The early days of the Trump administration saw a flurry of activity that could give the crypto industry an idea of forthcoming crypto regulations, namely that they may not be regulated as securities.
Practitioners have decried a lack of concrete change in the form of new rules and guidance. The skeptics have their reasons. The formation of the crypto task force, Trump’s crypto executive order, crypto czar David Sacks’ lone press conference, and the digital asset reserve has been criticized as mere theater.
The real work of regulating comes not in press conferences but in the guidance, enforcement, and rulemaking that support the structure of rules-based systems.
A faithful account of all of the cryptocurrency decisions from the Trump administration reveals a new approach to enforcement and regulation that could meaningfully affect the rights of operators in the United States.
Trump’s regulatory approach opens up banking to crypto
In the dog days of the Biden administration, a policy known as “Operation Chokepoint 2.0” became a major scandal in certain crypto media channels. The allegations were that, during the Obama administration, the Justice Department developed a program called Operation Choke Point that it used to surveil and curtail certain disfavored businesses like payday lenders and firearms dealers.
Some speculated that the Biden administration adopted the same policies for cryptocurrency companies. There was a lot of back and forth over this issue — some denied it ever happened, but many cryptocurrency firms and individuals lost access to banking services.
Whether this was a directive or simply an unforeseen consequence of other policies, many in the industry were incensed; the issue became politically charged.
Crypto execs went on popular shows and podcasts like The Joe Rogan Experience to discuss debanking. Source: Nic Carter
As a result, one of the first steps the Trump administration took regarding crypto was to fix the industry’s debanking problem. This began only two days after Trump took office with Staff Accounting Bulletin 122 (SAB 122), a directive that repealed the Securities and Exchange Commission’s (SEC) SAB 121 — which had effectively prohibited banks from holding cryptocurrencies by making it difficult and inefficient to do so.
On March 7, the Office of the Comptroller of the Currency (OCC) released its own interpretive guidance, Letter 1183, itself undoing Letter 1179. The latter required banks to ask OCC’s permission to participate in certain crypto-native activities like custodying cryptocurrency, holding stablecoin reserve deposits and functioning as validation nodes.
On March 28, the Federal Deposit Insurance Corporation (FDIC) followed up with its own guidance. It rescinded the Biden era FIL-16-2022, which required FDIC-supervised institutions to notify the FDIC of their intent to dabble in crypto and provide information on possible risks.
Acting FDIC Chair Travis Hill also signaled that “banking regulators should not use reputational risk as a basis for supervisory criticisms” at all.
It may be difficult to separate the effects of these policies so early in the administration because banks are large institutions and move slowly. But across three agencies the rules have changed substantially and dramatically, which could have major effects on cryptocurrency access to banking services in the medium to long term.
Fully dismissed crypto cases
Virtually every pending SEC matter with a cryptocurrency defendant has been dropped. While nice for the targets, it doesn’t create much precedent that anyone can build off of. That said, the result does suggest that the underlying activities in those dropped cases won’t be pursued for enforcement, at least for the immediate future.
It’s helpful, then, to consider what activities have received implied license through this campaign of dropped enforcement.
There are a number of cases in which the SEC filed a complaint and litigated to varying degrees of resolution, which the commission either fully dropped or settled without admissions of wrongdoing on the part of the targets:
These cases revolved around the unregistered sale and offer of securities under the Securities Act of 1933, and acting unregistered as a broker, dealer, clearing agency and exchange. While the allegations and actors aredifferent, the common thread between them is that none would be subject to the laws in question if the underlying assets were not themselves securities.
The sole exception is Consensys, which was accused of providing staking as a service without first registering it as a security. While the texture of this claim is familiar, the activity is somewhat different than the pure offer and sale of securities.
This dismissal, along with the related guidance concerning mining pools, suggests that the current SEC does not consider most token-generating activities to be investment contracts, either.
Crypto firms were quick to celebrate after the SEC dropped cases against them. Source: Bill Hughes
Stayed pending resolution
Other cases have been filed in court and halted through joint motions to pause the suits. This is presumably in anticipation of eventually dismissing them, but since they have not yet been dismissed, it is hard to say for sure.
