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News/Crypto Regulations in Focus: U.S. States and FDIC Take Action

Crypto Regulations in Focus: U.S. States and FDIC Take Action

Van Thanh Le

Jan 15 2025

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Trump to Prioritize Crypto Policies on Inauguration Day

On January 20, 2025, President-elect Donald Trump is expected to prioritize crypto policies via executive orders, repealing rules like accounting standards treating digital assets as liabilities and considering Bitcoin a strategic reserve asset with a $21 billion allocation. Supported by pro-crypto appointees like SEC Chair Paul Atkins, Trump’s administration aims to foster growth and shield investors from bureaucratic hurdles. 

Preceding this, a January 17 VIP Crypto Ball offers $100,000 tickets or $1 million packages, including private dinners, to bolster industry connections. Circle contributed $1 million in USDC to Trump’s inaugural committee, as crypto executives lobby for advisory roles. David Sacks, an early Bitcoin backer, is set to become Chief Technology Officer. 

New Hampshire and North Dakota Propose Bills for Strategic Bitcoin Reserves

New Hampshire and North Dakota have recently introduced legislation aimed at creating a strategic Bitcoin reserve, as part of a broader initiative to integrate cryptocurrency into state financial strategies. In New Hampshire, the bill was introduced by Republican Representative Keith Ammon and refers to “digital assets” rather than explicitly mentioning Bitcoin. This approach aims to ease political tensions. Meanwhile, North Dakota's legislation is supported by Representatives Nathan Toman and Josh Christy, alongside Senator Jeff Barta, and boasts 11 sponsors. Additionally, Pennsylvania introduced a similar proposal in November, with Representative Mike Cabell highlighting Bitcoin’s potential as a hedge against inflation. Interest in Bitcoin reserves has surged following Donald Trump's promise to make the U.S. a cryptocurrency leader if elected. Current market sentiment suggests only a 27% chance that Trump will establish a Bitcoin reserve within his first 100 days, which reflects a decrease from 45% in November.

FDIC's Travis Hill Calls for Policy Shift on Crypto Banking Restrictions

FDIC Vice Chair Travis Hill has criticized past federal restrictions on banks’ involvement in cryptocurrency, including the controversial use of “pause letters” that hindered innovation and perception of regulatory obstruction. He called for an end to tactics reminiscent of “Operation Choke Point,” which pressured banks to limit services to certain industries, urging clearer guidelines for safe engagement with digital assets. Hill emphasized the need for balanced regulations that enable banks to evolve while managing risks effectively. He highlighted a lack of transparent standards for handling cryptocurrencies, referring to a 2023 FDIC report that disclosed multiple “pause letters” sent to banks. Furthermore, Hill indicated that existing Bank Secrecy Act policies incentivize banks to shut accounts over compliance fears, underlining the need for a reevaluation of these approaches. The ongoing push for fair treatment of the crypto sector is reinforced by legal actions from industry leaders demanding better regulatory practices.

Trump Establishes Crypto Advisory Council to Shape New U.S. Digital Asset Policies

President-elect Donald Trump is establishing a new crypto advisory council, comprising approximately 24 CEOs and founders, to shape U.S. digital asset policies and draft pro-crypto legislation. This initiative aims to create a strategic Bitcoin reserve and collaborate with major agencies like the SEC, CFTC, and Treasury to develop a clear regulatory framework, addressing the ongoing regulatory uncertainties in the crypto sector. 

Key figures, such as Crypto.com CEO Kris Marszalek and Circle CEO Jeremy Allaire, have actively engaged with Trump, with Allaire contributing $1 million in USDC to support crypto initiatives. Bo Hines, a former congressional candidate, has been appointed to lead the council alongside David Sacks, Trump’s AI and crypto czar, focusing on fostering innovation in the digital asset realm. To rally industry support, a black-tie event named the “Inaugural Crypto Ball” is scheduled for January 17th in Washington, D.C. This signals a proactive approach to U.S. crypto policy under Trump's leadership.

