Trump’s crypto orbit is getting more institutional power, and a lot more baggage
Washington is opening more doors for crypto at the exact moment the optics around favoritism, conflicts, and self-dealing are getting harder to ignore. The latest batch of moves includes a canceled SEC crypto meeting, a Trump-linked stablecoin project getting preliminary approval for a national trust bank, and a White House that wants private-sector help fighting cybercriminals.
- SEC crypto rulemaking hit a snag with a canceled meeting.
- World Liberty Financial won preliminary approval for a trust bank.
- FinCEN is ending beneficial ownership reporting for U.S. persons.
- The White House is floating private cyber “effects” operations.
- Crypto PAC money is still flooding politics, with mixed results.
The big picture is not hard to read: crypto is moving closer to the center of U.S. finance and policy. The harder part is separating real market infrastructure from political patronage dressed up as innovation. That line is getting thinner by the week.
The SEC hit pause just as crypto policy was supposed to move forward
The Securities and Exchange Commission canceled its scheduled “Reg Crypto” meeting on Friday, citing an “unforeseen scheduling issue.” The meeting had been promoted as part of work toward “a tailored offering regime for certain investment contracts involving crypto assets.”
It was also expected to discuss an “innovation exemption, ” a regulatory carve-out meant to make it easier for certain crypto products to reach market. In practical terms, that could matter for things like tokenized equities and 24/7 blockchain-based stock trading, where promoters want the speed of crypto rails without the full pain of existing market plumbing.
Tokenizing equities means representing stock ownership or trading rights on a blockchain instead of through the usual brokerage and clearing systems. That sounds sleek, and sometimes it is. It also raises real questions about investor protection, market structure, custody, and whether financial engineers are solving problems or just rebranding old ones with shinier software.
CoinDesk sources suggested White House concerns may have played a role in the cancellation, though that has not been independently confirmed in the materials available. Either way, the timing is awkward. The Senate’s digital asset market structure legislation, the SEC Approves Generic Listing Standards for Commodity-Based, is still awaiting a September 15 cloture vote.
That means the fight over who writes the rules is still very much alive. The industry wants clarity. Regulators want control. Politicians want leverage. And the public, as usual, gets the invoice.
The White House is hosting crypto, prediction markets, and the usual beltway theater
A White House crypto event is scheduled for Wednesday at 1600 Pennsylvania Ave. Politico reported that the guest list includes top executives from the cryptocurrency and prediction market industries, along with Wall Street and traditional finance leaders. Semafor said the meeting is expected to feature remarks from President Donald Trump.
Patrick Witt, the White House crypto adviser, is also expected to attend. So are SEC Chairman Paul Atkins and Michael Selig, who chairs the CFTC.
The gathering is being described as a small-group kick-off for the CFTC’s inaugural Innovation Committee meeting. That meeting, titled New Frontier of Finance, will be livestreamed on CFTC.gov.
The agenda tells you exactly where Washington’s head is at:
- Crypto’s Regulatory Evolution: From Uncertainty to Clarity
- Artificial Intelligence: Preparing for Intelligent Markets
- Prediction Markets: Innovation, Jurisdiction, and the Future of Event Contracts
Prediction markets are platforms where people wager on future outcomes, such as elections, policy decisions, or sports. They can be useful, sharp, and occasionally brutally efficient at surfacing information. They are also exactly the kind of thing regulators tend to tolerate only after they stop pretending they can wish them away.
The larger signal here is that crypto, AI, and prediction markets are being folded into the same policy conversation. That can mean smarter oversight. It can also mean a lot of glossy language about “innovation” while the same old power players quietly carve up the terrain. The CFTC’s broader posture is worth watching too, especially in remarks like The Next Phase of Project Crypto: Unleashing Innovation, which frame market access as a policy priority rather than a threat to be stamped out.
World Liberty Financial gets a bank, and the optics are radioactive
On August 14, the Office of the Comptroller of the Currency granted preliminary conditional approval to World Liberty Trust Company, National Association, the bank arm tied to World Liberty Financial. World Liberty Financial is the controversial token-issuing project that is partly owned by a Trump-linked entity.
The bank will be based in Bay Harbor Islands, Florida. According to the approval, World Liberty Trust Company is a wholly owned subsidiary of WLTC Holdings LLC, a Delaware company. Its five-member board will include CEO Zach Witkoff, Scott Alper, Robert Witkoff, Jeffrey Weiner, and Erin Baskett.
World Liberty Financial launched USD1 in March 2025. USD1 is a dollar-backed stablecoin, meaning it is designed to track the U.S. dollar rather than swing around like a normal crypto asset with a caffeine problem.
