The U.S. Securities and Exchange Commission has picked a new leader for its emerging cryptocurrency division.

Valerie Szczepanik, who already worked at the SEC, was promoted to a role that didn't exist until this week: Associate Director of the Division of Corporation Finance and Senior Advisor for Digital Assets and Innovation.

Szczepanik, who joined the agency in 1997, will "coordinate efforts across all SEC Divisions and Offices regarding the application of U.S. securities laws to emerging digital asset technologies and innovations, including Initial Coin Offerings and cryptocurrencies," the SEC said in a statement.

The new role is emerging at a key time for the SEC. The financial watchdog is balancing on consumer protection and innovation in what has become multi-billion dollar market.

Szczepanik was most recently Assistant Director in the Division of Enforcement's Cyber Unit. She is currently head of the SEC's Distributed Ledger Technology Working Group, co-head of its Dark Web Working Group, and a member of its FinTech Working Group.

Before the SEC, she served in the U.S. Attorney's Office for the Eastern District of New York, and clerked for federal judges on the U.S. District Court for the District of Columbia and the United States Court of Appeals for the Federal Circuit.

SEC Chairman Jay Clayton called Szczepanik "the right person to coordinate our efforts in this dynamic area that has both promise and risk."

Szczepanik received a law degree from Georgetown University and a Bachelor of Science degree in engineering from the University of Pennsylvania.

The issue of how to classify a cryptocurrency has been a major point for the agency and cryptocurrency exchanges.

The SEC's Clayton made it clear in March that all ICOs constitute securities. But companies tied to cryptocurrencies have maintained that some should be fall under a different category because of their utility and stark differences from stocks.

The agency has warned investors of pump-and-dump schemes, shut multiple down, and charged some backed by celebrities with fraud. In May, the regulator created the website HoweyCoins.com to show investors some of the ways a site can look valid when it actually could be a scam.

Bitcoin prices have plummeted this year. The flagship cryptocurrency is down roughly 50 percent in 2018 after climbing more than 1,300 percent last year.

Fundstrat co-founder Tom Lee and other pundits have predicted that institutional investors entering the market could boost liquidity and stagnant prices. But that money seems to be waiting for more guidance from regulators.

"At the moment we're in purgatory with regard to regulatory clarity and I think that's going to keep institutions on the sidelines," Lee, the only major Wall Street strategist to cover bitcoin, told CNBC's "Fast Money" Monday. If I was an institution and I was going to make an allocation into crytpo, I'd want some clarity."