Last year's highly regarded SEC cryptocurrency litigation chief is now fixing computers in the IT department.
With the Trump administration in office, the regulatory leaders who once dominated the U.S. anti-crypto policy are now facing a complete reckoning. Major financial regulatory agencies, including the SEC, FDIC, and CFTC, are undergoing significant personnel changes and policy shifts. It is evident that the regulatory attitude in Washington is undergoing a fundamental change. Below, Odaily Planet Daily will take a look at what these changes and reckonings specifically bring to the industry.
SEC: The entire Gary Gensler team has left, pro-crypto individuals have taken over, and enforcement procedures have changed.
SEC, the new administration is firing on all cylinders.
At the SEC headquarters located at 100 F Street NW in Washington, D.C., the atmosphere is quietly changing. With Trump's election, Gary Gensler resigned on the same day, and pro-crypto Mark Uyeda became acting chair, assuming the chair duties until the confirmation of the new chair Paul Atkins. This building, with its beautiful glass façade, is no longer the enemy of the cryptocurrency industry but has transformed into a truly friendly regulatory agency.
On February 5th, local U.S. time, two insiders revealed that the U.S. SEC is currently requiring its lawyers to obtain high-level approval before formally launching investigations. The new requirement stipulates that enforcement personnel must obtain permission from politically appointed commissioners to issue subpoenas, request documents, and compel testimony. There are currently three commissioners: Acting Chair Mark Uyeda, Hester Peirce (known as Crypto Mom), and Caroline Crenshaw (Democratic Commissioner). During the previous administration, the SEC only needed to obtain the approval of two enforcement supervisors to formally initiate an investigation, while enforcement personnel could continue informal investigations without commissioner approval, including sending information requests.
At the same time, many readers may already know that SEC Acting Chair Mark Uyeda has formed 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 regulatory framework for cryptocurrencies (similar to the EU's MiCA). The subsequent news is that Acting Chair Mark Uyeda appointed Landon Zinda, the policy director of the former cryptocurrency advocacy group Coin Center, as his legal advisor and senior consultant to join the committee.
On the SEC cryptocurrency working group’s website, the SEC's supportive stance is very clear, even providing an email for cryptocurrency individuals to directly contact the SEC. Source: SEC official website.
Hester Peirce stated: 'The cryptocurrency working group is considering recommending that the SEC take action to provide temporary forward-looking and retrospective relief for token issuances (compared to the SEC's previous retrospective enforcement), where issuing entities or other entities willing to take responsibility provide certain specific information and keep it updated, and agree not to challenge the SEC's jurisdiction in cases involving allegations of fraud related to the purchase and sale of assets.'
Is a reckoning coming? Anti-crypto forces are being marginalized.
Odaily previously reported that nearly all senior legal officials working under Gary Gensler have left, suggesting that his entire team has departed. Previously, SEC's Chief Economist Jessica Wachter, Chief Accountant Paul Munter, and Chief Legal Counsel Megan Barbero have also left.
But what about those who don’t leave?
It has been reported that the SEC has reappointed former Deputy Chief of the Cryptocurrency and Cyber Unit, crypto litigation attorney Jorge Tenreiro, to its Computer Systems Management (IT) department. Tenreiro worked at the SEC for over 11 years, and according to his LinkedIn profile, he initially served as an enforcement attorney and later became the head of the agency's cryptocurrency enforcement division from October 2022 to November 2024.
Tenreiro participated 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, leading to a reduction in the size of its cryptocurrency enforcement division.
FDIC: Regulatory hostility has completely vanished, and cryptocurrency banking services may return.
What is the FDIC?
The FDIC (Federal Deposit Insurance Corporation) is an independent agency of the U.S. responsible for providing insurance for bank deposits, ensuring that depositors can receive up to $250,000 in compensation in the event of a bank failure. The FDIC regularly reviews the asset-liability situation of banks, assesses risks, prevents misconduct, and takes corrective measures when problems are identified, and can even close severely violating or undercapitalized banks. Additionally, the FDIC is responsible for taking over and liquidating banks when they fail, safeguarding depositors' interests, and maintaining the safety and stability of the financial system. If a bank collapses, the FDIC typically arranges for another bank to take over the deposits or directly compensates depositors to make the banking system safer and more reliable.
In simple terms, the FDIC is the national bank insurance of the United States, ensuring the safety of consumers' deposits in banks. Previously, during the collapse of Silicon Valley Bank, it was the FDIC responsible for handling the aftermath and subsequent arrangements.
