02-10-2026 
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Calls for investigations into President Donald Trump’s controversial “crypto” ventures are spreading beyond the usual Democratic suspects, posing a real threat to the passage of digital asset market structure legislation.
- Market structure push still can’t resolve stablecoin yield issue
- Trump’s crypto ethics/optics getting worse
- House Reps want WLF-UAE probe, conservative media agrees
- Lutnick’s Epstein ties/lies spark resignation calls
- Bessent won’t pause WLF bank application
- Erebor first crypto bank fully approved as CFTC clarifies stablecoin rules
- Federal Reserve guv updates crypto ‘skinny’ master account plans
Senate Democrats held a closed-door meeting on digital asset market structure legislation last week, their first since the Agriculture Committee advanced its Digital Commodity Intermediaries Act last month along a strict party-line vote. The Banking Committee’s more complicated bill (the CLARITY Act) saw its mid-January markup session cancelled at the last minute after the Coinbase (NASDAQ: COIN) digital asset exchange withdrew its support.
Multiple accounts claim the Dems’ meeting was productive and included an appearance by Senate Minority Leader Chuck Schumer (D-NY), who was said to be “very desperate” to secure agreement on how best to proceed.
Schumer was said to be spooked by reports that the Fairshake political action committee (PAC) has amassed a $193 million war chest to spend on November’s midterm elections. Fairshake and other crypto-focused PACs have made little secret of their intention to punish any pol who fails to display sufficient fealty to the crypto cause, potentially threatening Dems’ ability to retake control of either the House or Senate (or both) come November.
Last week’s brutal crash in the price of the BTC token and other major tokens prompted the Dems’ official X account to tweet an image of BTC’s falling value chart overlaid on a picture of haggard-looking President Donald Trump, accompanied only by the word “Yikes.”
White House crypto advisor Patrick Witt tweeted a reply alluding to potential blowback from Fairshake and other crypto sector PACs, saying: “Probably not the message you want to be sending to the crypto community before midterms.”
Witt is convening a second White House meeting between crypto supporters and the banking sector on Tuesday. The meeting follows an initial confab on February 2 that failed to resolve the stablecoin-based “yield v rewards” issue, one of the primary obstacles to the Banking committee approving its market structure bill.
If you’re just joining us, banks want the GENIUS Act’s prohibition on stablecoin issuers offering ‘yield’ to holders of their tokens to also prohibit third-party platforms like Coinbase from offering ‘rewards’ to token holders. Exchanges claim banks’ fears of “mass deposit flight,” and the resulting inability to issue loans are just cover for the fact that banks don’t want competition.
Reports from that first White House meeting indicate that the crypto sector proposed a number of compromises, including letting smaller community banks hold the fiat reserves backing stablecoins or partnering with crypto operators to issue their own stablecoins.
Firmly on the crypto sector’s side is Banking Committee Chair Tim Scott (R-SC), who told Fox News last week that allowing crypto firms to issue rewards is “a good thing.” Scott claimed “we can protect consumers and community banks while still allowing innovation and competition to lower prices and expand access.”
Scott insisted “there will not be a deposit flight” by bank customers seeking higher returns on their deposits. Scott also denied that crypto firms plan to advertise their services “as if they were a bank.” Scott said Congressional crypto boosters would ensure that “the consumer is not misinformed on their decision” to keep their cash in an FDIC-insured bank or a non-insured crypto platform.
The White House has reportedly set a month-end deadline for the squabbling parties to reach a consensus on the yield issue. Should consensus remain elusive, some have suggested President Trump should intervene. However, given the current circumstances, that could create more problems than it solves.
They’re not questioning his ethics, they’re denying their existence
Another major sticking point preventing Banking’s Dems from supporting market structure passage is their concern over Trump’s ‘ethics’ issues, which could prove even more consequential in derailing this legislative. If/when a finalized market structure bill makes it to the Senate floor, it will need 60 votes for passage, requiring the assent of at least seven Dems and all 53 Republicans.
But the uproar over the recent revelation that the Trump-linked decentralized finance (DeFi) platform World Liberty Financial (WLF) sold 49% of the company to a UAE government official for $500 million days before Trump’s inauguration isn’t going away.