WLF currently pays BitGo to issue the token and custody reserve assets backing the roughly $4 billion in circulating USD1, according to the information provided. Zach Witkoff said a national trust bank would bring “USD1 issuance, custody, and reserve management together under OCC supervision.” He also tweeted: “Our ambition is clear: to build the most trusted and widely used digital dollar in the world while strengthening the role of the U.S. dollar across the global economy.”
That is the sales pitch. The fine print matters more.
This bank is not a retail bank. Its charter will not allow it to accept retail customer deposits, gain access to a Federal Reserve master account, or enjoy FDIC coverage on its accounts. In other words, this is a narrow trust structure focused on custody and reserve functions, not some magical on-ramp to becoming JPMorgan with a crypto logo slapped on the door.
The OCC letter reportedly raised concerns about “potential conflicts of interest” and fears that WLTC could receive preferential treatment. Those concerns are not exactly subtle when the OCC is led by Jonathan Gould, a Trump appointee, and the applicant is tied to the president’s orbit. The broader approval trail around the project is laid out in more detail at OCC Grants World Liberty Financial Preliminary.
Sen. Elizabeth Warren called the approval “the most brazen act of self-dealing our financial system has ever seen.” She has introduced draft legislation, the Ending Presidential Corruption in Banking Act, which would bar federal banking agencies from issuing licenses to entities owned or controlled by a president, vice-president, their spouses or children, a member of Congress, a federal appointee, or a special Government employee.
That bill has approximately zero chance of passing in the current Congress. Still, it captures the core problem here: even if the paperwork is technically valid, the appearance of favoritism is awful. And in Washington, bad optics usually show up before the second act of the scandal.
For context on the political and security concerns surrounding this project, see UAE’s $500M Stake in Trump-Linked WLFI Crypto Project and Rep. Mike Lawler warns Kathy Hochul's green energy policies.
FinCEN is killing beneficial ownership reporting for U.S. persons
FinCEN said it will permanently remove the requirement for U.S. companies and U.S. persons to report beneficial ownership information under the Corporate Transparency Act. It also said it will delete previously reported information by U.S. persons from the beneficial ownership database.
Beneficial ownership information is the data that shows who really owns or controls a company. The whole point of the Corporate Transparency Act was to make it harder to hide behind shell companies, which are a favorite tool for money launderers, fraudsters, and other assorted parasites.
Treasury Secretary Scott Bessent called the shift “a victory for common sense and American small businesses.” Warren called it “a gift to cartels, criminals, and U.S. adversaries that exploit shell companies to move millions through our financial system.”
Both arguments have some weight, depending on what you think the bigger problem is. Small businesses do hate paperwork. Criminals also love less transparency. Funny how those interests occasionally align.
A separate wrinkle makes the rollback even more politically charged. A UAE-linked investment fund’s purchase of a 49% stake in World Liberty Financial became public knowledge more than a year later. The UAE also played a role in the reported $2 billion purchase of USD1 and in a Witkoff-negotiated deal involving UAE access to microchip technology that had previously been under embargo.
That is exactly why beneficial ownership rules matter. Once disclosure disappears, tracing influence gets a lot easier to blur on purpose. For readers tracking the underlying reporting framework, the relevant background is in Corporate Transparency Act reporting requirements.
The White House wants private cyber operators, with limits
Trump issued a memo on August 12 titled Expanding Capabilities to Combat Transnational Cyber-Enabled Crime. It seeks to unleash “the ingenuity of the private sector” against Transnational Criminal Organizations, or TCOs.
The memo would authorize vetted private groups to conduct “Cyber Surveillance Operations” and “Cyber Effects Operations” against foreign Cyber-Enabled Transnational Criminal Organizations, or CE-TCOs. That is a modern, digital-age version of the old privateer idea: let private actors do government-adjacent dirty work when the state wants reach without full ownership of the mess.
“Cyber effects operations” can include “the manipulation, disruption, denial, degradation, or destruction” of information systems or infrastructure. That is not a polite compliance memo. It is offensive cyber activity, with guardrails.
The memo bars actions involving “critical outcomes, ” meaning likely loss of life or injury or use of force and armed attack under international law. It also excludes groups that are part of or directed by a foreign government. Before any action, the Justice Department and Homeland Security must sign off.
Companies would also have to maintain a bond or escrow of at least $1 million. So yes, the White House appears to want private cyber muscle, but not without paperwork, liability, and enough legal friction to keep the lawyers awake.
Patrick Witt defended the concept by tweeting: “Letters of marque are in our Constitution, making privateers as American as apple pie.” He also said cybercrime cost Americans nearly $21 billion last year, up 26% year over year, with about a third of it involving crypto.
The memo is not crypto-specific, but the framing clearly fits the broader anti-scam push. For scammers using crypto rails to steal, launder, or extort, a more aggressive response would be unwelcome. The obvious danger is that private offensive cyber work can go wrong in a hurry, especially when policy starts sounding like a pirate cosplay contest with a legal budget.