Why is national bank insurance related to the cryptocurrency industry?
Due to the regulatory functions of the FDIC, it has not been a good name for the cryptocurrency industry; the FDIC has restricted the cryptocurrency industry’s access to banks, leading to complaints from the entire cryptocurrency sector.
Imagine if you opened a cryptocurrency company or project and couldn't open an account at any major U.S. bank, nor could you obtain loans, receiving none of the banking services you should enjoy for your business project. This is what Operation Choke Point 2.0 is—a policy that prohibits cryptocurrency projects from enjoying banking services, with the FDIC as the main regulatory enforcer of this policy. We'll talk about this policy shortly.
This is not unfounded. Anchorage Digital CEO Nathan McCauley stated during the U.S. Senate hearing on de-banking that, although Anchorage Digital is a federally licensed cryptocurrency bank, it has still been denied service by banks, leading to a loss of business and even a 20% reduction in staff. McCauley pointed out that between 2021 and 2023, U.S. regulators gradually pressured banks to distance themselves from the cryptocurrency industry, with multiple policies jointly issued by the OCC, FDIC, SEC, and the Federal Reserve discouraging banks from cooperating with cryptocurrency companies, resulting in many crypto firms being unable to access basic banking services, with some even forced to shut down.
Consensys CEO Joseph Lubin stated that the company has twice faced attempts by U.S. authorities to cut off access to the financial system, making it a victim of Operation Choke Point 2.0. In the latest incident, a large U.S. bank (reportedly Wells Fargo) ultimately closed Consensys's account after succumbing to regulatory pressure. Lubin revealed that the bank initially tried to delay execution and expressed support for Consensys, but ultimately could not withstand the pressure. Furthermore, Lubin himself was also targeted during this reckoning.
What is different about the FDIC today?
And with Trump taking office, the FDIC also changed.
The U.S. Federal Deposit Insurance Corporation (FDIC) recently announced that it is actively reassessing its regulatory approach to cryptocurrency-related activities, including withdrawing and replacing Financial Institution Letters (FIL) 16-2022, to provide compliance pathways for banks to engage in cryptocurrency and blockchain-related activities while adhering to principles of safety and soundness. The FDIC plans to collaborate with the Digital Asset Market Working Group established by the Trump administration to optimize the regulatory framework.
FDIC Acting Chair Travis Hill has criticized the FDIC's stance as hindering banks from exploring blockchain and digital assets, stating: 'I have been critical of the FDIC's stance on crypto assets and blockchain. As I mentioned last March, the FDIC's approach 'led to a general belief 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 banks attempting to offer cryptocurrency-related products or services, stating: 'After becoming acting chair, I directed staff to conduct a comprehensive review of all regulatory communications with banks attempting to provide crypto-related products or services.'
To enhance transparency, the FDIC recently released 175 documents detailing its regulatory approach to banks engaging in cryptocurrency-related activities. These changes imply that banks can custody customers' cryptocurrencies, and they will be insured by the FDIC.
Operation Choke Point 2.0: About to end, participants may be held accountable.
How fierce is Operation Choke Point 2.0?
As we have just mentioned, Operation Choke Point 2.0 is a policy that prohibits cryptocurrency projects from accessing banking services. In fact, the scale of this operation may far exceed what readers can imagine.
Blockworks described it this way: if FTX is the butterfly flapping its wings in the Amazon rainforest, then 'Operation Choke Point 2.0' is the torrential rain pouring down on the U.S. cryptocurrency industry today.
This action is being pursued by the Biden White House, Federal Reserve, Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), Department of Justice (DOJ), along with 'influential figures in Congress,' all dedicated to stripping the cryptocurrency industry of its fiat channels to completely crush the industry.
Senators Roger Marshall, Elizabeth Warren, and John Kennedy pressured Silvergate, after which Signature Bank significantly reduced cryptocurrency-related deposits in December 2023. In January 2024, the FDIC, OCC, and Federal Reserve jointly stated that they 'strongly discourage' banks from supporting cryptocurrency businesses, leading to the complete shutdown of cryptocurrency operations at Metropolitan Commercial Bank.