These cases mostly differ from the ones that have already been dropped in that, in the case of Binance and Tron, the government brought allegations not just of unregistered operation but of actual fraud as well. The pause indicates the government may be conciliatory, but the aggravating nature of these allegations is stalling resolution.
Gemini fits more naturally into the category above, and it is not clear why that case has not yet been dropped.
SEC drops investigations into crypto firms
There are other cases where the SEC opened investigations and even issued Wells notices indicating potential enforcement. However, the commission has reportedly ceased investigations after Trump’s inauguration.
The investigations were focused around allegations that non-fungible tokens (NFTs) were securities, or that intermediaries like Robinhood or Uniswap were operating as unregistered brokers.
While little has come of these actions, on balance they match the trend suggested above.
What the dismissals say quietly
None of the dismissals could be considered an SEC edict that certain crypto activities are legal. But taken together, these dismissals, pauses and dropped investigations paint a clear picture of how the current SEC thinks about cryptocurrency’s place in securities regimes.
The SEC dropped charges where allegations revolved around operating as a broker, dealer, clearing house or exchange. This is consistent with the position that the underlying assets themselves are not securities.
The same is true about cases of issuance. The commission dropped charges alleging that an entity issued securities in the form of cryptocurrency tokens.
Still, claims of fraud and market manipulation have not yet been dropped. This might indicate a reticence among commission attorneys to let these claims go. Still, if the assets at hand are not securities, the SEC will not be the correct agency to bring those claims, and so, if the SEC is consistent, then it will likely drop these cases too.
Furthermore, in threeofficialstatements, the SEC notified the public that traditional memecoins, proof-of-work mining, including pooled mining, and traditional “covered” or asset-backed stablecoins denominated in dollars are not subject to securities laws.
This, alongside the chain of dismissals, suggests that secondary market sales of fungible cryptocurrency tokens, NFTs, and staking-as-a-service products are also outside of the scope of traditional securities law.
Some might argue that this is more confusing than clarifying, but applying the principle of Occam’s Razor would suggest the SEC simply does not consider cryptocurrency assets to be subject to securities laws as currently construed.
But what does it all mean?
“Flood the Zone” is a tactic that Trump strategist Steve Bannon made famous during the president’s first term, and it might now apply to the manic flurry of policy and dismissals over the past few months.
Take any one at face value and it would be easy to discount the project as insubstantial, but together they arguably represent a sea change in the crypto policy of the United States government.
Banks, once effectively prohibited from holding cryptocurrencies, are now unrestrained. Companies once bogged down in litigation are now free. They may well be followed by new entrants comforted by their survival.
At a biweekly clip, the SEC is releasing new guidance as to which products exist outside its remit. And Trump nominee Paul Atkins isn’t even in the door yet.
This is a dramatically improved regulatory environment, and there are now affirmatively legal paths through which industry participants can do business onchain.
Unwary travellers returning from the EU risk having their sandwiches and local delicacies, such as cheese, confiscated as they enter the UK.
The luggage in which they are carrying their goodies may also be seized and destroyed – and if Border Force catch them trying to smuggle meat or dairy products without a declaration, they could face criminal charges.
This may or may not be bureaucratic over-reaction.
It’s certainly just another of the barriers EU and UK authorities are busily throwing up between each other and their citizens – at a time when political leaders keep saying the two sides should be drawing together in the face of Donald Trump’s attacks on European trade and security.
Image: Keir Starmer’s been embarking on a reset with European leaders. Pic: Reuters
The ban on bringing back “cattle, sheep, goat, and pig meat, as well as dairy products, from EU countries into Great Britain for personal use” is meant “to protect the health of British livestock, the security of farmers, and the UK’s food security.”
There are bitter memories of previous outbreaks of foot and mouth disease in this country, in 1967 and 2001.
In 2001, there were more than 2,000 confirmed cases of infection resulting in six million sheep and cattle being destroyed. Footpaths were closed across the nation and the general election had to be delayed.
In the EU this year, there have been five cases confirmed in Slovakia and four in Hungary. There was a single outbreak in Germany in January, though Defra, the UK agriculture department, says that’s “no longer significant”.
