Summary
- The administration of President Donald Trump is keen to show that it made good on its election promises to the crypto and blockchain sector in its first 100 days.
- Initial steps suggest an end to the line of the previous administration and with the express aim of allowing innovation to flourish.
- For more analysis from CCI on the steps the Trump administration has taken, and changes announced in the crypto and blockchain sectors, check out this blog.
What can crypto glean from the early days of Trump 2.0?
There can be no doubt that one of the most striking aspects of activity in the sector during the president’s first 100 days has been the alignment of federal agencies with Trump’s message of support for crypto. As the self-styled ‘crypto president’, Trump has appointed a group of allies in key positions, who are enabling his vision.
There have been clear incidences of collaboration between the regulators. For example, the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and Federal Reserve Board have aligned to reduce barriers for banks engaging in crypto activities.
One of the most striking turnarounds has been the attitude of the Securities and Exchange Commission (SEC) – perhaps the sector’s most visible sticking point during the last administration – under businessman Paul Atkins.
The commission has quickly begun working directly with crypto stakeholders on issues like token issuance, and the thorny issue of the line between securities and commodities. Alongside this, Atkins has been a visible presence, opening a crypto roundtable four days into the job, and hosting a half-day session at the commission’s headquarters.
Among the SEC’s other moves has been to:
- Reduce enforcement, rescinding Staff Accounting Bulletin No.121, thereby easing capital requirements for crypto custodians.
- Call for public ideas for policy measures that will both help develop innovation while also protecting investors.
- Clarify some areas, stating that typical meme coins, specific proof-of-work mining activities, and certain USD-backed stablecoins are not securities.
- Outline disclosure expectations for offerings and registrations of securities in crypto asset markets. The SEC wants to resolve the uncertainties surrounding the application of federal securities laws to crypto asset activity. It has distinguished between offering crypto assets as a transaction and underlying crypto assets.
There have also been significant changes at the Department of Justice (DoJ). President Trump’s former defense lawyer and now Deputy Attorney-General Todd Blanche issued a memo in April titled Ending Regulation by Prosecution in which he called for an “end [to] the regulatory weaponization against digital assets”. It listed what the DoJ could and could not pursue in terms of prosecutions and ordered prosecutors to narrow their focus to serious criminal activities, such as using digital assets to support narcotics trafficking.
Also, as a result of the memo, the DoJ disbanded its National Cryptocurrency Enforcement Team (NCET) and raised thresholds for areas like AML compliance.
Shift away from regulation by enforcement
Under previous administrations and in the face of large-scale crypto legislation, regulators often tackled issues on a case-by-case basis. The initial months of the Trump administration suggest a shift away from this to something more collaborative and codified.
One strong example of this, is the fact that the SEC has dropped its long-running case against digital payment network, Ripple, which became typified as ‘the battle’ between the SEC and crypto industry. In the same vein, it’s stopped its regulation by enforcement approach, as evidenced in the dropping several high-profile cases where it has alleged that SEC registration requirements had been violated.
Legislation begins to materialize
Another positive shift for the industry is that regulators are working with Congress; this is clearly easier when the house majority is held by the same party in both, but welcome nonetheless. Three acts have been tabled, which if passed, will help establish clear licensing, supervisory requirements and enforcement mechanisms.
The Guiding and Establishing National Innovation for US Stablecoins Act of 2025 (GENIUS Act), would amend the Bankruptcy Code and establish federal rules for payment stablecoins. It would define them as a digital asset that can be used as a means of payment. The act passed the US State Banking Committee in March and is currently being voted on by the Senate.
Alongside this, the Financial Integrity and Regulation Management Act (FIRM Act), seeks to prohibit key institutions, including the Federal Reserve, from using incorporated reputational risk when assessing an institution’s soundness. This too passed the State Banking Committee in March and has progressed to the Senate. A companion bill was introduced into the House of Representatives in April.
