09-25-2025 
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America’s securities/commodities regulators compete to see who can dismantle more crypto guardrails, while Senate Democrats want a probe of President Trump’s allies before market structure legislation is passed.
- CFTC says tokenized stablecoins are derivatives collateral
- CFTC chair candidate list expands
- SEC pimps innovation exemption, says L2’s might be exchanges
- WLF says debit card, app coming “very soon”
- NYT v Trump sparks letter demanding Sacks/Witkoff probe
- Pro-crypto PACs breed like bunnies, hoover up cash
On September 23, Caroline Pham, acting-chair and the only commissioner still working at the U.S. Commodity Futures Trading Commission (CFTC), announced that the regulator was launching “an initiative for the use of tokenized collateral including stablecoins in derivatives markets.” The CFTC is soliciting input on the plan, with comments due by October 20.
The change would allow stablecoins to serve alongside cash and U.S. Treasury bills as acceptable collateral for derivatives trading. The idea was initially suggested last year by Pham via the CFTC’s Global Markets Advisory Committee. Putting it into action is part of the CFTC’s ‘crypto sprint’ to accelerate implementation of the White House’s desire to broaden crypto’s reach into traditional finance.
Pham said “tokenized markets are here, and they are the future,” adding that “collateral management is the ‘killer app’ for stablecoins in markets.” Pham said the CFTC would “work closely with stakeholders” to ensure this initiative’s success.
Some of those stakeholders were quick to congratulate Pham on the move, with Heath Tarbert, president of USDC-issuer Circle (NASDAQ: CRCL), saying “[u]sing trusted stablecoins like USDC as collateral will lower costs, reduce risk, and unlock liquidity across global markets 24/7/365.”
More praise came from Paolo Ardoino, CEO of Tether, issuer of the market-leading USDT stablecoin. Ardoino called Pham’s announcement “an important step toward strengthening the U.S.’s leadership in global finance” and generously offered to “share our experience in this sector” to strengthen this initiative. Still more praise came from representatives of the Crypto.com and Coinbase (NASDAQ: COIN) digital asset exchanges, as well as RLUSD stablecoin issuer Ripple Labs.
CFTC chair nominee list expands and contracts
Meanwhile, the hunt for a suitable nominee to fill the vacant-for-eight-months-and-counting CFTC chairman’s seat continues. While the White House has yet to formally state that Trump’s original nominee, Brian Quintenz, is out of the running, new names—including Securities and Exchange Commission (SEC) crypto task force chief counsel Michael Selig and Treasury Secretary Scott Bessent’s crypto adviser Tyler Williams—have circulated in recent days as potential candidates.
On September 24, Semafor’s Eleanor Mueller reported that Josh Sterling, a former director of the CFTC’s Division of Swap Dealer and Intermediary Oversight (now known as the Markets Participants Division), is being vetted by the White House. Sterling, who was mentioned in January as a possible contender before Quintenz got the nod, is currently a partner at Milbank LLP, representing the Kalshi predictions market.
Coincidentally, Quintenz sits on Kalshi’s board of directors, and part of the reason his nomination came under fire was the revelation in July that he’d pressed the CFTC to share private information regarding its vetting of prediction markets (known as ‘designated contract markets’ under CFTC parlance).
Meanwhile, Brogan Law attorney Veronica Irwin issued a blog post over the weekend in which she claimed “multiple sources” had told her that SEC Chair Paul Atkins is “first in line” for the CFTC chair role and that Atkins “would be game for the job.”
Irwin suggested that Atkins could continue to serve as SEC chair should he get the CFTC gig. Irwin acknowledged that it wasn’t clear whether it was legally possible for Atkins to serve such a dual role, but Trump has a history of putting a single individual in charge of multiple agencies/departments, as well as broadly interpreting the powers granted to the executive branch under Article II of the Constitution.
Atkins appeared to downplay these reports in an interview with Fox Business on September 23, saying, “I have my hands full right now.” Punchbowl News then quoted Atkins saying (a little more emphatically) “thanks but no thanks” to the CFTC gig.
The prime culprit in Quintenz’s apparently shelved nomination was an intervention by Cameron and Tyler Winklevoss, the brothers behind the Gemini (NASDAQ: GEMI) exchange, who lobbied Trump against Quintenz getting the CFTC gig. While other industry figures offered Quintenz their support, and Quintenz publicly released texts that he claimed showed the Winklevii’s ulterior motives, it doesn’t appear to have restored Trump’s confidence in his original choice.
SEC fires warning shot at L2 transaction processing
Atkins did confirm that the SEC would work more closely with the CFTC going forward. That fits with the Senate’s latest draft of its digital asset market structure bill, which calls on both regulators to form a joint advisory committee to avoid ‘turf wars’ over crypto oversight.
(Speaking of, the CFTC/SEC will hold a joint roundtable on September 29 at the SEC offices in Washington, and the agenda/panelist list has now been published.)
