Original | Odaily Planet Daily

Author | jk

With the rise of the Trump administration, the regulatory leaders who once dominated the U.S. anti-crypto policy are now facing a comprehensive reckoning. Major financial regulatory agencies such as the U.S. Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), and the Commodity Futures Trading Commission (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: Gary Gensler's team all leaves, pro-crypto individuals take over, enforcement procedures change

SEC, new officials bring new energy

The atmosphere at the SEC headquarters located at 100 F Street, Washington, D.C., is quietly changing. With Trump's inauguration, Gary Gensler resigned on the same day, and pro-crypto Mark Uyeda became the acting chair, temporarily assuming the chair's responsibilities until the new chair Paul Atkins is confirmed. This building with its beautiful glass curtain wall is no longer the enemy of the crypto industry but has transformed into a genuinely friendly regulatory agency.

For Mark Uyeda's profile and pro-crypto stance, you can read this article “Uncovering the new leadership team of U.S. crypto regulation, how long until implementation?”

On February 5, local time in the U.S., two insiders revealed that the SEC is currently requiring its lawyers to obtain high-level approval before formally initiating 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 the "crypto mom"), and Caroline Crenshaw (a Democratic commissioner). During the previous administration, the SEC only needed the approval of two enforcement supervisors to formally initiate an investigation, and enforcement personnel could continue informal investigations, including sending information requests, without commissioner approval.

At the same time, many readers may already know that acting chair Mark Uyeda has established a new cryptocurrency working group, led by the crypto-friendly commissioner known as "crypto mom," Hester Pierce, with the ultimate goal of providing regulatory clarity and proposing a clear regulatory framework for cryptocurrencies (similar to the EU's MiCA). The follow-up news is that acting chair Mark Uyeda appointed Landon Zinda, the policy director of the former cryptocurrency advocacy organization Coin Center, as his legal advisor and senior advisor to the cryptocurrency working group.

On the SEC cryptocurrency working group's website, the SEC's supportive attitude is very evident, even providing an email for crypto individuals to contact the SEC directly. 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 retroactive relief for token issuances (compared to the SEC's previous retroactive enforcement), where issuing entities or other willing responsible entities 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.”

Reckoning coming? Anti-crypto individuals marginalized

Odaily previously reported that almost all senior legal officials working under Gary Gensler, including personnel from the enforcement department and the general counsel's office, have left, suggesting that his entire team has departed. The SEC's chief economist Jessica Wachter, chief accountant Paul Munter, and general counsel Megan Barbero have also left.

What about those who remain?

According to reports, the SEC has reassigned former deputy director of the crypto assets and networks division, crypto litigation attorney Jorge Tenreiro, to its IT department. Tenreiro has worked at the SEC for over 11 years, and according to his LinkedIn profile, he initially served as an enforcement attorney before becoming the head of the agency'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 President Trump took office, the SEC's stance has undergone a significant shift, leading to a reduction in the size of its cryptocurrency enforcement division.

FDIC: Regulatory hostility completely disappears, crypto banking services may return

What is the FDIC?

The FDIC (Federal Deposit Insurance Corporation) is an independent agency of the U.S. government responsible for insuring 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 status of banks, assesses risks, prevents improper business practices, and takes corrective actions when problems are identified, even closing banks that are severely non-compliant or insolvent. Additionally, the FDIC is responsible for taking over and liquidating banks in bankruptcy, protecting depositors' interests and maintaining the safety and stability of the financial system. If a bank fails, the FDIC typically arranges for another bank to take over deposits or directly compensates depositors, making the banking system safer and more reliable.

In simple terms, the FDIC is the national bank insurance of the United States, guaranteeing the safety of consumers' deposits in banks. Previously, during the bankruptcy of Silicon Valley Bank, it was the FDIC that handled 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 not a good name for the crypto industry; it restricted the crypto industry’s access to banks and drew complaints from the entire crypto sector.

Imagine if you opened a crypto company or project, you could not open an account at any major U.S. bank, nor could you obtain loans, and you would not enjoy any of the banking services that a business project should have. This is what Operation Choke Point 2.0 is about, a policy that prohibits crypto projects from accessing banking services, with the FDIC being the main regulatory implementer of this policy. We will discuss this policy shortly.

This is not unfounded. Anchorage Digital CEO Nathan McCauley stated at a U.S. Senate hearing on "de-banking" that although Anchorage Digital is a federally licensed crypto bank, it was still denied service by banks, leading to business losses and even a 20% layoff. McCauley pointed out that between 2021 and 2023, U.S. regulators gradually pressured banks to distance themselves from the crypto industry, including multiple policies jointly issued by the OCC, FDIC, SEC, and the Federal Reserve, making banks generally unwilling to cooperate with crypto companies, resulting in many crypto enterprises being unable to obtain basic banking services, with some even being forced to shut down.