According to Bo Hines, Executive Director of the Presidential Council of Advisers for Digital Assets, with this legislation progressing, crypto supporters in the White House and Congress are looking to a larger bill that will set a full regulatory regime for the country’s crypto markets.
Significant banking sector developments
Crypto supporters in the current administration regularly refer to Operation Choke Point, which was originally a 2013 DoJ initiative to investigate how banks did business with certain industries. Republicans have described the initiative as a ploy by regulators under the Biden administration to limit access to banking services, and specifically crypto.
Trump has signed two executive orders relating to crypto, both of which have the potential to have far wider implications for the banking sector, showing potential to pave the way for crypto to become integrated with the broader financial system.
EO 14178 – Strengthening American Leadership in Digital Financial Technology seeks to “promote United States leadership in digital assets and financial technology while protecting economic liberty”. In specific terms, it codifies a strategy to help develop blockchain growth, allowing “individual citizens and private-sector entities alike to access and use for lawful purposes open public blockchain networks without persecution”. It limited federal regulatory reach, and banned central bank digital currencies (CBDC), describing them as a threat to the stability of the financial system. Finally, it created the President’s Working Group on Digital Asset Markets.
EO 14233 – Establishment of the Strategic Bitcoin Reserve and United States Digital Asset Stockpile sets the creation of a strategic bitcoin reserve – effectively treating it as a gold reserve, hence the president’s term ‘digital gold’ – as federal policy along with the establishment of a Digital Asset Stockpile. This is designed as a “secure account for orderly and strategic management” of the country’s other digital asset holdings. It is estimated that the authorities have 200,000 bitcoin, seized in criminal and civil proceedings. Some supporters suggest that the reserve could be used to help pay off the national debt.
Alongside this, the OCC rescinded an Interpretative Letter from 2021 that banks obtain supervisory non-objection before getting involved in crypto activities. This had meant that the bank would need to demonstrate its establishment of risk management and measurement processes.
As a result, more crypto firms are expected to apply for bank charters, which would give them direct access to the US payments system. Currently, four companies, including Coinbase, are believed to be considering applications.
Although the OCC and FDIC have rescinded their guidance on crypto, the Federal Reserve has yet to follow suit. As a result, although banks can now offer custody of crypto assets services after the SEC rescinded SAB 121, and support stablecoins, but they can’t work directly with crypto firms.
Several federal agencies have reversed or removed advisories and similar made by previous administrations. The Commodity Futures Trading Commission (CFTC) withdrew two prior advisories on virtual currency derivatives and clearing, which suggests digital asset derivatives and their more traditional counterparts to be treated equally.
There’s also interest in perpetual crypto futures contracts, which allow traders to speculate on cryptocurrencies without an expiration date. The authorities have put this to public comment, seeking to explore regulatory frameworks that could expand US access into this potentially lucrative but risky area of investing.
Does crypto continue to be a bipartisan issue?
Historically, crypto has not been a partisan issue, enjoying support from both parties. The first 100 days has highlighted policy differences, but notably, both acts that have come before the Senate Banking Committee have secured support from Democrats and Republicans alike.
The key test will be whether lawmakers continue to vote the strength of the issues, rather than default to party lines.
Crypto has a chance to flourish if the conditions are right
On the face of it, the new administration looks to be making good on its policies. It certainly hasn’t stalled or procrastinated, but the sector and its supporters want to be sure that rhetoric is being translated into policy certainty.
The actions of individual states remain an outlier. States don’t have to adopt the federal government’s stance, which may complicate federal policy pushes in key areas. One example of this is the number of states that have rejected bitcoin reserve bills, potentially complicating the administration’s wider attempts to achieve this at a federal level.
It may also point to the development of a two-tier system developing between states that embrace a more deregulated approach and those that develop crypto policy with a mind to filling what has been described as an “enforcement vacuum”.
One thing is certain, no administration has yet bestowed so much attention on the sector. The key now is to develop smart, fit for purpose regulations that ensure innovation thrives and consumers are protected.