Meanwhile, cryptocurrency companies attempting to control their fiat channels have also faced resistance; the Federal Reserve officially rejected Custodia's (formerly Avanti) application to join the Federal Reserve system at the end of January, a request that had been pending for more than two years. Although Anchorage became the first national trust bank to receive conditional approval in 2021, Paxos and Protego have still not been approved. The government's designation of cryptocurrency banks as 'high risk' will lead to four major negative impacts, including increased FDIC insurance rates, reduced capital ratios by the Federal Reserve (limiting overdraft capacity), restrictions on business activities, and lower regulatory review scores (affecting merger and acquisition capabilities), further exacerbating the separation between banks and the cryptocurrency industry.
Moreover, most of the above actions are without a trace. This means that cryptocurrency companies not only cannot sue but may also find it impossible to gather evidence. Many of those pushing for this are hiding behind the scenes, exerting pressure quietly.
All of this began to shift after Trump took office.
What is the current attitude of U.S. regulatory agencies?
The U.S. Congress held its first hearing on Operation Choke Point 2.0, inviting cryptocurrency industry figures to describe how they were 'choked off.' Congressman Meuser stated during the hearing that the Biden administration's Operation Choke Point 2.0 is implemented by regulatory agencies specifically targeting and de-banking the digital asset ecosystem.
'The FDIC has pressured banks through private dialogue and formal regulatory threats to refuse to provide services to digital asset companies, their employees, and even their customers.'
This is a serious abuse of power that not only stifles innovation but directly harms consumers by denying them access to new, potentially beneficial financial products...
Just yesterday, the FDIC Acting Chair Travis Hill publicly revealed the Biden administration's Operation Choke Point activities, leading to the de-banking of cryptocurrency companies nationwide... The FDIC has pledged to address this issue in the future, and I will continue to monitor its reform progress and explore legislative solutions to ensure such incidents do not occur again.
'A free market can only thrive when innovation is fully developed. The role of regulatory agencies is to protect our financial system—but this should not come at the expense of legitimate businesses, like energy companies and cryptocurrency companies.'
The official Congressional hearing acknowledged the existence of Operation Choke Point 2.0. Source: YouTube.
Readers can appreciate the differences in official positioning today.
At the same time, U.S. Federal Judge Ana C. Reyes has severely criticized the FDIC's behavior in the case where Coinbase sued the Federal Deposit Insurance Corporation (FDIC). This lawsuit originated from Coinbase's attempt to obtain documents related to the FDIC sending a 'pause letter' to banks to limit cryptocurrency-related activities, which serves as evidence of Operation Choke Point 2.0. Judge Reyes pointed out that the FDIC failed to provide a significant number of documents related to Coinbase's earlier submitted Freedom of Information Act (FOIA) requests and may have destroyed some case information.
Ana C. Reyes directly questioned the FDIC during the hearing: 'Can you explain why you interpreted the FOIA request so narrowly? Its content is very clear, and it doesn't seem to be understood as you do (restrictively).' Here are some excerpts from the dialogue:
Andrew Dober (FDIC representative attorney): Yes, Your Honor, I can—
The Court: No, you answer my question directly.
Andrew Dober: Regarding these matters, I do have a statement, Your Honor. The FDIC requests that the court pause this case for three weeks—
The Court: No, you can’t. I now want you to answer my question.
Andrew Dober: Because of the leadership changes—
The Court: I now want you to answer my question.
Andrew Dober: Yes, Your Honor. Could you please repeat these questions?
The Court: Who interpreted the FOIA request so narrowly and illogically?
Andrew Dober: Your Honor, I believe that was the way it was understood at the time—
The Court: I didn’t ask how you interpreted it; I asked who did this. This interpretation is so narrow that it's almost laughable. Who is it?
According to The Block, VBCapital partner Scott Johnsson stated, 'It is shocking to see a federal judge severely reprimand a federal agency's lawyer in such a manner.'
Judge Reyes not only plans to summon FDIC employee certificates 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 noted that Andrew Dober may face 'serious sanctions.'
And the reckoning is also coming. U.S. Senator Cynthia Lummis stated that the Senate Banking Committee has found the first solid evidence of Operation Choke Point 2.0. She said, 'Rest assured, the Digital Asset Subcommittee will find those involved and hold them accountable.'
CFTC: Restructuring the enforcement division.
On February 5, 2025, Acting Chair Caroline Pham announced that the Commodity Futures Trading Commission (CFTC) has reorganized its enforcement division to focus more on combating fraud and to stop substituting enforcement actions for regulatory functions. This reform aims to optimize resource allocation, improve enforcement efficiency, and ensure market integrity.
