The US Securities and Exchange Commission’s sole Democratic Commissioner has said the agency is “playing a game of regulatory Jenga” with its approach to the crypto industry and market regulation under the Trump administration.

In May 19 remarks at the SEC Speaks event, Commissioner Caroline Crenshaw cautioned against what she described as a dangerous dismantling of “discrete but interrelated rules” on crypto and the wider market.

She likened market stability to a “Jenga tower” that the agency’s rules had “carefully developed over the years,” which could topple if some rules were removed.

In addition to a lamentable loss of staff, Crenshaw said the SEC has used staff guidance to effectively reverse rules without proper analysis or public comment, particularly around crypto

“Our statements on these crypto-related issues are the equivalent of a wink and nod intended to convey that we do not plan to rigorously apply our laws in certain, specific situations.”

She added that the regulator has abandoned enforcement actions, especially in crypto markets, creating what she calls “regulation by non-enforcement.”

“I am deeply troubled by the Commission’s abandonment of swaths of our enforcement program,” she said. 

Crenshaw, the SEC’s last remaining Democrat commissioner, said the agency’s “about-face” is problematic for a host of reasons, such as corroding its reputation in court, undermining its credibility, and casting doubt on the state of “longstanding and fundamental case law.”

Related: SEC is scaling back its crypto enforcement unit: Report

Crenshaw, who had also opposed the SEC’s settlement with Ripple, said in her latest remarks that the 2022 FTX collapse was an example of what a “large-scale crypto crisis” can look like. 

“Those risks have not gone away, but the calls for serious regulatory scrutiny are a lot quieter these days,” she said.

“Failing to appreciate and address these risks and complexities destines us to repeat hard lessons with high stakes as crypto becomes increasingly entangled with traditional finance.”

In comparison, remarks from the SEC’s Republican commissioners welcomed the agency’s embrace of the crypto sector. 

Crypto was “languishing in SEC limbo”

SEC chair Paul Atkins said at the SEC Speaks event that “crypto markets have been languishing in SEC limbo for years,” adding that the agency should not be in the business of stifling innovation of crypto companies.

Commissioner Hester Peirce, who heads the SEC’s Crypto Task Force, said in remarks that the agency’s approach under the Biden administration has “evaded sound regulatory practice and must be corrected.”

She also claimed that crypto did not come under the purview of securities laws because “most currently existing crypto assets in the market” are not securities. 

“Even if a broad swath of the crypto assets trading in secondary markets today were initially offered and sold subject to an investment contract, they clearly are no longer bought and sold in securities transactions. Many of these crypto assets are functional.”

Commissioner Mark Uyeda echoed the sentiment of his peers, stating that the SEC “should undertake efforts to provide assurances that regulation by enforcement will not be a tool used for future policymaking.”