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SEC’s Atkins Grilled on Crypto Enforcement Pullback as Justin Sun Case Draws Congressional Scrutiny

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21Shares Introduces JitoSOL ETP to Offer Staking Rewards via Solana

TLDR:

  • SEC paused Justin Sun’s wash trading case in 2023 while exploring resolution, raising conflict concerns over Trump ties 
  • Atkins offered lawmakers confidential briefing on Sun case but cited regulatory restrictions on public discussions 
  • SEC dropped major enforcement actions against Binance, Ripple, Coinbase, rejecting previous regulation-by-enforcement approach 
  • Atkins confirmed SEC and CFTC are developing joint crypto rules aligned with House-passed Clarity Act framework

 

SEC Chairman Paul Atkins faced intense scrutiny from House lawmakers regarding the agency’s shift in cryptocurrency enforcement policies.

During Wednesday’s oversight hearing before the House Financial Services Committee, Democrats questioned the regulatory pullback on major crypto cases, particularly involving Tron founder Justin Sun.

Atkins defended the agency’s new direction while promising clearer regulations for the digital asset industry through collaboration with the CFTC.

Sun Case Raises Questions About Enforcement Priorities

Representative Maxine Waters, the committee’s ranking Democrat, pressed Atkins on the agency’s handling of the Justin Sun investigation.

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The SEC had accused Sun in 2023 of orchestrating wash trading schemes involving over 600,000 fraudulent transactions to inflate TRX token volumes. However, the agency paused the case last year while exploring potential resolution options.

Waters highlighted Sun’s connections to President Trump’s family through World Liberty Financial Inc. “Well, while you were exploring a potential resolution, Mr. Sun has been busy ingratiating himself within Trump’s orbit,” Waters said to Atkins during the hearing.

She questioned whether these ties influenced the SEC’s decision to halt enforcement actions. The California lawmaker also referenced recent allegations from Sun’s former girlfriend suggesting evidence of TRX manipulation.

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Atkins responded that regulatory restrictions prevented him from discussing specific cases publicly. He offered lawmakers a confidential briefing on the matter, stating he was willing to have further conversations “to the extent the rules allow me to do that.”

Waters pressed further, asking whether the SEC’s focus on real fraud extended to crypto markets. “Whatever involves securities,” Atkins responded.

The agency dropped several high-profile enforcement actions last year against major crypto firms including Binance, Ripple, Coinbase, Kraken, and Robinhood.

SEC leadership criticized the previous administration’s regulation-by-enforcement approach. When asked about protecting investors versus Trump business interests, Atkins stated, “As far as what the Trump family does or not, I can’t speak to that.”

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Regulatory Clarity Takes Center Stage

Republican committee members shifted focus toward Atkins’ plans for establishing comprehensive crypto regulations.

The chairman outlined ongoing coordination with the Commodity Futures Trading Commission to develop clear operational guidelines for digital asset companies.

These efforts align with the Clarity Act passed by the House, though the legislation’s Senate fate remains uncertain.

Atkins explained that both agencies are working on rules “consistent with what’s in the Clarity Act that you all passed here in the House, and hopefully what will come out of the joint work that you’re doing with the Senate.”

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He added that this effort would help provide certainty regarding jurisdictional boundaries between the two agencies. The framework would establish which types of digital assets fall under SEC or CFTC oversight.

The CFTC recently updated its guidance on stablecoins, allowing national trust banks to issue payment stablecoins and expanding eligible tokenized collateral.

Meanwhile, the National Credit Union Administration proposed rules for credit unions seeking stablecoin issuer status.

These moves implement provisions from last year’s GENIUS Act, marking the crypto sector’s first major legislative achievement.

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A policy race now develops between Atkins’ SEC and Senate lawmakers working on comprehensive crypto legislation.

Recent Senate delays may allow the SEC to lead in establishing digital asset regulations. The industry watches closely as regulatory frameworks take shape across multiple federal agencies.

 

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Crypto World

Naoris Launches Post-Quantum Blockchain as Quantum Risks Grow

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Naoris Launches Post-Quantum Blockchain as Quantum Risks Grow

Naoris Protocol has launched its mainnet, introducing a layer-1 blockchain designed to use post-quantum cryptography for transaction validation and network security. The network is live with limited, invite-only participation, allowing early users to run validator nodes and process transactions.

According to an announcement shared with Cointelegraph, it integrates cryptographic standards finalized by the National Institute of Standards and Technology (NIST) to address risks in existing blockchains, where current encryption methods could become vulnerable over time.

Before mainnet, the protocol’s test network processed more than 100 million transactions and identified hundreds of millions of potential threats, according to the project, with activity spanning millions of wallets and nodes.

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The system uses a consensus model called distributed proof of security (dPoSec) to verify transactions across nodes, while the NAORIS token is intended to support network operations as the economic model develops.

The rollout begins with a restricted group of validators and partners, with broader access expected to expand in phases.

The project lists advisers with backgrounds in cybersecurity, government and enterprise technology, and is backed by investors including Draper Associates.

Related: Is $450B in Bitcoin vulnerable to the quantum threat? Analysts weigh in

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New research suggests quantum computing may arrive sooner than expected

The launch comes as revised estimates for quantum computing, which uses qubits and quantum states to process information differently from classical computers, are driving efforts to move away from current cryptographic standards.

New research from Google released on Monday suggests quantum computers may need far fewer resources than previously thought to break blockchain encryption. The study found fewer than 500,000 physical qubits could crack systems securing Bitcoin (BTC) and Ether (ETH), a roughly 20-fold reduction from earlier estimates.

The findings point to a shorter timeline for quantum risk, with Justin Drake, a researcher at the Ethereum Foundation, estimating at least a 10% chance that a quantum computer could recover a private key by 2032.

Breakdown of Bitcoin supply by address type and quantum exposure risk. Source: Google Quantum AI

Researchers at California Institute of Technology working with Oratomic reached similar conclusions, recently finding that improvements in error correction (which reduce the number of qubits needed to stabilize computations) could lower the requirements for practical systems to 10,000 to 20,000 qubits, down from earlier assumptions of millions.

Based on these reductions, the researchers said a viable quantum computer could emerge by around 2030.

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Blockchain developers are beginning to respond. In January, developers in the Solana ecosystem introduced a quantum-resistant vault that uses hash-based signatures to generate new keys for each transaction, reducing the exposure of public keys.

On March 24, developers from the Ethereum Foundation launched a “Post-Quantum Ethereum” resource hub outlining plans to upgrade the network’s cryptography, targeting protocol-level changes by 2029 while also noting the multi-year complexity of such a transition.

Magazine: A newbie’s guide to surviving crypto winter