Consensys CEO Joseph Lubin stated that the company had twice been targeted by U.S. authorities attempting to cut off access to the financial system, making it a victim of Operation Choke Point 2.0. In the latest incident, a major U.S. bank (reportedly Wells Fargo) ultimately closed Consensys' account after being pressured by regulators. Lubin revealed that the bank initially attempted to delay execution and expressed support for Consensys but ultimately could not withstand the pressure. Additionally, Lubin himself was also targeted in this reckoning.

How is today's FDIC different?

With Trump's rise to power, the FDIC has also changed.

The 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 Letter (FIL) 16-2022), to provide compliance pathways for banking institutions to participate in cryptocurrency and blockchain-related activities while adhering to safety and soundness principles. The FDIC plans to collaborate with the digital asset market working group established by Trump's executive order to optimize the regulatory framework.

FDIC acting chair Travis Hill has criticized the FDIC's stance for hindering banks from exploring blockchain and digital assets, stating: “I have previously criticized the FDIC's attitude towards crypto assets and blockchain. As I said last March, the FDIC's approach ‘led to a widespread belief that if an institution is interested in anything related to blockchain or distributed ledger technology, that institution cannot conduct business.’” After taking office, Hill initiated a review of all regulatory communications related to banks attempting to offer crypto-related products or services, stating: “After becoming acting chair, I instructed staff to conduct a comprehensive review of all regulatory communications with banks trying to provide crypto-related products or services.”

To enhance transparency, the FDIC recently released 175 documents detailing its regulatory stance on banks engaging in crypto-related business. These changes mean that banks can hold customers' cryptocurrencies, and they will be insured by the FDIC.

Operation Choke Point 2.0: About to end, participants may be held accountable

How severe is Operation Choke Point 2.0?

As we just mentioned, Operation Choke Point 2.0 is a policy that prohibits crypto projects from accessing banking services. In fact, the scale of this operation may far exceed readers' imaginations.

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 currently pouring down on the U.S. cryptocurrency industry.

This action is led 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), along with "influential figures in Congress," all dedicated to stripping the cryptocurrency industry of its fiat channels to completely stifle this sector.

Senators Roger Marshall, Elizabeth Warren, and John Kennedy pressured Silvergate, which subsequently led Signature Bank to significantly reduce cryptocurrency-related deposits in December 2023. In January 2024, the FDIC, OCC, and the Federal Reserve jointly stated that they "strongly discourage" banks from supporting crypto businesses, immediately followed by Metropolitan Commercial Bank completely shutting down its cryptocurrency operations.

At the same time, crypto companies attempting to secure their fiat channels also faced resistance. The Federal Reserve officially rejected Custodia (formerly Avanti)'s application to join the Federal Reserve System at the end of January, a request that had been pending for over two years. Although Anchorage became the first nationally chartered trust bank to receive conditional approval in 2021, Paxos and Protego have yet to be approved. The government's classification of cryptocurrency banks as "high risk" brings four major negative impacts, including increased insurance premiums from the FDIC, reduced capital ratios from the Federal Reserve (limiting overdraft capabilities), restricted business activities, and lowered regulatory review scores (affecting merger and acquisition capabilities), further exacerbating the isolation between banks and the crypto industry.

Moreover, most of the above actions are without a trace. This means that cryptocurrency companies not only cannot sue, but may even find it impossible to gather evidence. Many of those pushing this agenda are hiding behind the scenes, exerting pressure quietly.

All of this began to reverse with Trump's inauguration.

What is the current attitude of U.S. regulatory agencies?

The U.S. Congress first held a hearing on Operation Choke Point 2.0, inviting individuals from the crypto industry to describe how they were being "choked." Congressman Meuser stated at 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 pressures banks through private conversations and formal regulatory threats, demanding that they 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 also directly harms consumers, preventing them from accessing new and potentially beneficial financial products…

Just yesterday, the acting chair of the FDIC, Travis Hill, publicly exposed the Biden administration's Operation Choke Point activities, leading to the de-banking of cryptocurrency businesses nationwide… The FDIC has committed to correcting this issue in the future, and I will continue to monitor its reform progress and explore legislative solutions to ensure such events do not happen again.

“A free market can only thrive when innovation is fully developed. The role of regulators is to protect our financial system — but this should not come at the expense of the development of legitimate businesses, such as energy companies and cryptocurrency firms.”

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

Readers can appreciate the difference in the official characterization today.

