USDUS Crypto Policy Shifts: SEC Shakeup, Bitcoin Reserves, and Stablecoins
Trump Launches U.S. Sovereign Wealth Fund, Sparks Speculation of Bitcoin Investments
On February 3, 2025, President Donald Trump announced an executive order to establish a U.S. sovereign wealth fund aimed at enhancing fiscal sustainability and long-term economic stability. The directive requires the Treasury and Commerce Secretaries to develop a comprehensive plan within 90 days, covering funding mechanisms, investment strategies, and governance structures. Sovereign wealth funds, which manage national wealth, have notable global examples like Norway’s $2 trillion fund.
While Trump's order did not explicitly mention Bitcoin, speculation is high that the fund could allocate capital to the cryptocurrency due to the pro-Bitcoin stances of appointed leaders Howard Lutnick and Scott Bessent. Apollo Stats co-founder Thomas Fahrer estimated the fund could amass $5 trillion, with a 10% allocation to Bitcoin potentially reaching $500 billion. However, bettors on Polymarket currently assign only a 14% probability that the fund will invest in Bitcoin before July, indicating skepticism about immediate crypto exposure.
SEC Reassigns 50 Crypto Lawyers, Establishes Task Force Amid Regulatory Shift
The SEC is downsizing its crypto enforcement unit by reassigning over 50 lawyers and staff in response to an executive order from President Trump aimed at boosting digital asset growth through reduced regulation. This shift signifies a significant change in federal policy and raises questions about ongoing high-profile cases, such as the lawsuit against Ripple. To adapt to this new direction, a Crypto Task Force led by Commissioner Hester Peirce has been established to reassess asset classifications and shift certain enforcement roles beyond the SEC.
Despite these changes, strict measures against fraud will remain in place. Concurrently, the White House is exploring the establishment of a national Bitcoin reserve, with 15 states considering Bitcoin as a reserve asset, and a new stablecoin bill is being introduced to Congress. These developments indicate a drive towards regulatory clarity within the digital assets sector.
FDIC Releases 790 Pages on Crypto Service Requests
The Federal Deposit Insurance Corporation (FDIC) recently released 790 pages of correspondence regarding banks' requests to offer crypto services, revealing significant resistance and delays in approval processes. The correspondence involved 24 banking firms and highlighted that such requests were frequently met with extensive information demands and pause letters. FDIC Acting Chairman Travis Hill noted a substantial reconsideration of the agency's supervisory approach to crypto activities. This release followed a December 2024 court order due to concerns over excessive redactions in prior documents related to crypto debanking under Operation Chokepoint 2.0.
Additionally, Senator Cynthia Lummis accused the FDIC of destroying relevant documents and mandated preservation of records from 2022 onward, threatening criminal referrals if misconduct is found. Coinbase initiated Freedom of Information Act requests to investigate these practices, specifically concerning a 15% cap on deposits from crypto-related companies, underlining ongoing regulatory scrutiny over digital asset activities.
Utah Moves to Become First U.S. State with Bitcoin Reserves After 8-1 Vote
Utah is poised to become the first U.S. state to adopt Bitcoin reserves following the approval of a bill in the Utah House, which received an 8-1 vote. The bill allows the state to invest a portion of public funds in digital assets with a market cap over $500 billion and includes approved stablecoins as investment options. This legislative effort is expedited by Utah's 45-day legislative calendar, which is unmatched in speed and momentum compared to other states. The move has garnered significant political will, with Senator Cynthia Lummis and Dennis Porter from the Satoshi Action Fund emphasizing Utah's leading role in the Bitcoin initiative.
Notably, every recent bill from the House Economic Development Committee has become law, bolstering confidence in this proposal's success. Arizona is the only other state at a similar legislative stage, while states like Alabama and Florida have shown public support but lack formal proposals.
Ohio Senator Proposes Bill to Create Bitcoin Reserve Fund for State Investments
Ohio Senator Sandra O'Brien has introduced Senate Bill 57, which would allow the state treasurer to invest in Bitcoin, creating the "Ohio Bitcoin Reserve Fund." The bill mandates that investments be held for a minimum of five years and requires secure custody solutions for the asset. It also compels state entities to accept cryptocurrency payments, converting them to Bitcoin and transferring them to the reserve.
