08-25-2025 
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America’s federal regulators are vowing to move heaven and earth to implement the White House’s proposed changes to how digital assets are governed.
- SEC launches Project Crypto
- CFTC’s ‘crypto sprint / Winklevii v Quintenz heats up
- Senate market structure responses
- TMTG Q2 underwhelms
- WLF invests in DWF’s Falcon Finance
- Trump PAC crypto donations soar
On July 31, Paul Atkins, chair of the Securities and Exchange Commission (SEC), announced plans to launch ‘Project Crypto.’ Atkins described the project as “the SEC’s north star in aiding President Trump in his historic efforts to make America the ‘crypto capital of the world.’”
Atkins was referencing the report issued by the White House’s Presidential Working Group on Digital Assets (PWG) just the day before. The 166-page Strengthening American Leadership in Digital Financial Technology Report laid out proposals that will impact nearly all aspects of the blockchain sector, including how digital assets will be defined and overseen by the SEC and the Commodity Futures Trading Commission (CFTC).
Atkins said he was “directing the SEC’s policy divisions to work with the Crypto Task Force, led by Commissioner [Hester] Peirce, to swiftly develop proposals to implement the PWG’s recommendations.” SEC staff have been directed to “to draft clear and simple rules of the road for crypto asset distributions, custody, and trading for public notice and comment.”
While these new rules are being drafted, Atkins said SEC staff “will in the coming months consider using interpretative, exemptive, and other authorities to make sure that archaic rules and regulations do not smother innovation and entrepreneurship in America.”
The proposed changes are significant and bear addressing verbatim and at length. Chief among the SEC’s many priorities is “establishing certainty over whether certain digital assets are securities as defined by the Howey test or subject to an investment contract.”
Atkins added that “it should not be a scarlet letter to be deemed a security,” saying “investors will benefit from the opportunity to earn distributions, voting rights, and other features typical of securities. Projects should not be forced to establish decentralized autonomous organizations [DAOs] and offshore foundations or decentralize too early if this is not their desired plan of action.”
SEC staff have therefore been directed to “propose purpose-fit disclosures, exemptions, and safe harbors, including for so-called ‘initial coin offerings,’ ‘airdrops,’ and network rewards … our goal should be that issuers no longer exclude Americans from their distributions to avoid legal complexity and lawsuits.”
Citing recent efforts by companies such as Robinhood Markets (NASDAQ: HOOD) to offer tokenized securities to customers outside America, Atkins has directed SEC staff to “work with firms seeking to distribute tokenized securities within the United States and to provide relief where appropriate to assure that Americans are not left behind.”
In terms of digital asset custodians, Atkins said the SEC’s “existing custody rules were created without crypto assets in mind.” Staff have been directed to “consider how best to adapt the existing regime to facilitate the custody of crypto assets, including possible exemptive or other relief, in addition to changes to the rules themselves.”
Atkins wants to allow the rise of so-called ‘super-apps,’ saying “securities intermediaries should be able to offer a broad range of products and services under one roof with a single license.” Atkins wants to permit broker-dealers to “offer trading in non-security crypto assets alongside crypto asset securities, traditional securities, and other services, like crypto asset staking and lending, without requiring fifty-plus state licenses or multiple federal licenses.”
The SEC will also “update antiquated agency rules and regulations to unleash the potential of on-chain software systems in our securities markets.” These include both “truly decentralized” software systems, “like automated market makers,” as well as those that “have an operator.” Atkins said the SEC shouldn’t “interpose intermediaries for the sake of forcing intermediation where the markets can function without them.”
Finally, the SEC is considering an “innovation exemption that would allow 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.”
Said innovators must still “adhere to certain conditions and requirements,” like making “periodic reports” to the SEC. Other possible conditions include the need to “incorporate whitelisting or ‘verified pool’ functionality, and restrict tokenized securities that do not adhere to a token standard that incorporates compliance features.”
To consult with stakeholders on these proposals, the Crypto Task Force is hitting the road in a new series of roundtables that won’t require stakeholders to travel to Washington, D.C. (as the initial series did). Appropriately enough, these events kicked off Monday in Berkeley and will conclude on December 5 in Ann Arbor, MI.
CFTC does what it can while Quintenz nomination languishes
On August 1, the CFTC signalled its willingness to work with the SEC to enact the PWG report’s proposals. Acting CFTC Chair Caroline Pham issued a statement saying the CFTC is “wasting no time” in launching what it’s calling a “crypto sprint” to realize Trump’s regulatory goals.
