From New York to Washington, the US anti-crypto forces are being cleaned up

Author: jk; Editor: Hao Fangzhou

With the coming to power of the Trump administration, the senior regulators who once dominated the US anti-crypto policy are now facing a comprehensive liquidation. Major financial regulatory agencies such as the US Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), and the Commodity Futures Trading Commission (CFTC) are undergoing large-scale personnel adjustments and policy shifts. It can be seen that Washington's regulatory attitude is undergoing fundamental changes. Next, Odaily Planet Daily will show you what these changes and liquidations have brought to the industry.

SEC: Gary Gensler's team has all left, pro-crypto people have moved in, and the enforcement procedures have changed

SEC, new officials take office

The atmosphere is quietly changing at the SEC headquarters at 100 F Street in Washington, DC. With Trump's inauguration, Gary Gensler resigned on the same day, and pro-crypto Mark Uyeda became acting chairman, temporarily taking over the chairman's duties before the new chairman Paul Atkins is confirmed. This building with a beautiful glass curtain wall is no longer the public enemy of the crypto industry, but has become a truly friendly regulator.

For Mark Uyeda's profile and pro-crypto stance, you can read this article "Uncovering the new leadership of US crypto regulation, how long will it take from taking office to implementation? "(https://www.odaily.news/post/5201353)

On February 5, local time in the United States, two people familiar with the matter revealed that the US SEC currently requires its lawyers to obtain high-level approval before officially launching an investigation. The new requirements stipulate that law enforcement officers must obtain permission from politically appointed commissioners to issue subpoenas, request documents and compel testimony. There are currently three commissioners: Acting Chairman Mark Uyeda, Hester Peirce (Crypto Mom) and Caroline Crenshaw (Democratic Commissioner). During the previous administration, the SEC only needed the approval of two enforcement directors to formally launch an investigation, and enforcement officers could continue informal investigations, including sending requests for information, without the approval of the commissioner.

Meanwhile, as many readers are aware, SEC Acting Chairman Mark Uyeda has established a new cryptocurrency working group, led by crypto-friendly Commissioner Hester Pierce, known as "Crypto Mom," with the ultimate goal of providing regulatory clarity and proposing a clear cryptocurrency regulatory framework (similar to the EU's MiCA). Following up on this news, Acting Chairman Mark Uyeda appointed Landon Zinda, former policy director of the cryptocurrency advocacy organization Coin Center, to join the committee as his legal counsel and senior advisor to the cryptocurrency working group.

On the website of the SEC’s cryptocurrency working group, the SEC’s support for Taiwanese independence is very obvious, and it even provides an email address for crypto professionals to contact the SEC directly. Source: SEC official website Hester Peirce said: "The Cryptocurrency Working Group is considering recommending that the SEC take action to provide temporary forward-looking and retroactive relief for token issuance (compared to the previous SEC's retrospective enforcement), in which the issuing entity or other entity willing to take responsibility provides certain specific information and keeps it updated, and agrees not to question the SEC's jurisdiction in cases alleging fraud related to the purchase and sale of assets." Liquidation is coming? Anti-crypto people are marginalized Almost all senior legal officials working under Gary Gensler, including those in the enforcement department and the Office of General Counsel, have resigned, and it can be inferred that his entire team has left. Previously, the SEC's chief economist Jessica Wachter, chief accountant Paul Munter, and general counsel Megan Barbero have also left.

What about those who don't leave?

According to reports, the SEC has reassigned Jorge Tenreiro, a former deputy director of the Crypto Assets and Networks Division and a crypto litigation lawyer, to its Computer Systems Management (IT) Division.Tenreiro worked at the SEC for more than 11 years. According to his LinkedIn information, he started as an enforcement attorney and then served as the head of the agency's cryptocurrency enforcement division from October 2022 to November 2024.

Tenreiro has been involved in multiple SEC enforcement cases against cryptocurrency companies, such as lawsuits against Ripple and Coinbase. Since President Trump took office, the SEC has undergone a U-turn and has therefore scaled back its crypto enforcement division.

FDIC: Regulatory hostility disappears across the board, crypto banking services may return

What is the FDIC?

The FDIC (Federal Deposit Insurance Corporation) is an independent agency in the United States that insures bank deposits, guaranteeing depositors up to $250,000 in compensation in the event of a bank failure.The FDIC regularly reviews the balance sheet of banks, assesses risks, prevents improper business practices, and takes corrective measures when problems are discovered, and can even close banks that are seriously violating regulations or insolvent.In addition, the FDIC is responsible for taking over and liquidating banks in the event of bank failure, protecting the interests of depositors and maintaining the security and stability of the financial system. If a bank fails, the FDIC usually arranges for another bank to take over the deposits, or directly compensates the depositors, making the banking system safer and more reliable.

