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The U.S. Securities and Exchange Commission (SEC) is scrapping its Crypto Assets and Cyber Unit, and replacing it with a new, smaller team that will focus on cyber-related misconduct targeting retail investors.

The regulator announced on Thursday the creation of a new Cyber and Emerging Technologies Unit, which, it said, will target various forms of online fraud and regulatory misconduct. Those include hacking to facilitate insider trading and brokerage account takeovers, social media schemes, and fraud using emerging technologies such as artificial intelligence (AI) and machine learning.

While the new team will be comprised of about 30 lawyers and investigators, the agency’s old crypto unit had about 50 members.

Effectively, the change reverses the work of the previous regime at the SEC, which renamed and expanded its previous cyber unit in 2022, stepping up its enforcement focus on crypto and adding about 20 members to that team.   

In a statement, acting SEC chair, Mark Uyeda, said that the new unit will complement its new Crypto Task Force, which has been charged with shifting the regulator’s focus to policymaking in the emerging crypto space, and away from enforcement based on existing securities rules. 

“Importantly, the new unit will also allow the SEC to deploy enforcement resources judiciously,” Uyeda said.

At the same time, he suggested that the new unit’s work will be conducive to industry innovation.  

“The unit will not only protect investors but will also facilitate capital formation and market efficiency by clearing the way for innovation to grow. It will root out those seeking to misuse innovation to harm investors and diminish confidence in new technologies,” he said.