On August 4, Pham followed up her sprint news by announcing that the CFTC was launching “an initiative for trading spot crypto asset contracts that are listed on a CFTC-registered futures exchange (designated contract market or DCM).” Stakeholders have been invited to submit feedback and suggestions by August 18.
Pham said the initiative was “a clear and simple solution the CFTC can implement now” as the regulator awaits the arrival of Brian Quintenz, Trump’s nominee for permanent CFTC chair, whose Senate confirmation is looking more questionable by the day.
The Senate Agriculture Committee scheduled two different hearings to approve Quintenz’s nomination proceeding to the Senate floor for a vote. But both meetings were cancelled at the last minute, the second cancellation at the request of the White House.
Last week, reports emerged that Cameron and Tyler Winklevoss, co-founders of the Gemini digital asset exchange, had reached out to Trump to express their unease with Quintenz taking the CFTC’s reins. The twins reportedly told Trump that Quintenz was a bad fit because, for one thing, he’d agreed that the underfunded CFTC would need a bigger budget if it were to take the lead role in regulating digital assets.
Tyler Winklevoss later confirmed these reports to The Block. Despite both brothers having initially praised Quintenz’s nomination, Tyler claimed he and his brother “learned a lot of new information” since those endorsements.
Tyler claimed Quintenz is “the wrong person for this nomination … his policy is not in line with the stated goals and policy of President Trump and the Trump administration. And [Quintenz’s policies are] actually quite antithetical to the ethos of crypto and decentralization.”
Tyler further claimed that “[m]any in our industry have serious concerns with this nomination.” An anonymous Quintenz critic told The Block they had concerns over Quintenz’s views towards software developers’ liability for how their products are used.
In 2018, back when Quintenz was a CFTC commissioner, he stated that defi developers could be held legally liable if they could ‘reasonably foresee’ that their products would be used for illicit purposes and did nothing to stop it.
That’s a different view from that expressed in the PWG report as well as in market structure legislation working its way through Congress. These documents envision legal carveouts for decentralized finance (DeFi) developers, including those who build coin mixers designed to obfuscate the trail left by digital assets.
Another industry concern involves Quintenz’s support for central bank digital currencies (CBDC), including a July 2020 statement in which he described CBDCs as “an area of particular interest to me.” Anti-CBDC bills have the support of much of Congress, while the PWG report specifically recommends that the government “discourage, oppose and prohibit” any federal agency from reviving this dead horse.
Tyler also expressed concerns over recent reports that Quintenz has been using his CFTC nomination to make inquiries regarding prediction markets—aka a DCM, in CFTC parlance—that compete with Kalshi, the CFTC-registered site on whose board Quintenz has a seat.Nevada’s sports betting operators have expressed concerns about prediction markets horning in on their territory. On August 4, Rep. Dina Titus (D-NV) sent the CFTC a letter asking for the release of “all relevant communications from or about Mr. Quintenz related to prediction markets and event contracts.” Titus wants to know if Quintenz “violated CFTC policies, any applicable federal statute, or his own ethical pledge” to “not participate in any matter involving Kalshi for one year.”
The White House issued statements last week that expressed continued support for Quintenz, but with the Senate having gone home for August, there could be ample opportunity for a reset without significant PR blowback.
Senate market structure feedback
Meanwhile, responses to the Senate Banking Committee’s request for input regarding its market structure discussion draft have begun to trickle in. When it comes to crypto, Congress currently resembles a wedding band asking guests if there’s anything they want to hear, so a lot of these responses could well become law of the land.
The DeFi Education Fund, a group that counts among its supporters the Andreessen Horowitz (a16z), Multicoin Capital and Paradigm venture capital groups; Ethereum-focused developers Uniswap Labs; the Solana Policy Institute and more, submitted a 22-page document citing four “critical principles” to consider when drafting a final market structure bill.
These include recognizing a “fundamental distinction” between the “permissionless software [that DeFi devs] create or the technical activities in which they or others are involved” versus more centralized intermediaries. The group also wants “clear definitions” for centralized intermediaries so entities know whether they’re required to register with a federal agency.
They also seek “definitive criteria to evaluate the absence of unilateral and independent control over decentralized systems and user assets.” And finally, to treat blockchain tech as “neutral infrastructure, akin to the internet, rather than as entities subject to ill-suited registration or compliance obligations.”
a16z submitted a 52-page missive of its own, taking issue with the Senate’s proposed concept of “ancillary assets,” suggesting the proposed definition could “introduce new ambiguities that compound the problems resulting from the Howey test.”