Singapore Bans Polymarket Amid Crackdown on Unlicensed Online Gambling

Singapore has officially restricted access to the prediction marketplace Polymarket as part of a national crackdown on unlicensed online gambling. This initiative has already led to the shutdown of over 3,800 gambling websites since the start of 2025, with more than $37 million worth of transactions blocked. On January 12, Singapore's Gaming Regulatory Authority (GRA) warned users that Polymarket is illegal, imposing penalties that could include fines of up to SGD 10,000 (approximately $7,200) and six months in prison. 

Residents wishing to engage in online betting must use Singapore Pools, the only licensed online gambling provider in the country. The restriction aligns Singapore with jurisdictions such as Taiwan, France, and the U.S., which have also taken measures against Polymarket following its rising popularity during the 2024 presidential election. Notably, Taiwan prosecuted an individual for political betting on the platform, showcasing the stringent regulatory environment surrounding online gambling.

New York and Bank of England Launch Collaborative Initiative to Harmonize Global Crypto Regulations

The New York Department of Financial Services (NYDFS) and the Bank of England (BOE) have initiated the Transatlantic Regulatory Exchange (TRE) to harmonize global crypto regulations. Scheduled to begin in February 2025, this collaborative program promotes the sharing of expertise through a staff exchange involving experienced professionals in digital payments and distributed ledger technology, lasting at least six months with potential extension up to one year. NYDFS Superintendent Adrienne A. Harris emphasized that the partnership enhances regulatory frameworks while safeguarding consumers and fostering innovation. 

Sarah Breeden, BOE Deputy Governor, highlighted the initiative's role in bolstering financial stability. This collaboration seeks to address the complexities of digital asset regulation, creating a secure and innovative framework that clarifies the global financial ecosystem. Through TRE, both regulators aim to improve their capabilities in managing the evolving landscape of digital finance, enhancing global coordination in regulatory practices.

Senator Elizabeth Warren Calls for Stricter Crypto Regulations Citing National Security Concerns

Senator Elizabeth Warren has publicly called for stricter regulations on cryptocurrencies, citing national security concerns related to their misuse by malicious actors. In her January 12 letter, she urged the Treasury Department to enhance Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) regulations, referencing instances such as North Korea's nuclear activities and ransomware attacks. Warren called for the expansion of the Bank Secrecy Act (BSA) to encompass global firms serving U.S. clients to ensure comprehensive regulatory coverage. 

The crypto community is divided on her proposals, with some accusing her of leveraging security issues to broaden regulatory reach. Warren's track record includes introducing the Digital Asset Anti-Money Laundering Act in 2022 and 2023. As the Trump administration takes a more pro-crypto stance, her position may introduce significant challenges, emphasizing the ongoing tension between innovation and regulation in the sector, which awaits new initiatives from Congress and the Treasury Department.

Trump's SEC to Overhaul Crypto Policies, Focus on Fraud Accountability and Non-Fraud Litigation

On January 15, 2025, reports highlighted major changes at the SEC under President-elect Donald Trump. Republican commissioners Hester Peirce and Mark Uyeda are preparing to review crypto enforcement cases, clarify crypto asset classifications, and reshape policies with a focus on fraud accountability. Incoming SEC Chair Paul Atkins, known for crypto-friendly views, is expected to reverse the enforcement-heavy approach of outgoing Chair Gary Gensler, including the withdrawal of some non-fraud litigation. 

The agency may rescind restrictive crypto custody rules for public companies, aligning with Trump’s pro-crypto stance. Under Gensler, the SEC launched 83 crypto-related actions, targeting firms like Coinbase and Kraken. Critics warn revising settled cases could face legal hurdles. Trump’s administration plans public consultations on token classifications, promising strategic crypto support, including executive orders for regulatory reassessment. 

