The Securities and Exchange Commission (SEC) is the US federal agency that regulates the securities markets. Created by the Securities Exchange Act of 1934, it requires companies that sell shares or bonds to the public to disclose material information, oversees stock exchanges, brokers, investment advisers and funds, and brings civil enforcement cases against fraud and other violations. Its stated mission is to protect investors, maintain fair, orderly and efficient markets, and facilitate capital formation.
The SEC is one of several US market regulators. Futures, swaps and most commodity derivatives fall under the Commodity Futures Trading Commission (CFTC), banking under the federal banking agencies, and money transmission under FinCEN (Financial Crimes Enforcement Network) and the states. Since 2017 the SEC has also been the most influential, and most contested, US authority on crypto, because many tokens have been sold in ways that may make them securities.
The SEC in plain terms
Think of a large farmers' market. Anyone may sell there, but the market inspector insists that every stall shows an honest label: what is in the jar, who made it and what could go wrong. The inspector does not promise that the jam will taste good, only that buyers are told the truth and that nobody rigs the scales.
The SEC plays that inspector's role for investments. A company raising money from the public must publish an honest description of its business and risks. The markets where shares change hands must run by clear rules, and people who lie to investors or trade on secret information can be fined or banned. Whether a crypto token counts as one of the "jars" the inspector checks has been one of the biggest arguments of the past decade.
History and legal basis
Congress set up the SEC after the 1929 crash and the failures that followed. The Securities Act of 1933 governs new offerings, and the Securities Exchange Act of 1934 created the commission and covers trading, exchanges and brokers. Joseph P. Kennedy was its first chairman. Later statutes widened its remit: the Investment Company Act and Investment Advisers Act of 1940 for funds, including the Money Market Fund (MMF), and their managers; the Sarbanes-Oxley Act of 2002 for corporate accounting after Enron; and the Dodd-Frank Act of 2010, which added oversight of advisers to private funds such as a Hedge Fund.
Structure and functions
The commission has five commissioners appointed by the President and confirmed by the Senate for staggered five-year terms; no more than three may belong to the same political party, and the President designates the chair. Most work is done in its divisions:
- Corporation Finance. Reviews registration statements and company filings, published through the EDGAR database.
- Trading and Markets. Oversees each Financial Exchange, every registered Broker / Stockbroker, clearing agencies and FINRA, the industry's main Self-Regulatory Organization (SRO).
- Investment Management. Regulates mutual funds, exchange-traded products and investment advisers.
- Enforcement. Investigates and brings each civil Enforcement Action for fraud, Insider Trading and Market Manipulation; criminal cases go to the Department of Justice.
- Economic and Risk Analysis. Supplies data and economic analysis behind rules.
Staff also issue interpretive guidance and the occasional No Action Letter, telling a firm that staff would not recommend enforcement for a described activity.
The SEC and crypto
The SEC's crypto role rests on the Howey Test, from a 1946 Supreme Court case: an investment contract, and so a security, exists when people invest money in a common enterprise expecting profits from the efforts of others. Key dates include:
- July 2017. The DAO Report concluded that tokens sold by the Decentralized Autonomous Organization (DAO) known as The DAO were securities, signalling that many an Initial Coin Offering (ICO) would need registration or an exemption.
- 2017–2020. A run of ICO cases followed, and some issuers moved to registered or exempt Security Token Offerings (STOs). In December 2020 the SEC sued Ripple over sales of XRP.
- June 2023. The SEC sued Coinbase and Binance, alleging they operated as unregistered exchanges, brokers and clearing agencies.
- January 2024. After losing a court challenge brought by Grayscale, the SEC approved the first US spot Bitcoin (BTC) exchange-traded products; spot Ethereum (ETH) products followed later in 2024.
- January 2025. Acting Chairman Mark Uyeda launched a Crypto Task Force led by Commissioner Hester Peirce, and staff rescinded accounting guidance (SAB 121) that had made Crypto Custody costly for banks. During 2025 the agency dropped several crypto cases, including those against Coinbase and Binance.
- 2025–2026. Chairman Paul Atkins, sworn in in April 2025, launched "Project Crypto" to rewrite securities rules for Digital Assets; that rulemaking was still under way in late 2026.
Congress has repeatedly debated dividing crypto oversight between the SEC and the CFTC; an early example was the never-enacted Cryptocurrency Act of 2020.
Criticism
From 2021 to 2024 industry groups accused the SEC of "regulation by enforcement": suing firms rather than writing crypto-specific rules, which they said left no workable path to registration. Investor advocates make the opposite criticism, that the 2025 retreat removed protections against Pump and Dump Schemes and unregistered offerings. Beyond crypto, the agency is often criticised for missing large frauds, the Madoff Ponzi scheme being the best-known case, and for the revolving door between its staff and the firms it oversees. These debates sit within the wider question of Cryptocurrency Regulation and how a Financial Regulator should treat new kinds of assets.