Atkins also confirmed the SEC’s intention to enact an “innovation exemption” by year’s end. This exemption would allow crypto operators to launch projects like initial coin offerings (ICO), airdrops, network rewards, and other such ‘innovations’ without garnering the SEC’s prior approval.
The exemption was first suggested in July as part of the SEC’s Project Crypto roadmap for implementing the White House’s policy recommendations. The exemption was defined as allowing “registrants and non-registrants to quickly go to market with new business models and services that do not neatly fit within our existing rules and regulations.”
The SEC has been systematically dismantling much of the crypto oversight established by the agency’s previous leadership, as well as pausing/dropping enforcement actions brought by the previous administration against crypto operators.
So it was somewhat surprising to hear SEC commissioner Hester Peirce go on The Gwart Show podcast earlier this month and essentially issue a warning that so-called ‘layer-2’ networks (L2s) of blockchains like Ethereum could find themselves regulated like exchanges if they rely on centralized sequencers to process transactions (for a fee).
The pseudonymous host set the stage by saying, “There’s these Layer-2 blockchains that effectively run matching engines … which is a pretty centralized role and it kind of goes against a lot of our initial understanding of blockchains whereby you have all these distributed nodes … a lot of these L2s are running what would reasonably be viewed as exchanges.”
Peirce responded by noting the SEC’s current view that virtually no digital assets are securities, and thus “if the assets that are being matched are not securities, obviously, we don’t have anything to say about it.”
However, she said, “This becomes more of an issue when you’re talking about tokenizing securities, and where are those things going to be, where are those transactions going to be happening? And I think this is where the questions about when is something actually decentralized and when is something not become very tricky.”
Peirce summed up her view by saying, “If you have a matching engine essentially that’s controlled by one entity that controls all the pieces of that, then that looks a lot more like an exchange and … we’re going to have to think about that. And the people who are running those things are also going to have to think about that.”
It took a while for Peirce’s comments to land, but they prompted pushback from Coinbase’s chief legal officer, Paul Grewal, who tweeted on September 22 that “[f]raming sequencers on L2s like [Base, an Ethereum L2 controlled by Coinbase] as exchanges misrepresents their function as a marketplace.”
Grewal claimed L2s are “general-purpose blockchains that operate as infrastructure … L2 sequencers enable scalable, secure onchain transactions that scale Ethereum compute … Mislabeling them is actively spreading [fear, uncertainty and doubt] and overlooks the critical role they play in scaling.”
Base lead developer Jesse Pollak followed by tweeting his defense of his L2, saying Base “isn’t an unlicensed securities exchange” but acknowledged there was “more work” to do to make Base’s transaction consensus mechanism “more decentralized.”
Ethereum creator Vitalik Buterin also weighed in on the brouhaha, tweeting that Base is “doing things the right way.” Buterin claimed that Base “uses its centralized features to provide strong UX features, while still being tied into Ethereum’s decentralized base layer for security. Base does not have custody over your funds, they cannot steal funds or stop you from withdrawing funds.”WLF rolling out new products ‘very soon’
World Liberty Financial (WLF), the decentralized finance (DeFi) platform with financial ties to the Trump family, made headlines this week at the Korea Blockchain Week 2025 conference in Seoul by announcing plans for new products.
WLF co-founder/COO Zak Folkman told conference attendees that WLF would release both a branded debit card and a retail app “very soon.” That hopefully signals a more pressing timeline than other products the WLF website has been claiming are coming ‘soon’ (just not ‘very soon’) for about a year now.
Folkman described the promised WLF app as “Venmo meets Robinhood” and claimed the debit card would allow users to link the app and WLF’s USD1 stablecoin “right into their Apple Pay.” Beyond that, Folkman was light on specifics.
However, Folkman did pledge that WLF would “never” launch its own USD1-specific blockchain, as some other stablecoin issuers (Tether, Circle, Stripe, etc.) are now doing. Folkman called that “literally the opposite of our entire mentality,” saying WLF’s goal was to be “completely agnostic when it comes to chains, technology, distribution platforms.”
However, Folkman’s claim that WLF believes that “our job is not to roll out chains or exchanges or anything like that,” begs the question: Does this mean the ‘Exchange: soon’ pledge on the WLF site is no longer valid?
WLF v NYT: Round 2
Galaxy Digital founder Mike Novogratz was asked by Bloomberg this week for his opinion on the Trump family’s numerous crypto ventures. Novogratz said that “as long as the Trump family and their associates play by the rules, I’m completely fine by it.” Novogratz added, “Everything [the Trump family/associates] do is pretty well disclosed.”
Not according to the New York Times, which earlier this month published a lengthy report into Trump’s longtime friend/WLF co-founder Steve Witkoff’s involvement in a pair of controversial deals in which the United Arab Emirates (UAE) got a U.S. semiconductor chip deal and USD1’s market cap got a $2 billion boost.