Thailand Bans Polymarket for Illegal Gambling, Pursues Bitcoin ETFs and Crypto Payments

Thailand announced plans to ban Polymarket, labeling it illegal online gambling due to its unregulated cryptocurrency betting activities, mirroring recent actions by Singapore, the U.S., France, and Taiwan. Concurrently, Thailand is exploring approval for Bitcoin ETFs to position itself as a digital asset hub. The SEC is considering allowing local exchanges to list ETFs, expanding beyond exposure funds launched in 2024. Additionally, Thailand plans a pilot for crypto payments in Phuket, and the government debates legalizing gambling, potentially recovering $4 billion in taxes. Despite these developments, Thailand's active crypto accounts stood at 270,000 in November 2024, below peak levels from the 2022 crypto slump.

South Korea Advances Crypto Regulation Phase Two, Enhancing Transparency and User Protection

South Korea’s Financial Services Commission (FSC) convened to progress the second phase of its crypto regulatory framework. This phase aims to enhance transparency, bolster user protection, and regulate stablecoins by aligning with global standards like the EU's MiCA. Discussions included periodic disclosure systems akin to capital markets, while local exchange Upbit faced scrutiny over 600,000 potential KYC violations. Corporate crypto investments, heavily anticipated, were postponed as the FSC nears policy completion; real-name trading accounts for corporations are projected for 2025. Meanwhile, South Korea's first crypto law in 2024 tackled unfair trading and deposit safeguards, with the second phase targeting gaps in issuance, distribution, and disclosure. The regulatory shift seeks to balance innovation and stability as South Korea strengthens its position as a global crypto hub.

Malaysia's PM Discusses Crypto Regulation Framework with Binance Founder and UAE Officials

Malaysia’s Prime Minister, Datuk Seri Anwar Ibrahim, recently engaged in discussions with Binance founder Changpeng Zhao and UAE officials to explore potential cryptocurrency regulatory frameworks aimed at modernizing the nation's financial system. Anwar emphasized the need for swift adaptation to ensure Malaysia does not lag behind in digital finance, marking this initiative as a "radical departure from old ways." The plan involves comprehensive studies by key authorities, including the Treasury, Securities Commission, and Bank Negara Malaysia, to address potential concerns and establish competency in this rapidly evolving sector. 

While digital assets are categorized as securities under the existing legal framework and the ringgit remains the sole legal tender, Malaysia faces challenges including tax evasion and illegal cryptocurrency mining. Experts advocate for clearer and more consistent legislation to enhance regulation in the digital space, reflecting the urgent need for a robust framework to support the growth of digital finance in the country.

Dubai Unveils "Crypto Tower" to Boost Blockchain Businesses and Innovation

Dubai is set to construct a "Crypto Tower," a pioneering development designed to foster blockchain businesses. Officially announced by the Dubai Multi Commodities Centre (DMCC), the project aims to enhance the digital asset ecosystem with 150,000 square feet of leasable space. It will encompass nine floors dedicated to office space for crypto startups and established firms, alongside specialized floors for blockchain incubators, venture capital firms, and AI innovation. 

Noteworthy features include a 10,000-square-foot indoor event space, a 3,500-square-foot outdoor area for events, and a 30,000-square-foot crypto club. Additional amenities will comprise an NFT art gallery, a gold bullion shop, an exotic car dealership, and a secure 5,000-square-foot vault for valuables like gold and cold wallets. This initiative aligns with Dubai's strategy to position itself as a global crypto hub, supported by a forward-thinking regulatory environment.

Trump’s Treasury Nominee Scott Bessent Opposes U.S. Digital Dollar, Advocates for Crypto Freedom

Scott Bessent, President-elect Donald Trump's nominee for Treasury Secretary, strongly opposes the creation of a U.S. Central Bank Digital Currency (CBDC), stating, "I see no reason for the US to have a central bank digital currency." He argues that CBDCs are more suited for countries without robust investment alternatives, like China, and emphasizes that the U.S. offers secure assets for dollar holders. The exploration of a digital dollar by the U.S. Treasury began in the early 2020s, driven by concerns over cryptocurrency competition and the digital yuan's rise. 