Image: Authorities carry disinfectant near a farm in Dunakiliti, Hungary. Pic: Reuters
Better safe than sorry?
None of the cases of infection are in the three most popular countries for UK visitors – Spain, France, and Italy – now joining the ban. Places from which travellers are most likely to bring back a bit of cheese, salami, or chorizo.
Could the government be putting on a show to farmers that it’s on their side at the price of the public’s inconvenience, when its own measures on inheritance tax and failure to match lost EU subsidies are really doing the farming community harm?
Many will say it’s better to be safe than sorry, but the question remains whether the ban is proportionate or even well targeted on likely sources of infection.
Image: No more gourmet chorizo brought back from Spain for you. File pic: iStock
A ‘Brexit benefit’? Don’t be fooled
The EU has already introduced emergency measures to contain the disease where it has been found. Several thousand cattle in Hungary and Slovenia have been vaccinated or destroyed.
The UK’s ability to impose the ban is not “a benefit of Brexit”. Member nations including the UK were perfectly able to ban the movement of animals and animal products during the “mad cow disease” outbreak in the 1990s, much to the annoyance of the British government of the day.
Since leaving the EU, England, Scotland and Wales are no longer under EU veterinary regulation.
Northern Ireland still is because of its open border with the Republic. The latest ban does not cover people coming into Northern Ireland, Jersey, Guernsey, or the Isle of Man.
Rather than introducing further red tape of its own, the British government is supposed to be seeking closer “alignment” with the EU on animal and vegetable trade – SPS or “sanitary and phytosanitary” measures, in the jargon.
Image: A ban on cheese? That’s anything but cracking. Pic: iStock
UK can’t shake ties to EU
The reasons for this are obvious and potentially make or break for food producers in this country.
The EU is the recipient of 67% of UK agri-food exports, even though this has declined by more than 5% since Brexit.
The introduction of full, cumbersome, SPS checks has been delayed five times but are due to come in this October. The government estimates the cost to the industry will be £330m, food producers say it will be more like £2bn.
With Brexit, the UK became a “third country” to the EU, just like the US or China or any other nation. The UK’s ties to the European bloc, however, are much greater.
Half of the UK’s imports come from the EU and 41% of its exports go there. The US is the UK’s single largest national trading partner, but still only accounts for around 17% of trade, in or out.
The difference in the statistics for travellers are even starker – 77% of trips abroad from the UK, for business, leisure or personal reasons, are to EU countries. That is 66.7 million visits a year, compared to 4.5 million or 5% to the US.
And that was in 2023, before Donald Trump and JD Vance’s hostile words and actions put foreign visitors off.
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Trump: ‘Europe is free-loading’
More bureaucratic botheration
Meanwhile, the UK and the EU are making travel between them more bothersome for their citizens and businesses.
This October, the EU’s much-delayed EES or Entry Exit System is due to come into force. Every foreigner will be required to provide biometric information – including fingerprints and scans – every time they enter or leave the Schengen area.
From October next year, visitors from countries including the UK will have to be authorised in advance by ETIAS, the European Travel and Authorisation System. Applications will cost seven euros and will be valid for three years.
Since the beginning of this month, European visitors to the UK have been subject to similar reciprocal measures. They must apply for an ETA, an Electronic Travel Authorisation. This lasts for two years or until a passport expires and costs £16.
The days of freedom of movement for people, goods, and services between the UK and its neighbours are long gone.
The British economy has lost out and British citizens and businesses suffer from greater bureaucratic botheration.
Nor has immigration into the UK gone down since leaving the EU. The numbers have actually gone up, with people from Commonwealth countries, including India, Pakistan and Nigeria, more than compensating for EU citizens who used to come and go.
Image: Editor’s note: Hands off my focaccia sandwiches with prosciutto! Pic: iStock
Will European reset pay off?
The government is talking loudly about the possible benefits of a trade “deal” with Trump’s America.
Meanwhile, minister Nick Thomas Symonds and the civil servant Mike Ellam are engaged in low-profile negotiations with Europe – which could be of far greater economic and social significance.