At the same time, U.S. District Judge Ana C. Reyes has issued a stern criticism of the FDIC's actions in the case where Coinbase sued the FDIC. This lawsuit stems from Coinbase's attempt to obtain documents related to the FDIC sending a "pause letter" to banks to restrict cryptocurrency-related activities, which serves as evidence of Operation Choke Point 2.0. Judge Reyes pointed out that the FDIC failed to provide a substantial 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 at the hearing: “Can you explain why you interpreted the FOIA request in such a narrow manner? The content is clear and does not seem to be understood as you have (restrictively).” Some excerpts from the dialogue are as follows:

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

The Court (Judge): No, just answer my question directly.

Andrew Dober: Regarding these issues, I do have a statement, Your Honor. The FDIC requests the court to pause this case for three weeks —

The Court: No, that won't do. I need you to answer my question now.

Andrew Dober: Because of leadership changes —

The Court: I need you to answer my question now.

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

The Court: Who interpreted the FOIA request in such a narrow and illogical manner?

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

The Court: I did not ask how you understood it; I asked who did this. This interpretation is so narrow it is almost laughable. Who exactly is it?

According to The Block, Scott Johnsson, a partner at VBCapital, stated: “It is shocking to see a federal judge reprimand a federal agency's lawyer in such a manner.”

Judge Reyes not only plans to subpoena FDIC employee credentials 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 legally required document retention measures and indicated that Andrew Dober might face “serious sanctions.”

And the reckoning is about to come. U.S. Senator Cynthia Lummis stated, today the Senate Banking Committee found the first concrete evidence of Operation Choke Point 2.0. 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, acting chair Caroline Pham of the U.S. Commodity Futures Trading Commission (CFTC) announced that the agency has restructured 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 multiple working groups responsible for regulating areas such as insider trading, cybersecurity and emerging technologies, and environmental fraud. Following this restructuring, the CFTC has reduced the number of working groups in the enforcement division from several to two, namely the Complex Fraud Working Group and the Retail Fraud and General Enforcement Working Group.

The Complex Fraud Working Group will handle 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 the operational efficiency of the agency, allowing the CFTC to more accurately combat market fraud and misconduct rather than imposing excessive compliance burdens. The CFTC announcement further emphasized that the new structure will more effectively prevent fraud, manipulation, and market abuse, ensuring market fairness while strengthening oversight governance of enforcement actions to prevent regulatory overreach and improve standards for consistency and due process in enforcement.

Why is this statement important? First, it is essential to know that the CFTC has been involved in cases against Binance and Coinbase, making it one of the more active U.S. crypto regulatory agencies. Due to the commodity nature of cryptocurrencies (such as being used as gas fees), the CFTC believes that the crypto industry may need to be under its regulation. At the same time, regulation by enforcement has been a common strategy of the SEC, which is a strategy of "you can do whatever you want, but once something goes wrong, you will be penalized," a strategy that operates under the principle that anything not prohibited by law is permissible.

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 definition of the attributes of cryptocurrencies, 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 erratic regulatory attitude has brought significant uncertainty to the U.S. crypto industry, which is why the CFTC's clear statement against regulation by enforcement is a significant positive development for the crypto sector.

David Sacks: Actions of the New Crypto Czar

David Sacks, as the White House's head of cryptocurrency and AI affairs, emphasized in a recent press conference the push for the U.S. 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 both the Senate and the House of Representatives would work together to draft cryptocurrency legislation to address the long-standing uncertainties faced by the industry. Senator Bill Hagerty proposed the GENIUS Stablecoin Act, aiming to provide legal support for the stablecoin issuance process. Sacks believes that stablecoins can not only solidify the dollar's dominant position in international markets but also potentially create trillions of dollars in demand for U.S. Treasury bonds, thereby lowering long-term interest rates and enhancing the stability of the U.S. financial system.

At a press conference, Senate Banking Committee Chairman Senator Tim Scott 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 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 feasibility issue of the SEC 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 from CNBC, Sacks also specifically emphasized the negative impact of de-banking on the crypto industry. He pointed out that keeping cryptocurrency-related businesses in the U.S. would be more beneficial for consumer protection, as regulatory agencies can more effectively oversee market activities when these companies are located within the U.S. He believes that regulatory loopholes in the Bahamas led to the largest scale of cryptocurrency fraud globally (referring to FTX), and the U.S. should avoid repeating the same mistakes.

In David Sacks' (far right) first press conference, he stood alongside senators and congressmen. Source: Bloomberg

Sacks confirmed that the Bitcoin Reserve will be included in the White House Digital Asset Working Group's research topics and may include seized assets. However, he stated that the concept of a Sovereign Wealth Fund is different from the Bitcoin Reserve, and specific policies will be handled by the incoming Treasury Secretary Howard Lutnick. The Trump administration is exploring the potential role of Bitcoin in the national financial system, but specific 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 all of you to create a golden age for digital assets.”

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