• Redacted letters sent to financial institutions from the FDIC, obtained and released by Coinbase, stated, “We respectfully ask that you pause all crypto asset-related activity.” and “The FDIC will notify all FDIC-supervised banks at a later date when a determination has been made on the supervisory expectations for engaging in crypto asset-related activity.” (Redacted FDIC letters)(Coindesk)

Securities and Exchange Commission (SEC)

• SEC Chair Gary Gensler said, “Democracies have consequences that lead to new leadership at many agencies — not just the SEC. And I deeply respect that. I took an oath of office to oversee the market and to enforce the laws, and I think that’s what we’ve been doing.” (PoliticoPro)

• On the nomination of Paul Atkins as SEC Chair, Commissioner Hester Peirce tweeted, “We have a lot of work to do at the SEC to advance free markets, capital formation, investor choice, and innovation. I’m delighted that Paul Atkins will be returning to lead the effort. Having worked for him during his last stint at the agency, I cannot think of a better person for the job.”

Commodity Futures Trading Commission (CFTC)

• The CFTC announced “record monetary relief of over $17.1 billion for fiscal year 2024. With the resolution of digital asset cases that resulted in the agency’s largest recovery ever, this record amount included $2.6 billion in civil monetary penalties and $14.5 billion in disgorgement and restitution.” The announcement included highlights on enforcement actions regarding digital asset commodities, stating, “The CFTC continued to cement its reputation as a premier enforcement agency in the digital asset space. It secured record-breaking monetary sanctions and relief in FTX and Binance, charged Voyager’s former CEO with commodity pool fraud, filed multiple actions involving decentralized finance, filed and settled charges with companies acting as intermediaries to digital asset exchanges, and brought a variety of other digital assets cases.” (Press release) 

Internal Revenue Service (IRS)

• The IRS and Security Summit partners issued a consumer alert regarding bad tax advice on social media, including, “the emergence and rapid spread of financial scams ranging from the Fuel Tax Credit on federal tax returns to ‘pig-butchering’ scams that involve investments in fake cryptocurrencies that ultimately leave the victims penniless.” (Press release)

CONGRESS

White House AI and Crypto Czar

• Rep. Stephen Lynch (D-MA) said, “It will be a big change from where we are right now. I just thought we might get someone who was a little bit more objective. There’s enough caution in that space that’s deserved that might be overridden by the president’s own interests as well. It seems to be all pushing from the same direction, and I’m not comfortable with that.” (PoliticoPro)(PoliticoPro)

• Sen. Todd Young (R-IN) tweeted, “Tech power — AI, crypto, and more — is fundamentally transforming our economy, security, and the very nature of global power. With the appointment of a White House AI and Crypto Czar, President Trump and his administration will be positioned to restore ‘Peace through Strength’ and seize the opportunities this dynamic period presents.”

• Rep. Dusty Johnson (R-SD) said, “He’s obviously brilliant. I’m pretty excited, because I do think there’s a lot we have to get done in the AI and digital asset space — and, listen, David Sacks is a guy who knows how to charge forward.” (PoliticoPro)

• Rep. French Hill (R-AR) tweeted, With AI and crypto rapidly advancing in our society, I couldn’t think of a better time than now to appoint DavidSacks to lead the charge with realDonaldTrump. As a proven leader on DigitalAssets in Congress, I look forward to working with David and President Trump on driving our mutual priorities of bolstering innovation and ensuring America is the leader of these groundbreaking technologies. A new era in American innovation starts now.”

• House Financial Services Chair Patrick McHenry tweeted, he mere fact that the U.S. now has a crypto and AI “czar” reflects the impact of FinancialCmte. The era of regulation by enforcement is over. With folks like David Sacks and Paul Atkins, the future of the digital asset ecosystem in the U.S. is brighter than ever.”

• Rep. Ritchie Torres (D-NY) said, “I welcome his pro-tech tendencies… when it comes to crypto, the positions that matter most are the SEC and CFTC,” and “it is unclear to me what impact a crypto czar would have on crypto policy.” (PoliticoPro)

• House Committee on Agriculture tweeted, “Congratulations, DavidSacks! Chairman CongressmanGT is excited to work together to build on the House’s strong digital asset legislation.”

• Rep. Tom Emmer (R-MN) tweeted, “President realDonaldTrump’s choice of DavidSacks as White House AI & Crypto Czar is a huge win for American investors and innovation. Congratulations, David, we look forward to working with you!”

• Rep. Warren Davidson (R-OH) tweeted, “An exceptional choice by realDonaldTrump to lead on crypto, AI, and financial innovation. Congratulations DavidSacks! I look forward to working with you.”

Treasury Secretary Nominee Mark Bessent

• Sen. Mark Warner (D-VA) said, “I don’t always agree with his politics, but I think he’s smart. I think he’s capable.” (PoliticoPro)

• Sen. Thom Tillis (R-NC) said, “I know enough about his background. He’ll be a good influence in the role.” (PoliticoPro)

• Sen. John Cornyn (R-TX) said, “I don’t see any opposition to his nomination so far. Certainly before I vote on any of the nominees, I want to have a chance to talk to them individually.” (PoliticoPro)

SEC Chair Nominee Paul Atkins

• Senate Banking Ranking Member Tim Scott (R-SC) released a statement, “Our small business owners, retirement savers, and retail investors across the country deserve a leader at the Securities and Exchange Commission who will prioritize the agency’s mission over a partisan political agenda. Paul Atkins has the experience necessary to lead the agency out of Gary Gensler’s disastrous tenure and help revitalize the U.S. capital markets system – which is critical to our economic growth, job creation, and innovation. I look forward to working with him to increase access to capital for entrepreneurs, open our capital markets to all Americans, and create a regulatory environment for digital assets that encourages innovation here in the United States, not overseas.” (Press release)