Last week, Politico quoted Sen. Cory Booker (D-NJ) saying the WLF-UAE deal “has created more of a sense of moral urgency for us to have ethics as part of [market structure]. The Trump administration has demonstrated the grossest, most egregious corruption from the White House we have ever seen.”
Sen. Ruben Gallego (D-AZ) added that the WLF-UAE deal “reinforces why we have to have ethics as part of the final market structure bill.” Sen. Adam Schiff (D-CA), who has led the charge to enshrine ethics guardrails that don’t exempt the president’s numerous crypto ventures from oversight, said “if anybody needed another reminder, they just got it.”
The 10 Dem members of the Senate Foreign Relations Committee issued a statement last week calling the deal “a pay-to-play scheme that puts personal profit ahead of the national interest.” The Dems called on Congress to “ensure U.S. foreign policy is guided by the interests and national security of the American people—not by who is willing to write the biggest check.”
And yet, Republicans continue to give the president a pass. Sen. Cynthia Lummis (R-WY) called the WLF-UAE uproar “another attack on Trump that is pretty baseless, to be honest.” Lummis, who’s retiring next January, claims to be buying the president’s claims of ignorance regarding decision-making by his three sons—all of whom, like their father, are listed WLF co-founders. Lummis asked: “How far do you have to separate yourself from the financial decisions of your children before you take serious criticism?”
Even less charitable was Sen. Bernie Moreno (R-OH), the biggest beneficiary of Fairshake’s political support in the 2024 election. Moreno accused Dems of “levying absurd accusations of criminal wrongdoing without any actual evidence, dragging innocent men through the mud for political gain.”
House seeks Trump corruption probe
Over in the House of Representatives, Rep. Ro Khanna (D-CA) announced last week that he has “launched an investigation as ranking member of the Select committee on China” into the WLF-UAE deal. News of the probe was first reported by the Wall Street Journal, which also broke the story of the deal.
It’s been speculated that the UAE investment in WLF was a quid pro quo for the Trump administration relaxing restrictions on the UAE receiving powerful U.S.-made microchips. The restrictions were originally put in place over fears the UAE could backdoor the chips to China, which remains under similar chip restrictions.
Khanna sent WLF a letter containing 16 questions, including how WLF distributes its revenue/profits. The Journal’s original report found that two Trump-controlled entities received the lion’s share ($187 million) of the UAE’s initial $250 million payment, while another $31 million went to entities controlled by WLF co-founder Steve Witkoff, who was also involved in the UAE chip deal.
Khanna has also asked the U.S. Attorney for Delaware to scrutinize a Delaware-based firm that the UAE used to make its WLF investment.
Khanna’s letter to WLF sought answers to his questions by March 1 but Dems are the minority party and lack subpoena power. As such, they can neither compel witnesses to testify nor force the majority party to support their efforts.
It was perhaps with the understanding that the GOP won’t force this issue that WLF called Khanna’s probe “a baseless assault” and accused Dems of “harassing a private American business to score political points.”
Regardless, the furor doesn’t appear to be dying down, as the outrage extends far beyond the usual suspects. Over the weekend, the conservative National Review published “the first in a series of five posts” detailing “The Sordid Story of Trump, the Trump–Witkoff Family Business, and the UAE.”
The article reminds readers that the Review was by no means shy in covering alleged corruption involving the family of Trump’s predecessor, Joe Biden. But “you’d have to add two digits to the sum of Biden abuses of power, foreign entanglements, and corruption alleged in the [Journal] report to get near what Trump has raked in just from the UAE.”
The Review also notes that the same Congressional Republicans who led multiple probes into Hunter Biden’s corruption appear to have “lost interest” in exposing potential corruption now that it’s linked to Trump.While the administration appears convinced it can ride out this storm, Axios reported Monday that even some crypto fans are “now questioning whether Trump’s return to power has delivered what they were promised.” There’s a growing sense that Trump’s ethics issues are complicating passage of market structure legislation, something the sector believes is key to its advancement.
Crypto influencer Carl Moon told his 1.5 million X followers that Trump has been “bad for crypto,” adding that it was a “big mistake to have him as president.” Others expressed gallows humor at the recent plunge in token values, tweeting that “when Trump said we wouldn’t have to pay taxes on crypto gains, I didn’t realize he was removing the gains.”