While the House-approved CLARITY Act focuses on digital commodities and excludes tokens that “have securities-like qualities in substance,” the Senate’s discussion draft “permits all assets to be ‘ancillary assets’ and then excludes only certain assets that have securities-like qualities in form.” This “increases the risk of unintended consequences, regulatory circumvention, and market abuse.”
a16z helpfully suggests that the Senate not try to reinvent the wheel but simply adopt CLARITY as is. Barring that, the Senate should mirror CLARITY’s “narrow and precise” definition of a ‘digital commodity.’
As for evaluating a digital asset’s risk profile, a16z believes the focus should be on “a control-based decentralization framework” rather than an “efforts-based” one. In terms of digital commodities, the focus should be on “whether any party retains unilateral authority—operational, economic, or governance—over the blockchain system.”
There’s lots of other suggestions (retroactive forgiveness for projects guilty of ‘technical violations,’ removing functional activities like mining, staking and smart contracts from the definitions of ‘financial activity,’ etc.) to peruse in the filing, which you can read now, or when it becomes law in three months. Up to you.
TMTG don’t need no stinking revenue
Shifting gears, Trump Media & Technology Group (TMTG) (NASDAQ: DJT) released its Q2 results on August 1, and the company was pleased to announce its first quarter of positive operating cash flow in its four years of existence. This flow was actually more of a trickle, totaling a mere $2.3 million, but a first is a first.
Revenue totaled an even more modest $883,300 (+6% year-on-year), so less than $10,000 a day. (Meta, it’s not.) And the company booked a net loss of $20 million for the quarter due to $20.5 million in non-cash expenses, most of which ($17.7 million) was due to stock-based compensation expenses. Hard to turn a profit when your execs are collecting perks worth 20x your revenue.
TMTG was far more eager to spotlight the $2 billion in BTC it acquired during the quarter after raising nearly $2.4 billion for that purpose. TMTG’s 18,430 BTC tokens rank sixth on the list of publicly traded entities who’ve adopted a Bitcoin ‘treasury’ strategy.
TMTG also disclosed slightly more details on its plans to issue a ‘utility token’ for its Truth+ video streaming platform of “premium, non-woke news channels.” While Truth+ is still in Beta testing, ‘Patriot Package’ subscribers will initially be able to use the token “to pay for Truth+ subscription costs.” The token’s utility will eventually be “applied to other products and services in the Truth ecosphere.”
World Liberty Financial, DWF draw closer
Meanwhile, the Trump-controlled DeFi platform World Liberty Financial (WLF) has made a $10 million investment in Falcon Finance, an offshoot of controversial market-maker DWF Labs. WLF said it was “proud to back Falcon Finance,” which recently accepted USD1, the WLF-issued stablecoin, as collateral on its platform.
Falcon said the deal will “accelerate Falcon’s technical integrations, focusing on shared liquidity provisioning, multi-chain compatibility, and smart contract modules for seamless conversions between USDf and USD1.” USDf is Falcon’s own stablecoin, which had a hiccup last month as it slipped its 1:1 peg with the U.S. dollar for as-yet unexplained reasons.
DWF and WLF have become increasingly cozy over the past few months, with DWF buying $25 million worth of WLF’s governance token WLFI in April. Around the same time, DWF built $18 million worth of liquidity pools for USD1 as part of its “collaboration” with WLF.
Earlier this year, WLF denied reports that it engaged in ‘reciprocal’ token purchases with companies whose tokens it listed on the WLF platform (which still doesn’t do anything beyond issue its own tokens). But given DWF’s previous purchase, WLF’s latest investment in Falcon Finance does fit that pattern.
Trump PAC reeling in the crypto cash
Finally, crypto cash continues to flow into MAGA Inc, a Trump-linked political action committee, despite the president being term-limited and thus barred (theoretically, at least) from mounting a 2028 re-election bid.
Federal disclosure forms show the digital asset sector contributed over $40 million to MAGA Inc so far this year, roughly one-fifth of all donations received by the PAC. This effort was led by a $10 million check cut by Foris DAX Inc, an offshoot of the Crypto.com exchange, which in March was chosen to custody the assets backing the exchange-traded funds (ETFs) issued by Trump’s TMTG.
The Blockchain.com exchange contributed $5 million, while a16z co-founders Marc Andreessen and Ben Horowitz contributed $3 million apiece. The Winklevii-led Gemini also donated $3 million, while Cameron and Tyler added another $500,000 apiece.
Other notable contributors include Ondo Finance ($2.1 million), Paradigm ($1.2 million), and Ava Labs ($1 million). Many of the above crypto entities also contributed six- and seven-figure donations to Trump’s inaugural committee fund.
Watch: Breaking down solutions to blockchain regulation hurdles
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