In simple terms, FDIC is the national bank insurance in the United States, which guarantees the safety of consumers' deposits in banks. Previously, when Silicon Valley Bank went bankrupt, it was the FDIC that was responsible for the aftermath and subsequent arrangements.

Why is national bank insurance related to the crypto industry?

Because of the FDIC's regulatory functions, the FDIC was actually not a good name for the crypto industry before; the FDIC restricted the crypto industry's access to banks and attracted complaints from the entire crypto industry.

Imagine if you started a crypto company or project, you couldn't open an account at any major US bank, you couldn't get a loan, and you couldn't get any banking services that a business project should have. That's Operation Choke Point 2.0, a policy that prohibits crypto projects from getting banking services, and the FDIC is the main regulator of this policy.We'll talk about this policy in a moment.

This is not groundless. Anchorage Digital CEO Nathan McCauley said at the US Senate's "de-banking" hearing that although Anchorage Digital is a federally licensed crypto bank, it was still refused service by banks, resulting in business losses and even 20% layoffs. McCauley pointed out that between 2021 and 2023, U.S. regulators gradually pressured banks to stay away from the crypto industry, including a number of policies jointly issued by the OCC, FDIC, SEC, and the Federal Reserve, which made banks generally unwilling to cooperate with crypto companies, resulting in many crypto companies being unable to obtain basic banking services, and some were even forced to shut down.

Consensys CEO Joseph Lubin said that the company had been twice cut off from the financial system by U.S. authorities and was a victim of Operation Chokepoint 2.0. In the latest incident, a large U.S. bank (reportedly Wells Fargo) eventually closed the Consensys account after pressure from regulators. Lubin revealed that the bank initially tried to delay execution and expressed support for Consensys, but ultimately could not withstand the pressure. In addition, Lubin himself was also targeted in this liquidation operation.

What is different about the FDIC today?

With Trump taking office, the FDIC has also changed.

The Federal Deposit Insurance Corporation (FDIC) recently announced that it is actively re-evaluating its regulatory approach to cryptocurrency-related activities, including withdrawing and replacing the Financial Institutions Letter (FIL) 16-2022), providing a compliance path for banking institutions to participate in cryptocurrency and blockchain-related activities while complying with the principles of safety and soundness. The FDIC plans to work with the Digital Asset Market Working Group established by Trump's executive order to optimize the regulatory framework.

FDIC Acting Chairman Travis Hill has criticized the FDIC’s stance for discouraging banks from exploring blockchain and digital assets, saying: “I have been critical of the FDIC’s approach to crypto assets and blockchain in the past. As I said last March, the FDIC’s approach ‘has led to a widespread belief that if an institution is interested in anything related to blockchain or distributed ledger technology, the institution cannot conduct business.’”After assuming his position, Hill initiated a review of all regulatory communications related to crypto banks, saying: “Upon becoming Acting Chairman, I directed staff to conduct a comprehensive review of all regulatory communications with banks attempting to offer crypto-related products or services.”

To increase transparency, the FDIC recently released 175 documents detailing its supervision of banks conducting crypto-related business. These changes mean: Banks can custody customers’ cryptocurrencies and they will be insured by the FDIC.

Operation Choke Point 2.0: It is about to end, and participants may be held accountable and liquidated

How fierce is Operation Choke Point 2.0?

We have just mentioned that Operation Choke Point 2.0 (translated as "Blocking Action" or "Neck-choking Action" 2.0) is a policy that prohibits crypto projects from enjoying banking services. In fact, the scale of this action may be far beyond readers' imagination.

Blockworks describes it this way: If FTX is a butterfly flapping its wings in the Amazon rainforest, then "Operation Choke Point 2.0" is the torrential rain that is now pouring down on the US cryptocurrency industry.

This action is a joint effort by the Biden White House, the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Department of Justice (DOJ), plus "influential people in Congress", to deprive the cryptocurrency industry of its fiat currency channels in order to completely strangle the industry.

Senators Roger Marshall, Elizabeth Warren and John Kennedy put pressure on Silvergate, and then Signature Bank drastically cut cryptocurrency-related deposits in December 2023. In January 2024, the FDIC, OCC, and Federal Reserve jointly stated that banks were "strongly discouraged" from supporting crypto businesses, and Metropolitan Commercial Bank completely closed its cryptocurrency business.