The Times also referenced the role played by David Sacks, the Silicon Valley venture capitalist and the White House’s AI & Crypto Czar. The Times said it had no proof that the chips/USD1 deals were related but suggested Witkoff’s involvement in both “blurred the lines between personal and government business.”
The Times released a follow-up report on September 24 that, while largely focused on the political fallout from its original report, stated that Witkoff and his two sons—Zach (WLF CEO/co-founder) and Alex (co-founder)—are believed to have been “allocated 3.75 billion of the company’s $WLFI tokens, which at the current trading price would be worth nearly $800 million.”
The Times also referenced a letter that two Democratic senators sent on September 23 to the Acting Inspectors General at both the Commerce and State departments, as well as the acting director of the U.S. Office of Government Ethics. The letter asks the recipients to “investigate the roles” of Sacks and Witkoff “in advocating for the United States to sell sensitive national security technology” to the UAE.
The letter, signed by Senators Elizabeth Warren (D-MA) and Elissa Slotkin (D-MI), said it “appears” that “in exchange for personal benefit, [Sacks and Witkoff] may have aided a foreign power’s effort to acquire U.S. technology that could present serious economic and national security risks—including use to enhance weapons that could be used against American service members. This conduct compromised national security and may have violated federal ethics laws.”
The letter recites some of the details in the original Times report, noting that neither Sacks nor Witkoff “disclosed their financial ties to the UAE’s national security advisor, Sheikh Tahnoon bin Zayed Al Nahyan, and the personal benefits they have received from the Sheikh’s $2 billion investment in the President’s stablecoin, USD1.”
The senators say an investigation “can help determine if politically connected crypto interests are undermining our national security. As Congress considers legislation on the market structure for digital assets, we must ensure that cryptocurrencies like USD1 are not providing the President and senior officials with the ability to line their pockets at the expense of the public interest.”
The reference to the market structure legislation currently being considered by the Senate Banking Committee—on which Warren is ranking member—follows continued pleas by Senate Dems to participate in the crafting of the bill’s language.
A dozen Senate Dems recently sent their preferred Framework for Market Structure Legislation to their GOP colleagues. The framework includes a desire to prevent Trump from using “digital asset projects to enrich himself and his family.”
The GOP will need some Dem ‘yes’ votes to get any market structure bill through the Senate, but whether this latest dustup over Trump’s crypto ventures will be enough to tip those scales to ‘no’ remains to be seen. Past instances of Dems talking tough before eventually caving don’t offer confidence that these spines will stay stiff when push comes to shove.
Paying the piper, calling the tune
The primary reason Dems tend to cave on their crypto concerns is the hundreds of millions of dollars crypto operators are willing to deploy against politicians who don’t vote as the industry prefers. Having realized that throwing that kind of money around can scare the bejeezus out of incumbent politicians, the sector is redoubling its efforts ahead of the 2026 midterm elections.
The Fairshake political action committee (PAC) blazed the trail in 2024, using cash mostly provided by three contributors: Coinbase, Ripple Labs, and the Andreessen Horowitz (a16z) (NASDAQ: ZADIHX) venture capital group. On September 23, Coinbase’s Grewal suggested that “maybe we need another dozen Fairshakes” to keep the momentum going.
Grewal may be getting his wish, as this month saw the debut of the still little-known The Fellowship PAC, which has yet to update either its website or its official X account since its brief mid-September announcement/threat of having raised “$100M+” to fuel its activities.
The Fellowship announcement came less than a month after the Winklevoss brothers announced the launch of their own PAC, the Digital Freedom Fund (DFF), which they funded with $21 million of their own money.
While Fairshake claims to support pro-crypto pols regardless of party affiliation, DFF is unabashedly pro-Trump. That earned it an endorsement from Trump’s WLF last week, along with vague promises that WLF will “stand behind” DFF, although it’s unclear whether this support is financial or simply moral.
There’s no such ambiguity with the Kraken exchange, whose co-CEOs Dave Ripley and Arjun Sethi each tweeted on September 23 that the company was donating $1 million to DFF. The cash was welcomed by Tyler W, who tweeted his thanks to both Ripley and Sethi.
Sethi claimed Kraken was “not backing a party. We are backing principles,” suggesting he hasn’t read DFF’s mission statement. Ripley was similarly noncommittal, saying Kraken wants to “support policymakers working toward real regulatory clarity and innovation.”
But Kraken is also donating $1 million to America First Digital (AFD), yet another recently formed PAC dedicated to “advancing pro-bitcoin and pro-crypto policies and regulations, amplifying the efforts of industry champions in Washington, and supporting ongoing education efforts among key decision-makers.”
AFD is led by Jason Thielman, a former exec director of the National Republican Senatorial Committee (NRSC), and Kristin Walker, a former senior advisor to staunchly pro-crypto Sen. Cynthia Lummis (R-WY). For the record, AFD’s official X account routinely praises Trump and GOP members of Congress, both collectively and singly, without once praising a pro-crypto Dem.
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