What is the Securities and Exchange Commission (SEC)?

What is the SEC?

The Securities and Exchange Commission (SEC) is the U.S. regulator overseeing the financial markets. It is the government agency that ensures that the securities markets operate fairly, orderly and transparently. The SEC protects investors, monitors companies that issue securities and takes action against deception and fraud. The regulator also supervises corporate mergers and acquisitions and ensures that market participants comply with U.S. securities law.

Securities are tradable financial products such as stocks and bonds. Because these products represent value and are bought and sold by millions of investors, proper oversight is important to prevent deception, market manipulation and unfair trading.

Key Takeaways

• The SEC is the U.S. regulator that protects investors and oversees the securities markets.
• The organization was created after the 1929 stock market crash to restore confidence in the financial markets.
• The SEC requires transparent reporting from companies and takes action against fraud and misleading information.
• In the crypto market the SEC determines when tokens count as securities and therefore fall under strict regulation.
• Under chairman Paul Atkins the focus is shifting from enforcement to clearer regulations for digital assets.

How was the SEC formed?

The SEC was founded in 1934 as a result of the stock market crash of 1929. This crash showed that more oversight and stricter rules were needed to restore confidence in the financial markets. President Franklin D. Roosevelt gave the SEC a clear mission: protect investors, promote fair and efficient markets and enable capital formation. Since its founding, the agency has consisted of a five-member commission appointed for five-year terms.

What does the SEC actually do?

The SEC ensures transparency and protection in the financial markets. Public companies must regularly submit financial reports so that investors have access to accurate and reliable information. Individuals or entities holding more than 5% of the shares of a publicly traded company must also report this to the SEC. The SEC also reviews market products such as ETFs and handles applications from companies wanting to go public. When companies or individuals fail to comply with securities law, the SEC can take action ranging from investigations to lawsuits.

The role of the SEC in the crypto market

In recent years the SEC has taken on an increasingly important role in the crypto market. The regulator determines, for example, when a crypto project, token or ICO counts as a security. If it does, the project must comply with the same rules as traditional securities, such as registration requirements and disclosure obligations. The SEC can take action when ICOs fail to follow these rules or when crypto projects spread misleading information.

The Howey test is an important tool used by the SEC. It is a legal standard that determines whether a transaction is a security. It looks at the investment of money, the involvement in a common enterprise, the expectation of profit and whether that profit comes from the efforts of others. If a crypto asset meets these criteria, the SEC can apply oversight.

The SEC’s role in crypto ETFs

The SEC plays a major role in approving crypto ETFs, such as Bitcoin and Ethereum ETFs, for U.S. exchanges. Before a crypto ETF can be traded, the SEC evaluates whether the underlying crypto market is transparent enough, whether reliable price data is available and whether the risk of market manipulation is sufficiently limited. On January 10, 2024 the SEC approved Bitcoin spot ETFs for the first time, a historic milestone that significantly increased institutional access to Bitcoin. These products give investors the ability to invest in crypto without owning or managing the digital assets themselves. As a result, crypto ETFs are playing a growing role in the broader adoption and legitimization of the crypto market.

A new direction for the SEC?

On April 23, 2025 Paul Atkins was appointed chairman of the SEC. Since then a clear shift in policy has emerged. The number of enforcement actions in fiscal year 2025 decreased by about 30% compared to the previous year. This is especially noticeable in the crypto sector because Atkins halted several ongoing investigations and lawsuits, including the case against Coinbase. In the research priorities for 2026, crypto is not even mentioned. The SEC’s focus is shifting from legal confrontation toward developing clearer regulations for cryptocurrencies.

Atkins says he wants to create a rational and predictable approach with a strong foundation for digital assets. Clearer guidelines provide more certainty for businesses while enforcement remains an important part of the SEC.

Possibly more power for the CFTC

A major bill on digital assets is pending in the U.S. Congress that could reshape the market structure. If passed in 2026, the Commodity Futures Trading Commission (CFTC) could gain more authority over crypto than the SEC. The SEC will continue to play an important role, but this could shift the balance of power between regulators. Either way, a clearer and more stable legal framework seems to be emerging. This offers positive prospects for crypto companies and investors.

Major crypto lawsuits involving the SEC

Below we look at the most significant cases between the SEC and various crypto parties over the years.

SEC vs. Ripple (XRP)

This was one of the longest and most discussed SEC cases. The regulator argued that XRP was an unregistered security, while Ripple Labs argued that XRP was a digital currency. In 2023 a ruling led to a partial victory for Ripple: the sale of XRP on exchanges was not considered a securities sale, but institutional sales might be. This case influenced how tokens are judged legally all over the world.

SEC vs. Coinbase

The SEC sued Coinbase because certain tokens traded on the platform should have been classified as securities. This is one of the cases Atkins halted, marking a major shift in enforcement policy.

SEC vs. Kraken

Kraken was sued by the SEC for the staking services offered on its platform. The platform stopped offering the service to U.S. customers and paid a fine.

SEC vs. Telegram (TON)

Telegram planned to issue the GRAM token, but the SEC argued that the project was selling unregistered securities. Telegram lost the case, shut down the project and paid a large fine. This case became an important reference point in ICO regulation.

SEC vs. BlockFi

BlockFi, a crypto lending platform, received a $100 million fine because it offered interest-bearing products that the SEC considered securities. This was one of the first major cases involving crypto interest products.

What is the Dutch SEC?

The Netherlands does not have a SEC, as the agency only operates in the United States as the supervisor of the securities market. In the Netherlands, the AFM and DNB are responsible for different aspects of financial oversight.

AFM (Autoriteit Financiële Markten)

The AFM oversees the behavior of financial market participants such as brokers, banks, investment firms and insurers. It checks whether consumers are treated fairly and transparently and whether financial products are offered responsibly.

DNB (De Nederlandsche Bank)

While the AFM focuses on behavior, the DNB focuses on financial stability. DNB checks whether banks, crypto companies with registration requirements, insurers and pension funds are financially healthy and maintain sufficient buffers.

Together they resemble the SEC in some ways but remain structurally different. Since 2024 the MiCA legislation has applied throughout the EU, giving AFM and DNB new responsibilities for supervising crypto companies.

Final thoughts

The SEC plays a central role in ensuring fair, transparent and well-functioning financial markets in the United States. By supervising companies, protecting investors and taking action when laws are violated, the organization strengthens trust in both traditional securities markets and the rapidly growing crypto sector. With the recent policy shift toward clearer regulation and fewer legal confrontations, more stability is emerging for businesses and investors. Even though future legislation may change the division of responsibilities between the SEC and the CFTC, the SEC remains a key pillar in overseeing financial markets and digital assets.