The public will have to wait to see what progress is being made at least until the first-ever EU-UK summit, due to take place on 19 May this year.
Hard-pressed British food producers and travellers – not to mention young people shut out of educational opportunities in Europe – can only hope that Sir Keir Starmer considers their interests as positively as he does sucking up to the Trump administration.
Ed Miliband has accused Nigel Farage of peddling “nonsense and lies” about the government’s commitment to net zero, as the Reform UK leader said the issue could become the “new Brexit”.
The energy secretary said both Mr Farage’s party and the Conservatives were prepared to “make up any old nonsense and lies to pursue their ideological agenda” ahead of next month’s local elections.
The former Labour leader also warned if an anti-net zero agenda was followed, it would not only risk “climate breakdown” but also “forfeit the clean energy jobs of the future” in Britain.
In an article for The Observer referring to price rises that began in 2022, he wrote: “Our exposure to fossil fuels meant that, as those markets went into meltdown and prices rocketed, family, business and public finances were devastated.
“The cost of living impacts caused back then still stalk families today.”
Image: Ed Miliband during a visit to the London Power Tunnels. Pic: PA
‘Hopelessly out of touch’
After the government’s decision to take control of British Steel from its Chinese owners earlier this month, Mr Farage accused Mr Miliband, whom he has repeatedly called “Red Ed”, of pursuing “net-zero lunacy”.
He said efforts to cut carbon emissions have made it harder to source the coal required to keep blast furnaces at the company’s crisis-hit Scunthorpe plant running after supplies were shipped from abroad last week.
In an interview with The Sun, Mr Farage said net zero could become “the new Brexit”, “where parliament is so hopelessly out of touch with the country”.
The Reform leader wants the government to ditch its target of achieving net zero by 2050.
Since she became Tory leader, Kemi Badenoch has also cast doubt on the government’s commitment to achieving net zero by 2050 – a target made by her own party.
But Sir Keir Starmer is expected to double down on the government’s commitment to clean power at an International Energy Agency conference in London this week.
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Farage rides on tractor
‘We need a British DOGE’
In his interview with The Sun, Mr Farage also vowed to be Britain’s equivalent of Elon Musk by cutting excess council spending if his party claims victory in next month’s local elections.
Mr Musk’s so-called Department of Government Efficiency (DOGE) has dismantled entire US federal agencies and cut tens of thousands of jobs.
The Reform leader said he would “send in the auditors” to every council Reform wins, adding: “The whole thing has to change. We need a British DOGE for every county and every local authority in this country.”
That’s despite the National Audit Office warning councils are facing a major funding crisis, with social care in particular putting huge strain on their budgets.
Votes for 1,641 council seats across 23 authorities in England will take place on 1 May.
Free breakfast clubs will launch at 750 schools across England next week, but teachers have warned government funding will fall short of the cost.
From Tuesday, thousands of parents can access 30 minutes of free morning childcare as part of a trial beginning at the start of the new term and running to July, ahead of an expected national rollout.
Ministers expect the scheme to save parents of primary-aged children £450 per year in childcare costs.
School leaders, however, are warning the pilot may lead to budget shortfalls.
“The initial feedback we are hearing from many school leaders participating in the pilot is that the funding just isn’t sufficient,” said Paul Whiteman, general secretary of NAHT, the headteachers’ union.
“At a time when school budgets are already stretched, most can ill-afford to subsidise this shortfall.”
Mr Whiteman added: “It’s absolutely crucial that this is addressed before the scheme is rolled out nationally.
“We have been encouraged to receive assurance from the Department for Education that funding will be looked at carefully when this trial is being assessed.”
The trial is backed by £7m of government funding and more than £30m is promised for breakfast clubs in 2025-26.
The government has previously insisted there will be enough funding to deliver the programme.
The 750 “early adopter” schools are spread across the country and include mainstream schools and alternative provision schools, which educate children with specific needs.
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March: Chancellor denies free school meals cuts
Academies, free schools and local authority schools are all taking part.
Education Secretary Bridget Phillipson said free breakfast clubs were “at the heart” of the Labour government’s “Plan for Change, making working parents’ lives easier and more affordable, while breaking down barriers to opportunity for every child”.