The Journal posted a follow-up report on Monday, noting that Trump and Witkoff’s sons have helped WLF steer “at least $1.4 billion to both families since the president’s re-election.” These insiders’ ability “to extract real cash from their ventures quickly, [means] they are far less exposed to the current crypto downturn than retail investors who loaded up on digital tokens,” including WLF’s ‘governance’ token WLFI and the president’s $TRUMP memecoin (both of which are currently trading at fractions of their issue prices).
Lutnick feeling the Epstein heat
Meanwhile, a separate scandal is brewing in Trump’s crypto-linked Cabinet. The Department of Justice’s (DOJ) recent release of additional Jeffrey Epstein material has caught Commerce Secretary Howard Lutnick in an apparent lie about having broken off ties with the now-deceased pedophile in 2005.
Last year, Lutnick declared that he’d been so weirded out about his former next-door neighbor Epstein’s comments about receiving “the right kind of massage” that Lutnick immediately told his wife that “I will never be in the room with that disgusting person ever again.” Lutnick added that he was “never in the room with him socially, for business, or even philanthropy. If that guy was there, I wasn’t going, because he’s gross.”
But the newly released emails show Lutnick and Epstein were scheduled to have drinks on May 1, 2011, apparently at Epstein’s home. Another email shows Lutnick and his family planning a visit to Epstein’s infamous private island in the U.S. Virgin Islands on December 23, 2012. An email forwarded to Lutnick by his assistant the following day includes a message from Epstein saying “Nice seeing you,” suggesting the island meeting occurred as planned.
Just days after that island meeting, both Lutnick and Epstein invested in a company called AdFin Solutions Inc. In November 2015, Lutnick invited Epstein to attend “a very intimate fund-raising event’ for then-presidential candidate Hillary Clinton.
It’s worth noting that all these encounters came after Epstein’s 2008 conviction in Florida for soliciting prostitution from a minor.
The revelations have prompted a bipartisan call from Reps. Thomas Massie (R-KY) and Robert Garcia (D-CA) for Lutnick to either resign as Commerce Secretary or for the White House to fire him. The White House has rejected these calls, but Massie isn’t giving up, tweeting Monday that, given Lutnick’s evident dishonesty, “what else is Lutnick covering up with respect to his association with Epstein?”
Many crypto critics are asking the same questions. Lutnick, the founder of Wall Street financial services firm Cantor Fitzgerald (NASDAQ: ZCFITX), is a major crypto supporter, having helped bring controversial stablecoin issuer Tether in from the regulatory cold.
For years, the famously audit-averse Tether’s claims to hold billions’ worth of U.S. Treasury bills in support of its USDT stablecoin were viewed with serious skepticism. That is, until Lutnick went on CNBC in 2023 and declared: “I hold their treasuries. And they have a lot of treasuries.”
However, Lutnick was far less definitive about Tether’s T-bills in written responses to questions ahead of his 2025 confirmation hearing with the Senate Commerce Committee. In that written submission, Lutnick stated that Cantor “is not conducting continuous diligence on Tether’s financial statements, but I believe my statements were accurate when made.”
Lutnick isn’t the only Tether-tied individual to make an appearance in the Epstein files. Others have included Tether attorney Jason Weinstein and Brock Pierce, a Tether co-founder who claims to have left the project in 2015 but who appears to have played a major role in stoking Epstein’s crypto interest.
WLF’s bank charter pursuit
Treasury Secretary Scott Bessent was asked about the WLF-UAE controversy during last week’s appearances on Capitol Hill. On February 4, Bessent sat before the House Financial Services Committee, where Rep. Gregory Meeks (D-NY) asked whether Bessent would agree to pause WLF’s application for a national trust bank charter until all the questions surrounding the UAE’s involvement are answered.
Meeks warned that “conflicts of interest and improper influence by U.S. elected officials over bank regulators weaken supervisory independence and ultimately impose massive losses on consumers and taxpayers.” Meeks also suggested that the UAE taking a 49% stake in WLF presented “a national security concern.”