At the same time, crypto companies trying to control their own fiat channels have also encountered resistance. The Federal Reserve formally rejected Custodia's (formerly Avanti) application to join the Federal Reserve system at the end of January, which had been delayed for more than two years. Although Anchorage became the first national trust bank to receive conditional approval in 2021, Paxos and Protego have not yet been approved. The government's classification of cryptocurrency banks as "high risk" will have four negative effects, including FDIC raising insurance premiums, Federal Reserve reducing capital ratios (limiting overdraft capabilities), business activities being restricted, and regulatory review scores being reduced (affecting mergers and acquisition capabilities), further exacerbating the isolation of banks from the crypto industry.

Moreover, most of the above actions are traceless. That is to say, not only can cryptocurrency companies not sue,they may not even find evidence at all. Many of the people who pushed this matter hid behind the screen and exerted pressure secretly.

All this began to change when Trump took office.

What is the attitude of US regulators today?

The US Congress first held a hearing on Operation Choke Point 2.0, inviting people in the encryption industry to describe how they were "choked". U.S. Congressman Meuser said at the hearing that the Biden administration's Operation Choke Point 2.0 was implemented by regulators and specifically targeted and de-banked the digital asset ecosystem.

“The FDIC has pressured banks, through private conversations and formal regulatory threats, to deny service to digital asset companies, their employees, and even their customers.

This is a serious abuse of power that not only stifles innovation, but also directly harms consumers by depriving them of access to new and potentially beneficial financial products…

Just yesterday, FDIC Acting Chairman Travis Hill publicly exposed the Biden Administration’s Operation Choke Point activities, which led to the debanking of cryptocurrency businesses across the country…The FDIC has pledged to correct this going forward, and I will continue to monitor its progress and explore legislative solutions to ensure this doesn’t happen again.

“Free markets can only thrive when innovation is allowed to flourish. Regulators’ job is to protect our financial system — but this should not come at the expense of legitimate businesses, like energy companies and cryptocurrency firms. ”

The official hearing of the U.S. Congress acknowledged the existence of Operation Choke Point 2.0. Source: YouTube 

Readers can savor the difference in today's official characterization.

At the same time, U.S. federal judge Ana C. Reyes severely criticized the behavior of the Federal Deposit Insurance Corporation (FDIC) in the case in which Coinbase sued the FDIC.The lawsuit stems from Coinbase's attempt to obtain documents showing that the FDIC sent a "suspension letter" to banks to restrict cryptocurrency-related activities. This suspension letter is evidence of Operation Choke Point 2.0.Reyes The judge noted that the FDIC failed to provide a large number of documents related to the Freedom of Information Act (FOIA) request previously submitted by Coinbase, and may have destroyed some case information.

Ana C. Reyes directly questioned the FDIC at the hearing: "Can you explain why you interpret the FOIA request in such a narrow way? Its content is clear and not as (restrictive) as you understand it. ” Part of the conversation is excerpted as follows:

Andrew Dober (FDIC representative lawyer): Yes, Your Honor, I can -

The Court (Judge): No, you answer my questions directly.

Andrew Dober: I do have a statement on these issues, Your Honor. The FDIC is asking the Court to stay this case for three weeks -

The Court: No, I can't. I want you to answer my questions now.

Andrew Dober: Because of the leadership change -

The Court: I want you to answer my questions now.

Andrew Dober: Yes, Your Honor. Could you please repeat those questions?

The Court: Who took such a narrow and illogical interpretation of the FOIA request?

Andrew Dober: Your Honor, I assume that’s how it was understood—

The Court:I didn’t ask you how you understood it, I asked you who did it. It’s an almost laughably narrow interpretation. Who?

According to The Block, Scott Johnsson, partner at VBCapital, said:“It’s shocking to see a federal judge berate a federal agency’s lawyers in such a way. ”

Judge Reyes not only plans to subpoena FDIC employees for testimony in mid-February, but also warned that if the FDIC does not cooperate, "life will become very, very unpleasant for the FDIC." She further questioned whether the FDIC had taken the document retention measures required by law, and pointed out that Andrew Dober could face "serious sanctions."

