From New York to Washington, the US anti-crypto forces are being completely liquidated

Original | Odaily

Author | jk

With the inauguration of the Trump administration, the regulatory leaders who once dominated the US anti-cryptocurrency policy are now facing a comprehensive purge. 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 massive personnel adjustments and policy shifts. It is clear that the regulatory attitude in Washington is undergoing a fundamental change. Below, Odaily will take you through the specific changes and purges that these bring to the industry.

SEC: Gary Gensler's team has all left, pro-crypto individuals have taken over, and enforcement procedures have changed

SEC, three fires for the new official

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 the pro-crypto Mark Uyeda (Uyeda Mark) became the acting chairman, acting as chairman until the confirmation of the new chairman Paul Atkins. This building with a beautiful glass curtain wall is no longer the public enemy of the crypto industry, but has become a truly friendly regulatory agency.

For information on Mark Uyeda's personal background and pro-crypto stance, you can read this article《Uncovering the New Leadership Team of US Crypto Regulation, How Long Until They Take Effect?》

On February 5, local US time, two informed sources revealed that the US SEC currently requires its lawyers to obtain senior approval before formally launching an investigation. The new requirement stipulates that enforcement officers must obtain the permission of 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 supervisors to formally launch an investigation, and enforcement officers could continue informal investigations without the approval of the commissioners, including sending information requests.

At the same time, I believe many readers already know that Acting SEC Chairman Mark Uyeda has established a new cryptocurrency working group, led by the crypto-friendly commissioner, the so-called "Crypto Mom" Hester Pierce, with the ultimate goal of providing regulatory clarity and proposing a clear cryptocurrency regulatory framework (similar to the EU's MiCA). The follow-up to this news is that Acting Chairman Mark Uyeda has appointed Landon Zinda, the policy director of the cryptocurrency advocacy organization Coin Center, as his legal counsel and senior advisor to the cryptocurrency working group.

On the SEC Cryptocurrency Working Group's website, the SEC's supportive attitude is very clear, even providing an email address for crypto people to contact the SEC directly. Source: SEC website

Hester Peirce stated that "the Cryptocurrency Working Group is considering recommending that the SEC take action to provide prospective and retroactive relief for token offerings (compared to the SEC's previous retrospective enforcement), where the issuing entity or other willing responsible entity provides certain specific information and keeps it updated, and agrees not to challenge the SEC's jurisdiction in cases alleging fraud in connection with the purchase and sale of the assets."

Purge coming? Anti-crypto individuals marginalized

Odaily previously reported that almost all the senior legal officials who worked under Gary Gensler's leadership, including personnel from the Enforcement Division and the Office of the General Counsel, have resigned, suggesting that his entire team has left. The SEC's former Chief Economist Jessica Wachter, Chief Accountant Paul Munter, and General Counsel Megan Barbero have also resigned.

So what about those who don't leave?

According to reports, the SEC has reassigned the former Deputy Head of the Crypto Assets and Cyber Unit and crypto litigation lawyer Jorge Tenreiro to its Computer Systems Management (IT) department. Tenreiro has been with the SEC for over 11 years, and according to his LinkedIn information, he was initially an enforcement lawyer and later served as the head of the SEC's cryptocurrency enforcement division from October 2022 to November 2024.

Tenreiro was involved in several SEC enforcement cases against cryptocurrency companies, such as the lawsuits against Ripple and Coinbase. Since the Trump administration took office, the SEC's stance has undergone a major shift, and it has consequently reduced the size of its cryptocurrency enforcement division.

FDIC: Regulatory hostility has completely disappeared, crypto banking services may return

What is the FDIC?

The FDIC (Federal Deposit Insurance Corporation) is an independent agency in the US responsible for insuring bank deposits, protecting depositors up to $250,000 in the event of a bank failure. The FDIC regularly reviews the asset and liability status of banks, assesses risks, prevents improper business practices, and takes corrective measures when problems are found, even closing severely non-compliant or insolvent banks. In addition, the FDIC is responsible for taking over and liquidating failed banks, protecting the interests of depositors and maintaining the safety 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 more secure and reliable.