Under the leadership of former Chair Rostin Behnam, the CFTC's enforcement division established several working groups responsible for monitoring insider trading, cybersecurity and emerging technologies, as well as environmental fraud. Following this restructuring, the CFTC reduced the number of enforcement working groups from several to two: the Complex Fraud Working Group and the Retail Fraud and General Enforcement Working Group.
Among them, the Complex Fraud Working Group 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 Working Group will focus on combating retail market fraud and other general enforcement matters.
Acting Chair Pham stated in a statement that this adjustment aims to stop 'Regulation by Enforcement' and enhance institutional operational efficiency, allowing the CFTC to more accurately combat market fraud and misconduct, rather than excessively impose compliance burdens. The CFTC announcement further emphasized that the new structure will more effectively prevent fraud, manipulation, and market abuse, ensure market fairness, while strengthening oversight governance of enforcement actions to prevent regulatory overreach, and improve consistency in enforcement and adherence to due process standards.
Why is this statement important? First, it is essential to know that the CFTC has been involved in cases regarding Binance and Coinbase, making it one of the more active U.S. cryptocurrency regulatory agencies. Due to the commodity nature of cryptocurrencies (such as being used as gas fees), the CFTC believes the cryptocurrency industry may fall under its regulatory purview. Furthermore, enforcement regulation was previously a common strategy of the SEC, which follows a 'you can do whatever you want, but once a problem arises, you'll be penalized' approach, allowing for actions not explicitly prohibited by law.
However, this strategy often does not provide any regulatory clarity: a typical example is Coinbase, which received swift approval from the SEC during its initial IPO without any definitions for cryptocurrency attributes, but years later, the SEC sued Coinbase on the grounds that cryptocurrencies are unregistered securities, and that Coinbase provided a trading platform for unregistered securities. This capricious regulatory attitude has brought significant ambiguity to the U.S. cryptocurrency industry, which is why the CFTC's clear stance prohibiting enforcement regulation is a massive boon for the cryptocurrency sector.
David Sacks: Actions of the new crypto czar.
David Sacks, as the White House's head of cryptocurrency and AI affairs, emphasized during a recent press conference the need to push the U.S. to become a leader in the digital asset space and called for a clear regulatory framework to be established as soon as possible. He announced that both the Senate and the House will work together to formulate cryptocurrency legislation to address the long-standing uncertainties faced by the industry. Senator Bill Hagerty proposed the GENIUS stablecoin bill, hoping to provide legal support for this market by regulating stablecoin issuance procedures. Sacks believes that stablecoins can not only consolidate the dollar's dominant position in international markets but could also bring trillions of dollars in U.S. Treasury demand, thereby lowering long-term interest rates and enhancing the stability of the U.S. financial system.
At the press conference, Senate Banking Committee Chairman Senator Tim Scott proposed the goal of getting stablecoin and digital asset legislation passed by Congress within 100 days and sent to the President for signing. House Financial Services Committee Chairman Congressman French Hill stated that the new version of the digital asset bill will be modified based on the FIT 21 bill to address previous loopholes, such as the SEC's feasibility issues in classifying tokens within 60 days. The Senate also plans to coordinate on FIT 21 to ensure that the bill version can ultimately be signed into law by the President.
According to reports and interviews by CNBC, Sacks also specifically emphasized the negative impact of de-banking on the cryptocurrency industry. He pointed out that keeping cryptocurrency-related businesses in the U.S. would be more beneficial for consumer protection, as regulators would be able to more effectively supervise market activities when these companies are located within the U.S. He believes that regulatory loopholes in the Bahamas led to the largest global cryptocurrency fraud case (referring to FTX), and the U.S. should avoid repeating such mistakes.
In David Sacks's first press conference, he stood with senators and representatives. Source: Bloomberg.
Sacks confirmed that Bitcoin Reserve will be included in the White House Digital Asset Working Group's research topics and may contain seized assets. However, he stated that the concept of a Sovereign Wealth Fund differs from Bitcoin Reserve, with specific policies to be managed by the incoming Treasury Secretary Howard Lutnick. The Trump administration is exploring the potential role of Bitcoin in the national financial system, but concrete plans are still under discussion.
David Sacks expressed the U.S. regulatory attitude in one sentence: 'The crypto war is over. I look forward to working with everyone to create a golden age of digital assets.'