Related coverage on enforcement and crypto-linked political conflicts can be found in SEC Enforcement Drops 60% Under Atkins: Crypto Security and Prosecutors Stand Firm on FinCEN Opinion in Tornado Cash.
Chainalysis is suing over a nearly $95 million TRM Labs contract
On July 1, ICE awarded a sole-source contract worth nearly $95 million to TRM Labs for forensic software and support services tied to Homeland Security Task Force investigations. ICE’s filing said Homeland Security identified TRM as “the only source that is uniquely positioned to deliver the [REDACTED].” The filing also referenced “advanced analytical and artificial intelligence (AI) platform support services.”
Chainalysis filed a complaint against the U.S. government on July 27, calling the decision “arbitrary, capricious, and unreasonable.” The case was sealed because it contains confidential and proprietary information and trade secrets. TRM filed a motion to intervene the following day.
Oral arguments are expected on September 2, and the government has requested a final ruling by September 10.
This matters because blockchain analytics firms are not just selling software. They are selling influence, access, and a seat in the machinery of enforcement. When the government picks one vendor without a competitive process, it can create a very real moat and plenty of suspicion for everyone else.
The dispute is covered more fully in Error extracting content.
Fairshake keeps spending, but voters are not always impressed
Fairshake, the largest crypto-focused PAC, is still throwing money around like it can buy political legitimacy on discount. Sometimes it buys access. Sometimes it buys embarrassment.
In Minnesota’s Democratic Senate primary, Coinbase executives spent more than $165, 000 backing Angie Craig, who lost to Peggy Flanagan. Craig also outspent Flanagan by more than 4x, including $10 million from dark-money groups. That is a brutal return on investment if the goal was control.
Fairshake’s Democrat-focused offshoot, Protect Progress, spent $2 million in a failed bid tied to Michigan’s 13th District. In March, Fairshake and allies spent $10 million trying to block Juliana Stratton from the Illinois Democratic nomination. For Florida’s 24th District, Protect Progress spent more than $2 million opposing Miami-Dade Commissioner Oliver Gilbert.
The Miami Herald called out the anti-Gilbert ads for “using fake Miami Herald headlines to make its case.” The ads accused Gilbert of supporting Trump’s immigrant deportation push and a $15 million plan tied to Hard Rock Stadium FIFA World Cup matches. The Herald said one referenced article did not mention Gilbert by name.
Gilbert did not bother pretending to be polite. He said, “what else would you expect from crypto con artists trying to buy a Democratic primary?” He also said Trump and his crypto backers “just put a target on my back” while he fights crypto scams.
Recent polling shows Gilbert trailing state Sen. Shevrin Jones by double-digits. So much for the theory that enough PAC cash can manufacture a political destiny on command.
Key questions and takeaways
-
Is U.S. crypto policy becoming friendlier?
Yes. The SEC and CFTC are moving toward clearer market rules, innovation exemptions, and more formal integration of crypto into mainstream finance. The catch is that the same process is being shadowed by obvious political baggage. -
What does World Liberty Financial’s bank approval actually mean?
It is preliminary conditional approval for a national trust bank focused on custody, reserves, and institutional services. It is not a full retail banking license, and it does not come with retail deposits, a Fed master account, or FDIC coverage. -
Why is the OCC approval so controversial?
Because the applicant is tied to Trump’s orbit, and the appearance of a politically connected crypto venture getting a regulatory green light is terrible. Even if it is legal, it looks like the sort of arrangement that makes people reach for the smelling salts. -
What is FinCEN changing?
FinCEN says it will remove beneficial ownership reporting requirements for U.S. companies and U.S. persons under the Corporate Transparency Act and delete previously reported U.S.-person data. Supporters call that relief from bureaucracy; critics see a win for shell-company abuse. -
What is the cyber memo trying to do?
It aims to let vetted private groups help combat foreign cybercriminal networks through surveillance and cyber effects operations. The upside is more pressure on scammers; the downside is giving private actors offensive cyber authority that could get messy fast. -
Is crypto political spending working?
Sometimes it buys access and influence, but not consistently enough to guarantee wins. The recent losses and messy ad campaigns show that money can still buy noise, not always results. -
Is this about innovation or favoritism?
Both are in play, but the favoritism question is the one with the sharper teeth. Crypto is getting more institutional access, yet a lot of that access is arriving through politically connected channels that look bad even when they are technically lawful.
The throughline is simple: crypto is moving closer to the center of U.S. finance and security policy, but the old game of influence is following right behind it. That can build useful infrastructure. It can also build a very expensive machine for insider access, regulatory capture, and self-dealing. America loves innovation. It just keeps dragging along the corruption with it.
Further reading
One more angle worth keeping an eye on: who gets to frame crypto as “innovation” when the paperwork starts looking a lot like political cover.