In simple terms, the FDIC is the national bank insurance of the US, guaranteeing the safety of consumers' bank deposits. 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 function, the FDIC has actually not been a good name for the crypto industry in the past; the FDIC has restricted the crypto industry's access to banks, and has also drawn complaints from the entire crypto industry.

Imagine if you set up a crypto company or project, you can't open an account with any major US bank, nor can you get a loan, and you can't enjoy the banking services that a business project should enjoy. This is Operation Choke Point 2.0 (a policy that prohibits crypto projects from enjoying banking services), and the FDIC is the main regulatory agency implementing this policy. We'll talk more about this policy in a moment.

This is not just hearsay. Anchorage Digital CEO Nathan McCauley said in a US Senate "de-banking" hearing that although Anchorage Digital is a federally licensed crypto bank, it still faced bank refusal of service, causing business damage and even 20% layoffs. McCauley pointed out that from 2021 to 2023, US regulatory agencies have been gradually putting pressure on banks to stay away from the crypto industry, including policies jointly issued by the OCC, FDIC, SEC, and the Federal Reserve, causing banks to generally be unwilling to cooperate with crypto companies, resulting in many crypto companies unable to obtain basic banking services, and some even forced to shut down.

Consensys CEO Joseph Lubin said the company had twice been the victim of attempts by US authorities to cut off access to the financial system, a victim of Operation Chokepoint 2.0. In the latest incident, a major US bank (reportedly Wells Fargo) ultimately closed Consensys' account under pressure from regulatory agencies. Lubin revealed that the bank had initially tried to delay implementation and expressed support for Consensys, but ultimately could not resist the pressure. In addition, Lubin himself was also targeted in this purge.

How is the FDIC different today?

And with Trump's inauguration, the FDIC has also changed.

The Federal Deposit Insurance Corporation (FDIC) recently announced that it is actively re-evaluating its approach to regulating crypto-currency-related activities, including withdrawing and replacing Financial Institution Letter (FIL) 16-2022, to provide a compliance path for banking institutions to participate in crypto-currency and blockchain-related activities while adhering to principles of safety and soundness. The FDIC plans to work with the digital asset market working group established by the Trump executive order to optimize the regulatory framework.

FDIC Acting Chairman Travis Hill has criticized the FDIC's stance as an obstacle for banks to explore Blockchain and digital assets, stating: "I have long criticized the FDIC's approach to crypto assets and Blockchain. As I said last March, the FDIC's actions 'have led to a general perception that if an institution is interested in anything related to Blockchain or distributed ledger technology, that institution cannot do business.'" Since taking office, Hill has initiated a review of all regulatory communications related to crypto-banking, stating: "Since becoming Acting Chairman, I have directed staff to conduct a comprehensive review of all regulatory communications with banks seeking to offer crypto-related products or services."

To increase transparency, the FDIC has recently released 175 documents detailing its regulation of banks' crypto-related activities. These changes mean that banks can now custody customers' cryptocurrencies, and they will be insured by the FDIC.

Operation Choke Point 2.0: About to End, Participants May Face Accountability

How Powerful is Operation Choke Point 2.0?

We have just mentioned that Operation Choke Point 2.0 is a policy that prohibits crypto projects from accessing banking services. In fact, the scale of this action may be far greater than readers can imagine.

Blockworks describes it as: If FTX is the butterfly flapping its wings in the Amazon rainforest, then "Operation Choke Point 2.0" is the downpour now cascading over the US crypto industry.

This action is being carried out by the Biden White House, Federal Reserve, Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), Department of Justice (DOJ), and influential figures in Congress, all working to deprive the crypto industry of fiat currency channels in order to completely stifle the industry.

Senators Roger Marshall, Elizabeth Warren, and John Kennedy have put pressure on Silvergate, after which Signature Bank significantly reduced its crypto-related deposits in December 2023. In January 2024, the FDIC, OCC, and Federal Reserve jointly declared that they "strongly discourage" banks from supporting crypto businesses, and shortly after, Metropolitan Commercial Bank completely shut down its crypto business.

