SEC to Notify Firms of Violations Before Taking Enforcement Action

Highlights:

• The SEC is set to notify firms before beginning enforcement actions as Paul Atkins ends his past aggressive strategy.
• The new SEC task forces will focus on financial privacy and cross-border fraud while reducing minor violation cases.
• Project Crypto with GENIUS and CLARITY Acts aims to create clear oversight rules for digital assets in the US.

The United States Securities and Exchange Commission (SEC) will begin sending notices to organizations before taking enforcement actions. SEC Chair Paul Atkins confirmed the move in an interview with the Financial Times on September 15.

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Paul Atkins, SEC Chair, announces a major shift: the SEC will now send enforcement notices before taking action, promoting transparency and fairness, especially in blockchain regulation. The SEC also advances privacy hearings and forms a Cross-Border Task Force to fight… pic.twitter.com/UKapiRHc7E

— Fama Crypto (@Famacrypt) September 16, 2025

Atkins explained that the SEC aims to warn firms of technical violations instead of imposing penalties without notice. He said, “You can’t just suddenly come and bash down their door and say uh-uh, we caught you, you’re doing something bad, and it’s a technical violation.” He went on to say that the SEC’s prior enforcement approach was unpredictable and had no precedent. “I think a lot of people rightly criticized the SEC,” Atkins said. “Especially in more recent years, it was not grounded in precedent or predictability.”

Atkins described the earlier approach as a “shoot first and ask questions later” method. He emphasized that his leadership will bring more balance and ensure the SEC focuses on significant violations instead of minor technical breaches. The remarks were the direct opposite of the enforcement approach of former SEC Chair Gary Gensler, whose tenure entailed numerous lawsuits against both established and new crypto companies.

SEC to Notify Firms Before Enforcement as Policy Shifts

The decision that the agency wants to take represents a major shift under Atkins. His leadership follows criticism of the agency’s earlier reliance on lawsuits as a primary tool for oversight. The newly formed Crypto Task Force of the SEC stated that on October 17, it will conduct a hearing about financial privacy and surveillance. The session will focus on privacy-preserving technologies and their role in shaping financial policy.

🆕 JUST IN: The SEC’s Crypto Task Force will host a public roundtable on financial surveillance and privacy in Washington, D.C. on Oct 17. Hester Peirce highlights the need for stronger user data control, a view shared by @StarkWareLtd.

— PulseWireX (@PulseWireX) September 10, 2025

The agency also recently introduced its Cross-Border Task Force. The unit will target fraud and market manipulation conducted outside U.S. borders. Atkins stressed that the new strategy will focus on bad actors engaged in fraud, rather than pursuing firms over smaller compliance issues. This represents a shift from the period under Gensler, when lawsuits and enforcement actions resulted in billions of dollars in fines.

His remarks also reflected a personal stance on priorities. Atkins recalled a message from a former SEC boss that warned, “If you lie, cheat or steal from your investors and steal their money like Bernie Madoff, we’ll leave you naked, homeless and without wheels.”

Clearer Path for Crypto Oversight

Atkins has also tied his enforcement shift to “Project Crypto,” a program aimed at offering clearer guidance for digital asset firms. Under his leadership, the SEC has dropped several lawsuits against companies, including Ripple, Binance, and Consensys.

The GENIUS Act, which is already signed into law, will apply a stablecoin framework in 2026. In the meantime, the CLARITY Act, which is currently in Congress, aims to establish market structures of digital assets. The action will define clear jurisdiction between the SEC and the Commodity Futures Trading Commission (CFTC).

This multi-tiered structure will likely avoid jurisdiction overlap. The ambiguity between the two agencies has long been a source of conflict and confusion to crypto firms. Atkins has indicated that the SEC will now concentrate on structured oversight and concentrate enforcement on fraud cases.

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