In response, former President Biden had initiated evaluations on digital assets, stressing the importance of advancing CBDC discussions. Bessent, a hedge fund manager and crypto advocate, has been linked to Trump’s push for a national crypto policy, underscoring the administration's commitment to embracing the crypto economy as a way to promote freedom and financial inclusion for diverse groups.

IRS Crypto Reporting to Begin in 2025 for CEXs, P2P Reporting Starts in 2027

Starting in 2025, the IRS will implement crypto reporting for custodial exchanges (CEXs), necessitating the filing of Form 1099-DA for transactions. This regulatory change focuses on improving tax compliance and ensuring that digital asset transactions are accurately reported. For users of centralized platforms like Coinbase or Gemini, custodial brokers will track transactions, but cost-basis reporting is not required until 2026. Notably, peer-to-peer (P2P) reporting for decentralized exchanges (DEXs) like Uniswap will commence in 2027, limited to reporting the total transaction amounts without including cost basis, due to their lack of asset possession. This distinction in reporting requirements highlights a crucial aspect for investors, who may face complex calculations regarding taxable gains, given the differences in how centralized and decentralized platforms manage transaction data. 

Senator Lummis Accuses FDIC of Destroying Operation Chokepoint 2.0 Documents, Urges Preservation of Records

Senator Cynthia Lummis of Wyoming has accused the Federal Deposit Insurance Corporation (FDIC) of destroying documents related to Operation Chokepoint 2.0, aimed at restricting banking services for crypto firms. In a letter, she demanded an immediate halt to document destruction and preservation of all records concerning "digital asset activities," including oversight of Signature Bank and Silvergate Bank liquidation. Lummis warned that any intentional destruction of materials could lead to criminal referrals to the U.S. Department of Justice. 

Operation Chokepoint 2.0 has significantly impacted the crypto industry, particularly during the 2024 U.S. elections. Following discussions around this, over 30 crypto founders, including Coinbase CEO Brian Armstrong, shared their experiences of banking challenges. Armstrong, pursuing transparency, filed a Freedom of Information Act request after receiving heavily redacted FDIC letters. Despite regulatory hurdles, many crypto firms adapted by leveraging stablecoins for operational financing.

Oklahoma Proposes Strategic Bitcoin Reserve Act, Joins Growing Trend Among States

Oklahoma has introduced the Strategic Bitcoin Reserve Act, marking a significant shift in financial policy as the state proposes to include Bitcoin in its treasury strategy. If passed, Oklahoma would become the sixth U.S. state to adopt this approach, following Texas and others, in an effort to safeguard against inflation and economic instability. Authored by Rep. Cody Maynard, the bill allows state savings and pension funds to invest in Bitcoin and other digital assets, emphasizing their decentralized nature and potential as a stable store of value. 

The legislation aims to demonstrate fiscal innovation and leadership, with a deliberate timeline for consideration starting February 3 and a potential implementation date of November 1. This initiative indicates a broader trend among states exploring digital assets as strategic reserves, reflective of the evolving financial landscape and the ongoing conversations around cryptocurrencies and their roles in government finance.

Texas Introduces Bill to Create First State Strategic Bitcoin Reserve

Texas state Senator Charles Schwertner has introduced Senate Bill (SB) 778 in the 89th legislative session, seeking to establish a Strategic Bitcoin Reserve, which would make Texas the first state in the U.S. to do so if enacted. The bill proposes creating a special fund outside the general revenue fund, allowing the state to own Bitcoin as a financial asset and accept Bitcoin donations. It recognizes BTC as a valuable digital asset with unique qualities against inflation and volatility, mandating secure cold storage and regular audits. Funding for Bitcoin purchases would be capped at 1% of general revenue. 

This follows a similar proposal from Texas Representative Giovanni Capriglione, who introduced House Bill (HB) 1598, allowing for Bitcoin donations. Other states like Oklahoma, Pennsylvania, North Dakota, and New Hampshire are also considering similar legislation to establish Bitcoin reserves. This initiative positions Texas at the forefront of the digital economy.

This article has been refined and enhanced by ChatGPT.

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