Bessent replied that the Office of the Comptroller of the Currency (OCC) that is considering WLF’s bank application may be under Treasury’s umbrella but is nonetheless “an independent entity.” Bessent then launched an offensive tangent, accusing Meeks of traveling to Venezuela in 2006 “to lobby [former Venezuelan president] Hugo Chavez on behalf of your donors.”
A shouting match between the two ensued, capped off by Meeks demanding that Bessent “stop covering for the president! Stop being his flunky!”
CFTC welcomes national trust banks into stablecoin action
WLF says it wants a bank charter to boost adoption of USD1, the stablecoin it issued last spring that has already amassed a market cap of $5.4 billion (thanks in part to still more UAE connections).
Other stablecoin issuers have cited similar desires in pursuing their own charter applications, some of which the OCC conditionally granted shortly before Christmas. (The OCC went further last week by granting full charter approval to Erebor Bank, the crypto-/tech-focused bank backed by some major Silicon Valley players.)
On February 6, the Commodity Futures Trading Commission (CFTC) announced that it had revised the Staff Letter 25-40 it issued on December 8, 2025. That letter took a ‘no-action position’ regarding futures commissions merchants accepting non-security digital assets, including ‘payment stablecoins,’ as customer margin collateral and to hold ‘certain proprietary payment stablecoins in segregated customer accounts.’
The revision specifies that a national trust bank—like WLF wants to become—”may be a permitted issuer of a payment stablecoin for purposes of the no-action position.” The CFTC claims it belatedly realized that “payment stablecoins … may be issued by a national trust bank.” National trusts weren’t meant to be excluded from this designation and thus a clarification was needed.
CFTC Chair Michael Selig expressed delight in the unprecedented steps that the OCC has taken to allow national trust charters to custody/issue stablecoins. Selig said, “these national trust banks continue to play an important role in the payment stablecoin ecosystem” and thus the CFTC never meant to stand in their way.
Skinny master accounts could make crypto firms fat and happy
Finally, U.S. Federal Reserve Gov. Chris Waller appeared to throw crypto firms a “skinny” bone on Monday in an update on plans to offer fintechs access to slimmed-down Fed master accounts. Waller made the comments during the Q&A portion of an economic policy event in California hosted by the Global Interdependence Center.
First, a little background. For years, Wyoming-based Custodia Bank unsuccessfully sought access to a Fed master account. Custodia, which holds special-purpose depository institution (SPDI) status in Wyoming, was consistently rejected by the Fed, rejections that were supported by federal court rulings (including an appeals court verdict last Halloween).
Shortly before that October ruling, Waller outlined his concept of a “skinny” master account that would provide crypto firms with “access to the Federal Reserve payment rails while controlling for various risks.” Said controls would include balance caps (10% of total assets or $500 million, whichever is lesser), no interest on balances, a lack of daylight overdraft privileges, no discount window borrowing, etc.
In December, the Fed withdrew its Biden-era policy statement that frowned on banks engaging in “novel and unprecedented” activities, including those tied to digital assets. The Fed said the situation (and its understanding) had “evolved” and thus it was open to creating “an avenue” for banks to “engage in certain innovative activities.”
On Monday, Waller said the Fed hoped to finalize its plans for skinny master accounts—now referred to as ‘payment accounts’—before the year is through “if possible.” Waller is keen to proceed despite sharp divisions between banks and crypto firms, a schism on full display in the comments submitted by both sides to the Fed’s Board of Governors before last Friday’s deadline.
Waller said he was being pulled in both directions, but he hoped to find “the right kind of middle lane.” While the crypto sector wants skinny accounts beefed up with more bells and whistles, Waller appeared to prefer the bare-bones ‘checking account’ model he originally described last October.
But some fintechs argue that requiring them to partner with banking intermediaries to access the FedACH payment rail creates “a hidden cost passed onto consumers and businesses” and interferes with “the speed, scale and security demands of our modern, digital economy.”
On the flipside, community banks in particular appear concerned by the risks that crypto and other fintechs pose to the broader financial system, given the comparative lack of regulatory scrutiny imposed on these firms. Some banking sector associations agree, suggesting there will be hell to pay if/when some of the more cavalier crypto firms fail.
Watch: The quiet rise of blockchain in mainstream finance
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