At the same time, crypto companies trying to control their own fiat currency channels are also facing resistance, as the Federal Reserve formally rejected Custodia's (formerly Avanti) application to join the Federal Reserve system in late January, an application that has been pending for over two years. Although Anchorage became the first to receive conditional approval as a national trust bank in 2021, Paxos and Protego have yet to be approved. The government's designation of crypto banks as "high risk" will lead to four negative impacts, including higher FDIC insurance premiums, lower capital ratios from the Federal Reserve (limiting overdraft capacity), restricted business activities, and lower regulatory review scores (impacting merger and acquisition capabilities), further exacerbating the isolation between banks and the crypto industry.

Moreover, most of the above actions are untraceable. This means that crypto companies not only cannot sue, but may not even be able to find evidence. Many of the people driving this are hidden behind the scenes, exerting quiet pressure.

All of this has been turning around since the Trump administration.

What is the Attitude of US Regulatory Agencies Today?

The US Congress first held a hearing on Operation Choke Point 2.0, inviting crypto industry participants to describe how they have been "choked." US Representative Meuser stated at the hearing that the Biden administration's Operation Choke Point 2.0 is being implemented by regulatory agencies, specifically targeting and de-banking the digital asset ecosystem.

"The FDIC, through private conversations and formal regulatory threats, is pressuring banks to refuse services 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 denying them access to new, potentially beneficial financial products...

Just yesterday, FDIC Acting Chairman Travis Hill publicly exposed the Biden administration's Operation Choke Point activities, resulting in crypto companies being de-banked nationwide...The FDIC has promised to correct this issue going forward, and I will continue to oversee their progress and explore legislative solutions to ensure such incidents do not happen again.

"A free market can only thrive when innovation is allowed to fully develop. The role of regulators is to protect our financial system -- but not at the expense of the development of legitimate businesses, such as energy companies and crypto companies."

The official Congressional hearing acknowledges the existence of Operation Choke Point 2.0. Source: YouTube

Readers can savor the difference in the current official characterization.

Meanwhile, US Federal Judge Ana C. Reyes has harshly criticized the FDIC's actions in Coinbase's lawsuit against the Federal Deposit Insurance Corporation (FDIC). This lawsuit stems from Coinbase's attempt to obtain FDIC documents sent to banks as "cease and desist letters" to restrict crypto-related activities, which are evidence of Operation Choke Point 2.0. Judge Reyes pointed out that the FDIC failed to provide a large number of documents related to Coinbase's previous Freedom of Information Act (FOIA) request, and may have destroyed some case information.

Ana C. Reyes directly questioned the FDIC in the hearing: "Can you explain why you have interpreted the FOIA request so narrowly? Its content is very clear and not as you (restrictively) understand it." Excerpts of the dialogue are as follows:

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

The Court: No, you answer my question directly.

Andrew Dober: Regarding these questions, Your Honor, I do have a statement.

The Court: No, that's not going to work. I'm asking you a question now. Answer my question.

Andrew Dober: Due to changes in leadership --

The Court: I'm asking you to answer my question. Who took this narrow and illogical interpretation of the FOIA request?

Andrew Dober: Your Honor, I believe that was the understanding at the time --

The Court: I didn't ask how you understood it, I asked who did this. This interpretation is almost laughably narrow. Who was it?

According to The Block, VBCapital partner Scott Johnsson said: "To see a federal judge so harshly reprimand a federal agency's lawyer is truly shocking."

Judge Reyes not only plans to summon FDIC employees to testify 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 has taken the legally required document retention measures, and indicated that Andrew Dober may face "serious sanctions".

And accountability is about to come. US Senator Cynthia Lummis stated that the US Senate Banking Committee has found the first concrete evidence of Operation Chokepoint 2.0 today. She said, "Rest assured, the Digital Assets Subcommittee will find the relevant parties and hold them accountable."

CFTC: Restructuring the Enforcement Division

On February 5, 2025, CFTC Acting Chairman Caroline Pham announced that the agency has restructured its Enforcement Division to focus more on combating fraudulent behavior and stop using enforcement actions as a substitute for regulatory functions. This reform aims to optimize resource allocation, improve enforcement efficiency, and ensure market integrity.