And the reckoning is coming. U.S. Senator Cynthia Lummis said that today the U.S. Senate Banking Committee found the first solid evidence of Operation Chokepoint 2.0. She said, "Rest assured, the Digital Assets Subcommittee will find the relevant parties and hold them accountable. ”

CFTC: Reorganizing the Enforcement Division

On February 5, 2025, Acting Chair of the U.S. Commodity Futures Trading Commission (CFTC) Caroline Pham announced that the agency has reorganized the Enforcement Division to focus more on combating fraud and stop replacing regulatory functions with enforcement actions. The reform is aimed at optimizing resource allocation, improving law enforcement efficiency, and ensuring market integrity.

Under the leadership of former Chairman Rostin Behnam, the CFTC Enforcement Division established several working groups responsible for the supervision of insider trading, cybersecurity and emerging technologies, and environmental fraud. After this reorganization, the CFTC has reduced the number of working groups in the Enforcement Division from multiple to two, namely the Sophisticated Fraud Working Group and the Retail Fraud and General Enforcement Working Group.

and improving the efficiency of institutional operations, so that the CFTC can more accurately combat market fraud and misconduct rather than over-imposing compliance burdens. The CFTC announcement further emphasized that the new structure will more effectively prevent fraud, manipulation and market abuse, ensure market fairness, and strengthen the supervision and governance of law enforcement actions, prevent regulatory overreach, and improve the consistency of law enforcement and due process standards.

Why is this statement important? First of all, it is important to know that the CFTC has participated in cases such as Binance and Coinbase and is one of the more active US crypto regulators. Because of the commodity attributes of cryptocurrencies (such as gas fees), the CFTC It is believed that the crypto industry should perhaps be placed under its supervision. At the same time, law enforcement supervision is a common strategy of the SEC in the past, that is, "you can play as you please, but once something goes wrong, you will be fined." A strategy that allows you to do anything that is not prohibited by law.

However, this strategy often does not provide any regulatory clarity: A typical example is Coinbase. When Coinbase first IPOed, the SEC quickly approved it and did not provide any definition of the attributes of cryptocurrency. However, a few years later, it filed a lawsuit against Coinbase on the grounds that cryptocurrency is an unregistered security and Coinbase provides a trading platform for unregistered securities. This capricious regulatory attitude has brought great ambiguity to the US crypto industry, which is why the CFTC's clear statement that it prohibits law enforcement supervision is a huge benefit to the crypto industry.

David Sacks: What the New Crypto Czar Does

David Sacks, the White House's head of cryptocurrency and AI affairs, emphasized the push for the United States to become a leader in the field of digital assets at a recent press conference and called for a clear regulatory framework to be established as soon as possible. He announced that the Senate and the House of Representatives will work together to develop cryptocurrency legislation to address the uncertainty that has long faced the industry. Senator Bill Hagerty proposed the GENIUS Stablecoin Act, hoping to provide legal support for this market by regulating the issuance process of stablecoins. Sacks believes that stablecoins can not only consolidate the dominance of the US dollar in the international market, but may also bring trillions of dollars in demand for US Treasury bonds, thereby reducing long-term interest rates and enhancing the stability of the US financial system.

At the press conference, Senator Tim Scott, chairman of the Senate Banking Committee, proposed that the goal is to pass the stablecoin and digital asset bill through Congress within 100 days and send it to the president for signature. Member French Hill, chairman of the House Financial Services Committee, said the new version of the Digital Assets Act will be amended on the basis of the FIT 21 Act to make up for previous loopholes, such as the practical feasibility of the SEC to classify tokens within 60 days. The Senate also plans to coordinate FIT 21 to ensure that the version of the bill can eventually be signed into law by the president.

According to CNBC reports and interviews, Sacks also emphasized the negative impact of de-banking on the crypto industry. He pointed out that keeping cryptocurrency-related businesses in the United States will be more conducive to consumer protection because regulators can more effectively supervise market activities when these businesses are located in the United States. He believes that regulatory loopholes in the Bahamas have led to the world's largest crypto fraud (referring to FTX), and the United States should avoid repeating the same mistakes.

David Sacks (right) stands with senators and representatives at his first press conference. Source: Bloomberg

Sacks confirmed that Bitcoin Reserve will be included in the study of the White House Digital Asset Task Force and may include seized assets. However, he said that the concept of a sovereign wealth fund is different from Bitcoin Reserve, and specific policies will be handled by incoming Treasury Secretary Howard Lutnick. The Trump administration is exploring the potential role of Bitcoin in the national fiscal system, but the specific plan is still under discussion.

David Sacks expressed the attitude of US regulation in one sentence: "The crypto war is over. I look forward to working with you to create a golden age of digital assets."