Crypto Week in Review (January 20–24, 2025)

The Trump administration’s first week back in office was marked by a flurry of crypto-related activity among regulators, lawmakers, and the market itself. Here’s what you need to know since Inauguration Day:

$TRUMP Coin: The week opened with the newly launched $TRUMP memecoin peaking in the top 15 cryptocurrencies by market cap and sparking debate across the ecosystem.

Securities and Exchange Commission: Acting SEC Chair Mark T. Uyeda announced the formation of a crypto task force to be led by Commissioner Hester Peirce. “The Task Force’s focus will be to help the Commission draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously,” the SEC said in a press release.

SAB 122: The SEC rescinded previous interpretive guidance, SAB 121, directing banks and public companies to disclose customer crypto assets on their own balance sheets. Instead, SAB 122 directs affected entities to “continue to consider existing requirements to provide disclosures that allow investors to understand an entity’s obligation to safeguard crypto-assets held for others.” SAB 122 has been endorsed by Commissioner—and now crypto task force head—Peirce.

Commodity Futures Trading Commission: Acting CFTC Chair Caroline D. Pham released a statement that it is “time for the CFTC to get back to basics.” In remarks before the Cato Institute in 2023, Pham proposed a CFTC pilot program to serve as a “regulatory sandbox” for digital assets. Pham has already announced new senior leadership, including a general counsel and a new director of the Division of Market Oversight, signaling changes to the CFTC’s enforcement regime.

Federal Deposit Insurance Corporation: Acting FDIC Chair Travis Hill released a list of matters he expects the FDIC to focus on, including “a more open-minded approach to innovation and technology adoption” with “a more transparent approach to fintech partnerships and to digital assets and tokenization.” The chair also identified “a wholesale review of regulations, guidance, and manuals,” suggesting more robust guidance relevant to digital assets is forthcoming.

Senate Panel on Digital Assets: Senate Banking Committee Chair Tim Scott announced Cynthia Lummis will lead the first-ever Senate Banking Subcommittee on Digital Assets’ first digital assets subcommittee. Lummis has identified passing a stablecoin bill as a priority and said it will probably be “some melding” of the House-passed FIT 21 and the Lummis-Gillibrand Payment Stablecoin Act.

Tornado Cash: The Fifth Circuit Court of Appeals issued an opinion holding that Tornado Cash’s “immutable smart contracts are not ‘property,’” meaning the contracts cannot be blocked under the International Emergency Economic Powers Act and the Treasury Office of Foreign Asset Control “overstepped its congressionally defined authority” to sanction Tornado Cash in late 2022. The Fifth Circuit’s opinion remanded the case to the district court to grant partial summary judgment to the plaintiffs challenging OFAC’s authority to sanction Tornado Cash under the Administrative Procedure Act. A criminal trial against Tornado Cash co-founder and developer Roman Storm is still scheduled for April. Storm has been charged with conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money transmitting business in connection with alleged money laundering for the Lazarus Group, a sanctioned North Korean cybercrime organization.

Ross Ulbricht: The founder of the darknet website Silk Road was granted a full pardon by President Donald Trump. Ulbricht was issued two life sentences without the possibility of parole for crimes related to operating the website from 2011 until his arrest in 2013. The pardon has been received by many as a win for the cryptocurrency industry because Silk Road was an early adopter of Bitcoin and other virtual currencies used for anonymous transactions—and supporters believe Ulbricht’s sentence was disproportionate for the non-violent crimes he was convicted of.

Executive Order: President Trump signed an executive order entitled "Strengthening American Leadership in Digital Financial Technology," which:

• Establishes the President’s Working Group on Digital Asset Markets within the National Economic Council, to be chaired by the Special Advisor for AI and Crypto and include representatives from the president’s cabinet;
• Provides a timeline for agency action on crypto:
  
  • Within 30 days of the order, specified agencies “shall identify all regulations, guidance documents, orders, or other items that affect the digital asset sector.”
  • Within 60 days, “each agency shall submit to the Chair recommendations” to rescind, modify, or adopt regulations, guidance documents, or orders.
  • Within 180 days, the working group shall submit a report with recommended “regulatory and legislative proposals that advance the policies established in this order,” with a particular focus on:
    
    • “[A] Federal regulatory framework governing the issuance and operation of digital assets, including stablecoins, in the United States” and
    • “[T]he potential creation and maintenance of a national digital asset stockpile” including “criteria for establishing such a stockpile, potentially derived from cryptocurrencies lawfully seized by the Federal Government through its law enforcement efforts.”
• Instructs the chair to designate an Executive Director of the Working Group to be “responsible for coordinating its day-to-day functions,” hold public hearings, and receive industry expertise
• Prohibits agencies from “undertaking any action to establish, issue, or promote” Central Bank Digital Currencies and requires that any “ongoing plans or initiatives” to create CBDCs be immediately terminated.

For the latest cryptocurrency news and regulatory developments, visit our Fenwick Crypto Review.