SEC Moves to Mainstream Crypto — Is the Institutional Era Here?

Cryptocurrency has often been seen as a wild, uncertain corner of finance. For years, regulators in the United States struggled to decide how to treat digital assets, leaving investors and companies guessing. But in 2025, this picture is starting to change dramatically.

The U.S. Securities and Exchange Commission (SEC), one of the most powerful financial regulators in the country, has introduced a major regulatory overhaul. With the introduction of the CLARITY Act and Project Crypto, the SEC is now creating a clearer path for cryptocurrencies to enter the mainstream. This shift is not just a small adjustment, it could mark the beginning of what many call the “institutional era” of crypto.

One of the clearest signs of this change is the massive inflows into Bitcoin exchange-traded funds (ETFs). In 2025 alone, Bitcoin ETFs have attracted $120 billion, proving that traditional investors, including pension funds, retirement accounts, and large asset managers, are finally comfortable putting money into crypto. Ethereum is also riding this wave. Reports show that Ethereum ETFs brought in nearly $3 billion in Q3 2025, while new financial products tied to liquid staking pushed Ethereum’s total locked value to over $71 billion. For years, institutions hesitated to engage in crypto because of unclear regulations. Now, that hesitation seems to be fading.

From Crackdowns to Clear Rules

This transformation is happening under the leadership of SEC Chair Paul Atkins. Unlike previous approaches that relied heavily on lawsuits and enforcement actions, Atkins has emphasized rulemaking and clarity.

The CLARITY Act, passed in 2025, is one of the most important developments. It spells out which regulator controls what:

• The Commodity Futures Trading Commission (CFTC) will oversee assets like Bitcoin, which are treated as commodities.
• The SEC will continue to regulate tokens that act more like securities (similar to stocks).

This clear division reduces confusion for businesses and investors. It also cuts compliance burdens, making it easier for banks, funds, and companies to legally work with crypto. Another big move was the repeal of Staff Accounting Bulletin 121 (SAB 121). Previously, this rule made it difficult for banks to hold crypto on behalf of clients. With it gone, financial giants like BlackRock can now safely add crypto to products like retirement funds, opening the door for millions of Americans to gain exposure.

Guidance That Calms Investors

The SEC has also taken steps to calm fears around new technologies in crypto. A special Crypto Task Force, led by Commissioner Hester Peirce, issued guidance in 2025 that liquid staking and certain blockchain activities are not securities offerings. This distinction matters because if staking had been classified as a security, it would have come with heavy restrictions and reporting requirements. By keeping it outside that category, the SEC is signaling that innovation in blockchain infrastructure will not automatically face regulatory roadblocks. In September 2025, the SEC and the CFTC jointly announced that registered U.S. exchanges like the NYSE and CME can now trade spot crypto assets. This move adds a new level of legitimacy and liquidity, since these exchanges already handle trillions in traditional assets.

The SEC’s reform goes beyond ETFs and staking. The introduction of the GENIUS Act now allows companies to issue tokenized equity and debt, meaning stocks and bonds can be created and traded in blockchain-based forms. This bridges the gap between traditional finance and digital assets, making crypto infrastructure useful for more than just coins and tokens. With these changes, surveys show that over 75% of institutional investors are planning to expand their crypto holdings, focusing mainly on Bitcoin and Ethereum, which together make up 60–70% of portfolio allocations in this new wave.

Challenges Still Remain

Despite this progress, not everything is solved. Regulation still differs widely around the world. For example, the European Union’s MiCA framework is much stricter than the U.S.’s more flexible approach. This mismatch could complicate cross-border investments and make it harder for global institutions to adopt unified strategies. Another challenge is education. While institutions now have a pathway into crypto, many retail investors, everyday people still lack knowledge about how these assets work. Without proper awareness, they risk falling victim to scams or misunderstanding risks, even as institutions benefit from new opportunities.

Timeline of Key 2025 Changes

To better understand this regulatory shift, here are some major milestones:

• January 2025: SEC launches the Crypto Task Force under Hester Peirce.
• February 2025: SEC drops enforcement actions against major exchanges like Coinbase and Kraken, signaling a new approach.
• Spring 2025: CLARITY Act passes, dividing authority between the SEC and CFTC.
• July 2025: Approval of in-kind ETF redemptions, making ETFs more efficient.
• September 2025: SEC-CFTC joint statement formally allows spot crypto trading on U.S. exchanges.

Looking Ahead

The SEC’s shift in 2025 could be remembered as the turning point when cryptocurrencies moved from the fringes of finance to the core of institutional portfolios. By reducing uncertainty and creating structured rules, the U.S. is positioning itself as a global hub for crypto innovation. Experts believe this “institutional era” of crypto will bring stability, larger inflows, and new financial products. Still, global cooperation and retail education remain essential to ensure that crypto’s growth benefits everyone, not just large investors.