A group of former SEC and CFTC officials is urging US regulators to take a lighter hand with crypto trading, arguing the current enforcement-heavy approach is pushing business offshore and costing the country its competitive edge. The proposal, framed as a competitiveness play, would ease oversight in hopes of pulling trading activity back onshore and keeping innovation domestic.
The lighter-touch pitch
The officials want a regulatory posture that's less aggressive than the enforcement-heavy approach that has defined US crypto policy in recent years. The lighter hand would apply specifically to trading — the area where the US has lost the most ground to overseas venues. The goal isn't deregulation for its own sake. It's recalibrating so that compliance doesn't become a reason to leave.
The group's argument is straightforward: the US can't win a global market it keeps pushing away. Every enforcement action that chases a platform offshore, every rule that makes listing a token a legal risk, is a vote for doing business somewhere else.
The offshore problem
Trading volume has drifted to jurisdictions with clearer rules or friendlier treatment. That migration has consequences beyond lost fees. US investors end up exposed to platforms that don't answer to American regulators, and the country's own market infrastructure atrophies. The former officials see a lighter touch as the way to reverse that flow.
The offshore dominance isn't just a market share problem. It's a supervision problem. When trading happens on venues outside US jurisdiction, American users are relying on foreign regulators — or no regulator at all — to keep the market honest.
The innovation argument
The pitch also rests on domestic innovation. A regulatory environment that doesn't treat every new product as a potential enforcement target gives builders room to experiment. The officials argue the US can't claim leadership in crypto if the people building it are doing so from Singapore or Dubai.
The logic is that innovation follows certainty. When founders know the rules, they build. When they don't, they relocate. A lighter touch, the argument goes, signals that the US is open for business again.
Who decides next
The proposal is a recommendation, not a rule change. Whether current SEC and CFTC leadership takes it up is the open question. The former officials carry weight — they've been through the enforcement machinery themselves — but they no longer set policy. The next few months will show whether the message lands.