Senator O’Brien emphasized Ohio's need to lead in the crypto sector, especially in light of potential changes from a federal crypto working group established by President Trump. This proposal follows a similar initiative by Ohio House Republican leader Derek Merrin and adds to a growing list of Bitcoin-related legislation in the state. As of now, twelve U.S. states have proposed bills permitting local treasuries to invest in crypto, with ongoing efforts in Arizona and Utah.
Missouri Proposes Bill to Invest Up to 10% of Public Funds in Bitcoin
On February 4, 2025, Missouri introduced Senate Bill SB 614, which aims to permit state investments in Bitcoin while safeguarding the rights of individuals in the cryptocurrency space. The proposed legislation allows the state to allocate up to 10% of public funds, amounting to a potential investment of $1.8 billion from the Missouri State Treasurer's total fund of approximately $18 billion.
Unique to this bill are its protections for participants in the Bitcoin ecosystem; it guarantees the right to self-custody, enabling residents to control their digital assets without governmental interference. Additionally, the proposal legally protects Bitcoin mining activities and exempts Bitcoin nodes from needing a money transmitter license. SB 614 is now pending review by the Missouri State Senate, signaling an increasing interest in Bitcoin adoption at the state level amidst a broader trend across the United States.
Senator Hagerty Introduces GENIUS Act to Regulate Stablecoins and Boost Adoption
Senator Bill Hagerty has introduced the GENIUS (Guiding and Establishing National Innovation in U.S. Stablecoins) Act to establish a regulatory framework for stablecoins, promoting clearer regulations and fostering adoption in the U.S. This legislation requires stablecoin issuers to back their digital assets with U.S. currency, Treasury bills, and other assets. Key provisions include specific licensing and reserve requirements, with issuers holding over $10 billion following Federal Reserve rules, while smaller ones adhere to state regulations. The bill aims to enhance financial inclusion and improve transaction efficiency.
Notably, it mandates audited monthly reports on reserves, with penalties for falsifying documents. Co-sponsored by Senators Kirsten Gillibrand, Tim Scott, and Cynthia Lummis, the bill signals bipartisan interest in stablecoin regulation. Trump’s recent executive order encourages the development of dollar-backed stablecoins, aligning with the bill’s goals while stalling the progress of a central bank digital currency.
CFTC Investigates Crypto.com and Kalshi Over Super Bowl Betting Contracts
The Commodity Futures Trading Commission (CFTC) is investigating Crypto.com and Kalshi over their Super Bowl event contracts, potentially leading to regulatory action in the expanding prediction markets sector. Crypto.com announced its intention to launch these contracts on December 19, 2024, allowing little time for regulatory review before the holiday break. The CFTC emphasizes strict standards for self-certified contracts to prevent manipulation.
While the agency cannot immediately halt trading, it retains the authority to impose future regulations. Kalshi's Super Bowl market, which began on January 24, has seen nearly $2.5 million in trading volume, along with over $1.5 million linked to ads during the game. Despite the booming prediction market, which handled over $2.5 billion in bets during the 2024 U.S. presidential election, the heightened scrutiny by the CFTC could significantly alter the operational landscape for firms like Crypto.com and Kalshi.
AFL-CIO Sues U.S. Treasury Over Musk's Access to Private Financial Data
The AFL-CIO, the largest labor union in the U.S., has filed a lawsuit against Treasury Secretary Scott Bessent, claiming the U.S. Treasury improperly allowed Elon Musk's Department of Government Efficiency (DOGE) to access sensitive personal and financial data of millions of Americans. The lawsuit alleges violations of federal privacy laws, asserting that information such as Social Security numbers, bank details, and home addresses are at risk due to this oversight.
This controversy arises from the Biden administration's decision to place Musk in charge of federal cost-cutting efforts via DOGE. High-profile Democrats, including Senators Ron Wyden, Chuck Schumer, and Elizabeth Warren, have criticized this action. Schumer has pledged to introduce legislation aimed at limiting Musk's influence within Treasury operations, indicating strong partisan concerns over privacy and oversight related to this unprecedented access to sensitive information.
This article has been refined and enhanced by ChatGPT.