• Sen. Kirsten Gillibrand (D-NY) said, “He has the right experience, and I think he’s a commissioner that would work well with Congress.” (PoliticoPro)

• Sen. Bill Hagerty (R-TN) said, “Many of the financial institutions that are regulated by the SEC, I think, are going to welcome Paul’s arrival like a breath of fresh air.” (PoliticoPro)

• Sen. Elizabeth Warren (D-MA) said, “I’m concerned about putting at the helm of the SEC a Wall Street lobbyist whose main contribution during the last financial crisis was to protest fines against the giant corporations that defrauded investors.” (Axios)

• Rep. Tom Emmer (R-MN) said in the Republican conference weekly news conference, “With our first pro-crypto Commander in Chief the SEC will work for the American people again, not against them. A new day is coming. And I look forward to working with President Trump and his new SEC Chair to deliver on our America first agenda for the digital asset community.” (PoliticoPro)

Debanking

• Sen. Cynthia Lummis (R-WY) said the issue of debanking is “much bigger and much more sinister than a lot of us knew… We’re going to need to have hearings in the Banking Committee, and it’s going to have to be a major topic of discussion with Treasury noms and people at the Fed.” (PoliticoPro)

• Rep. French Hill (R-AR) tweeted, Legal business like Anchorage should not be politically targeted and debanked simply because they are “in the business of crypto.”

Miscellaneous

• House Ways & Means Ranking Member Richie Neal (D-MA) released a statement regarding the GAO report on the use of cryptocurrency in employer-sponsored retirement plans, “Defined contribution plans are a key leg in our three-legged retirement savings system, with millions of Americans investing trillions of savings for a secure tomorrow. As markets evolve and new investing vehicles emerge, it is incumbent on the federal government to ensure proper oversight. Today’s report shows there’s more to do to protect American workers and their retirement savings from the volatile, high-risk environment that comes with cryptocurrencies. The crypto market, since it began emerging as a 401(k)-investment option for some retirees and investment firms in 2022, has not been fully subjected to proper oversight and regulation. As a result, as this report outlines, it has brought uniquely high risk to retirees. Americans must be confident that their investments are secure, and do not face unnecessarily high volatility, cybersecurity, and theft risk. Ways and Means Democrats’ commitment to the American worker is ironclad, and we will continue to ensure their dignity and financial security in retirement. Whether it was through the SECURE Act 2.0, the Butch Lewis Act, or making enhancements to the Saver’s Credit, we have made progress in making it easier for workers to save and plan for a secure retirement. Trump’s Billionaires ‘R’ Us cabinet will go to any length to leverage new markets for their own gain, but Democrats stand ready to fight for the dignity of work and protect Americans financial security.” (Press release)

• Retweeting a post from President-elect Donald Trump, Sen. Cynthia Lummis (R-WY) tweeted, “The next four years are going to be legendary. Laser eyes on 47.”

• Rep. French Hill (AR) tweeted, “FinancialCmte stands ready and willing to work alongside DOGE as we work to cut gov red tape and use AI, blockchain, and other technologies to make gov more effective for hardworking Americans.”

• Rep. Warren Davidson (R-OH) tweeted, “To celebrate the 250th Anniversary of the Declaration of Independence, doge will launch a plan to restore a government small enough to fit within the Constitution. The US makes roughly $230 billion in improper payments each year. Multiple departments cannot pass an audit. Putting all federal payments on blockchain could remedy both problems.”

• Financial Services GOP tweeted, “When America leads, we win, and when we fail to do so, we cede our competitive edge to foreign markets. Responsible development of growing technologies like blockchain ensure America remains at the forefront of innovation without sacrificing consumer protection.”

• Financial Services GOP also tweeted, “Chairman Patrick McHenry questions witnesses at today’s hearing on the future of finance. He covers: The transformative potential of blockchain. How technology is shaping private markets. Fintech’s role in addressing the dearth of IPOs.”

• Sen. Ted Cruz (R-TX) tweeted, “Bitcoin and crypto have come a very long way since the first transaction: 10,000 bitcoin for two pizzas. To the moon!”

• Sen. Cruz also tweeted, “I want Texas to be an oasis for Bitcoin and cryptocurrency in general. We need to see miners and crypto innovators coming to the Lone Star State — this will create jobs for the people of our state.”

• Rep. Brad Sherman (D-CA) tweeted, “In 2019 Trump saw how crypto threatened the dollar. Now, as Chief Crypto Advocate of his own company, he’s shifted. Recently, he recognized the danger of a #BRICS currency. At today’s FSCDems I agreed with Trump’s 2019 crypto stance and urged him to again recognize its dangers”

What I’m Reading This Week

• Through the Looking Glass: Conceptualizing Control and Analyzing Criminal Liability For Unlicensed Money Transmitting Businesses Under Section 1960, Daniel Barabander, Amanda Tuminelli, and Jake Chervinsky, The International Academy of Financial Crime Litigators. In this paper, the authors present a detailed legal analysis of the federal money transmitting statute, Title 18 United States Code Section 1960, to argue an entity must gain control through receiving funds and relinquish control through transferring funds to legally satisfy the elements of “money transmitting.” 

• Crypto Tax and Deregulation Outlook, Lee A. Sheppard, Tax Notes

• Who is a Broker? Reporting Rules for Digital Asset Transactions, David L. Forst, Sean P. McElroy, and Matthew L. Dimon, Tax Notes

• Old Tricks for New Dogs, Part V: CARF Enforcement and Compliance, Paul Foster Millen and Peter A. Cotorceanu, Tax Notes