC nearly doubled the size of the Crypto Assets and Cyber Unit with 50 dedicated positions, whereas the CETU is anticipated to have about 30. This restructuring may suggest a further shift in the SEC’s enforcement approach both in terms of size and focus.
The Cyber and Emerging Technologies Unit
Acting SEC Chair Mark T. Uyeda announced that “the new until will ... allow the SEC to deploy enforcement resources judiciously.” Moreover, the unit will focus on investor protection, “but will also facilitate capital formation and market efficiency by clearing the way for innovation to grow.” Uyeda noted that enforcement efforts “will root out those seeking to misuse innovation to harm investors and diminish confidence in new technologies.”
The CETU is expected to utilize the expertise of the former Crypto Assets and Cyber Unit. The announcement identifies the following priority areas “to combat misconduct as it relates to securities transactions”:
- Fraud committed using emerging technologies, such as artificial intelligence and machine learning
- Use of social media, the dark web, or false websites to perpetrate fraud
- Hacking to obtain material nonpublic information
- Takeovers of retail brokerage accounts
- Fraud involving blockchain technology and crypto assets
- Regulated entities’ compliance with cybersecurity rules and regulations
- Public issuer fraudulent disclosure relating to cybersecurity
CETU and the Crypto Task Force: Collaboration and Next Steps
The SEC’s announcement noted that the CETU will “complement the work of the Crypto Task Force led by Commissioner Hester Peirce.” Whereas the Crypto Task Force’s stated purpose is to focus on shaping guidance—such as developing clear criteria for whether and how certain assets are securities, proposing safe harbors for token issuers, and addressing custody concerns—it appears the CETU will assume a more immediate enforcement role on fraud and cyber-related misconduct. This two-pronged approach is in line with the SEC’s stated goal of providing workable regulatory pathways and deterring bad actors who undermine market confidence.
The CETU’s enforcement priorities may help clarify the boundaries for emerging crypto and fintech projects. Meanwhile, the task force’s ongoing efforts—such as exploring crypto lending and staking frameworks or facilitating cross-border regulatory sandboxes—may inform the CETU’s approach to investigations and enforcement. The synergy between these two initiatives may indicate that the SEC seeks to establish a balanced environment: one that protects retail investors but still encourages innovation to advance within a reliable, clearly defined regulatory framework.
Looking ahead, industry participants should anticipate continued scrutiny from the CETU alongside new guidance from the Crypto Task Force. Market actors operating in the digital-asset space may benefit from staying informed of both enforcement trends (as CETU deploys resources against fraudulent schemes) and regulatory developments (as the task force refines rules for compliant crypto operations). Engaging with the SEC—whether by submitting feedback or requesting meetings—remains an important avenue for influencing the evolving framework and meeting the SEC’s stated goal of “clearing the way for innovation to grow.”
