Navigating the US's new crypto terrain: Trump’s Week 1 approach to digital financial technology

President Trump had a busy first week in office when it came to setting out his approach to digital financial technology. In addition to issuing an Executive Order on digital financial technology (the Executive Order - read more in our previous post), there were a host of other key developments which give a sense of dramatic changes being made to the US crypto terrain.

Rescission of SAB 121

On January 23, 2025, the SEC issued Staff Accounting Bulletin 122, which expressly rescinded Staff Accounting Bulletin 121 (SAB 121). SAB 121 had required SEC reporting companies, including banks and other publicly traded entities, to treat digital assets held in custody as both assets and liabilities on their balance sheets. 

This move to repeal SAB 121 followed the resignation, shortly prior to Inauguration Day, of the SEC’s Chief Accountant, a role that typically is not a political appointment.

Pardon of Ross Ulbricht 

On Trump’s very first full working day in office, he issued a full pardon to Ross Ulbricht, who had been sentenced to a double life sentence plus 40 years for his role in connection with Silk Road, the notorious darknet marketplace that utilized Bitcoin for anonymous transactions.

Crypto stockpile

Last summer, at the Bitcoin 2024 conference in Nashville, Tennessee, Trump announced an intention to create a national Bitcoin reserve. The Executive Order’s directs a Working Group digital asset markets to evaluate the creation of a crypto stockpile from seized digital assets. 

This follows Wyoming Senator Cynthia Lummis’ January 15, 2025, informational request to Ronald L. Davis, Director of the United States Marshals Service, concerning the US Marshals’ proposed liquidation of over 69,000 Bitcoins acquired by the US government in connection with Silk Road-related seizures.

New Subcommittee on Digital Assets 

On January 23, 2025, Senator Lummis– was tapped as the first-ever Chair of the Senate Banking Committee’s new Subcommittee on Digital Assets. 

Senator Lummis previously proposed and co-sponsored prominent bipartisan digital asset legislation, including the Lummis-Gillibrand Responsible Financial Innovation Act, which focused on crypto market structure, and the Lummis-Gillibrand Payments Stablecoin Act, which focused on stablecoin regulation. 

Operation Chokepoint 2.0

On January 16, 2025, Senator Lummis reported that she had demanded, in the form of a letter to the Federal Deposit Insurance Corporation (FDIC) Chair, Marty Gruenberg, that the FDIC immediately halt destruction of materials related to the reported anti-digital assets initiative sometimes referred to as Operation Chokepoint 2.0. 

Lummis announced that she had taken such actions after her office was contacted by whistleblowers alleging that the FDIC was destroying materials concerning the FDIC’s digital asset-related activities and threatening retaliation against FDIC staff for speaking out. 

“The FDIC’s alleged efforts to destroy and conceal materials from the U.S. Senate related to Operation Chokepoint 2.0 is not only unacceptable, it is illegal,” said Lummis in a release, entitled, Lummis Demands FDIC Immediately Halt Destruction of Operation Chokepoint 2.0 Materials. “If it is uncovered that anyone within the FDIC has knowingly destroyed materials or sought to obstruct the oversight functions of the Senate, it will result in swift criminal referrals to the U.S. Department of Justice. The American people deserve transparency, and I will see to it that they get the answers they deserve.” 

Acting SEC Chair

Having previously named Paul Atkins as his pick to Chair the SEC, President Trump appointed existing SEC Commissioner Mark Uyeda as Acting SEC Chair pending Paul Atkins’ Congressional confirmation. Notably, during Gary Gensler’s term as SEC Chair, Uyeda, like fellow SEC Commissioner Hester Peirce, voiced numerous dissents to SEC crypto enforcement actions. 

Following Trump’s election victory, Uyeda shared publicly his view that the American people had spoken and that the era of crypto “regulation by enforcement” must end, particularly where no allegations of fraud or actual harm exist. On January 21, 2025, Acting Chair Uyeda announced the formation of a new SEC agency-wide crypto task force, to be led by Commissioner Peirce, “dedicated to developing a comprehensive and clear regulatory framework for crypto assets.”

Acting CFTC Chair and Chief of Staff

Trump named pro-crypto CFTC Commissioner Caroline Pham as Acting Chair of the CFTC. Among other things, Pham leads the Global Markets Advisory Committee (GMAC), a committee created in 1988, among other things, to advise the CFTC “on issues that affect the integrity and competitiveness of U.S. markets and U.S. firms engaged in global business, including the regulatory challenges of a global marketplace that reflects the increasing interconnectedness of markets and the multinational nature of business.”

The GMAC’s Digital Asset Markets Subcommittee supports a variety of crypto-related workstreams. On November 21, 2024, the Digital Asset Market’s Subcommittee’s Utility Token workstream presented to the CFTC concerning a proposed definition of a “utility token” that would be a commodity and not a security and developing regulatory guidance for market participants. 

As one of Pham’s first actions as Acting CFTC Chair, she appointed her key advisor, Harry Jung, as Acting Chief of Staff of the CFTC and announced that Jung would lead the CFTC’s engagement on crypto, decentralized finance (commonly referred to as DeFi), and other digital assets, building on his related work as the Designated Federal Officer of the GMAC. In the past, such engagements had been led by the CFTC’s enforcement head, with Jung’s appointment marking a shift in the CFTC’s approach. 

Memecoin and Ether spot ETFs

Bitwise is expected to seek SEC approval to launch a Dogecoin ETF, following reports of its January 22, 2025, application with Delaware’s Division of Corporations to register a trust called the “Bitwise Dogecoin ETF.” This DOGE development comes as the new, Elon Musk-led Department of Government Efficiency (D.O.G.E.) takes shape. 

As a result of the recent SEC leadership changes, many believe that Dogecoin ETFs and other similar “memecoin ETFs” would have a materially higher likelihood of receiving SEC approval than when Gary Gensler was SEC Chair. Some also anticipate that, under the Trump administration, Ether spot ETFs may receive regulatory approval to feature staking.