Under former Chairman Rostin Behnam, the CFTC Enforcement Division had established multiple working groups, responsible for regulating areas such as insider trading, cybersecurity and emerging technologies, and environmental fraud. After this restructuring, the CFTC will streamline the number of working groups in the Enforcement Division to two, namely the Complex Fraud Working Group and the Retail Fraud and General Enforcement Working Group.

The Complex Fraud Task Force will be responsible for handling complex fraud and market manipulation cases involving all asset classes, covering the entire process from investigation to litigation. The Retail Fraud and General Enforcement Task Force will focus on combating retail market fraud and other general enforcement matters.

Acting Chairman Pham stated in the statement that this adjustment aims to stop "regulation by enforcement" and improve the efficiency of the agency's operations, enabling the CFTC to more precisely combat market fraud and misconduct, rather than imposing excessive compliance burdens. The CFTC announcement further emphasizes that the new structure will more effectively prevent fraud, manipulation, and market abuse, ensure market fairness, while strengthening oversight and governance of enforcement actions, preventing regulatory overreach, and improving the consistency of enforcement and due process standards.

Why is this statement important? First, it needs to be known that the CFTC has been involved in cases involving Binance and Coinbase, and is one of the more active US crypto regulatory agencies. Because of the commodity nature of cryptocurrencies (such as gas fees), the CFTC believes the crypto industry may fall under its regulation. At the same time, regulation by enforcement has been a common strategy of the SEC, a "you can do whatever you want, but if there's a problem, you'll be fined" strategy of allowing anything not explicitly prohibited by law.

However, this strategy often does not provide any regulatory clarity: a typical example is Coinbase, where the SEC quickly approved its initial IPO and did not provide any definition of the attributes of cryptocurrencies, but a few years later sued Coinbase, claiming that cryptocurrencies are unregistered securities and Coinbase provided a trading platform for unregistered securities. This erratic regulatory attitude has brought a lot of uncertainty to the US crypto industry, which is why the CFTC's clear stance against regulation by enforcement is a huge positive for the crypto industry.

David Sacks: The Actions of the New Crypto Czar

David Sacks, as the White House's crypto and AI affairs officer, emphasized in a recent press conference the need to push the US to become a leader in the digital asset space and called for the establishment of a clear regulatory framework as soon as possible. He announced that the Senate and House will work together to develop cryptocurrency legislation to address the long-standing uncertainty facing the industry. Senator Bill Hagerty introduced the GENIUS Stablecoin Act, hoping to provide legal support for the stablecoin market by regulating the stablecoin issuance process. 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 Treasuries, thereby lowering 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, stated that the goal is to pass the stablecoin and digital asset bill through Congress and send it to the President for signature within 100 days. Representative French Hill, chairman of the House Financial Services Committee, said that the new digital asset bill will be amended based on the FIT 21 bill to address previous loopholes, such as the actual feasibility of the SEC classifying tokens within 60 days. The Senate also plans to coordinate with FIT 21 to ensure that the bill version can ultimately be signed into law by the President.

According to CNBC's report and interviews, Sacks also specifically emphasized the negative impact of decentralization on the crypto industry. He pointed out that keeping crypto-related businesses in the US will be more beneficial for consumer protection, as when these companies are located within the US, regulatory agencies can more effectively oversee market activities. He believes that the regulatory loopholes in the Bahamas led to the largest crypto fraud case globally (referring to FTX), and the US should avoid a similar situation.

At David Sacks' (far right) first press conference, he stood with Senators and Representatives. Source: Bloomberg

Sacks confirmed that the Bitcoin Reserve will be included in the White House's digital asset working group's research agenda and may include seized assets. However, he stated that the concept of a Sovereign Wealth Fund is different from the Bitcoin Reserve, and the specific policy will be handled by the 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 summed up the US regulatory attitude in one sentence: "The crypto war is over. I look forward to working with all of you to create a golden age of digital assets."