America's War on Crypto

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The crypto industry recently held a Consensus 2023 industry event in Austin, Texas. It was a 3 day event featuring numerous panels/sessions with speakers/representatives from both crypto and non-crypto companies/industries as well as representatives from various government regulators.

The event covered many topics including:
Crypto isn't just the wild west purview of money launderers and dark web ne'er do wells. There is serious financial/corporate activity happening in the crypto world now.

Valid Criticisms or Propaganda?​


Anti-crypto voices have tried to vilify the crypto industry on environmental concerns - claiming that crypto consumes too much energy. However, like most nascent technologies, they evolve with innovation when there is sufficient interest.

Bitcoin (BTC) was the first crypto coin and it was built on a "proof of work" model. This model is energy intensive by design and it also didn't scale well for handling a large volume of transactions. So, "proof of stake" crypto were developed that were orders of magnitude more efficient and scalable. Ethereum (ETH) transitioned from a proof of work model to a proof of stake model for this reason - and it's still not done being developed. Stellar (XLM) was developed on another "proof of agreement" model that claims to be several more orders of magnitude more efficient than proof of stake models - and even more energy efficient than traditional finance like credit cards:

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The efficiency of proof of work and proof of stake based cryptos are still being improved in many cases by the development of new technologies like parallel blockchains (aka parachains, cross chains, etc.) that distribute transaction loads and zero knowledge proofs (which could be very significant for Bitcoin in particular).

In addition to the developers of various crypto projects being sensitive to the energy costs from a design standpoint, the decentralized network of node operators (and bitcoin miners) that implement the crypto protocols (than operate the computer servers on the network) are also increasingly using more green energy sources:

... There has also been a shift toward using more renewable energy sources to power cryptocurrency mining. One 2020 study found that around 39% of the energy consumed by PoW cryptocurrencies is from renewable energy sources, up from 28% reported in a previous study. This percentage is likely to rise as renewables become more affordable in the future.
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Crypto Threatened by Government Hostility​


The Biden administration has been very open about their hostility to the crypto industry:
January 30 said:
It’s a safe bet that 80-year-old President Biden—like his 76-year-old predecessor—has never bought Bitcoin, used a stablecoin, or tried out Web3. But that didn’t stop Biden’s underlings at the White House from issuing a blog post on Friday, decrying crypto as predatory and dangerous. The document reads like a diatribe and even has a whiff of moral panic—as if Biden had instructed the makers of Reefer Madness to turn their attention to digital currency.
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Mar 22 said:
The White House Council of Economic Advisers delivered a 35-page takedown of the idea that digital assets like Bitcoin are useful as an alternative to government-backed currency, the claim that crypto’s underlying distributed ledger technology could have some utopian application, and the notion that it could serve as a hedge against inflation.

“Although the underlying technologies are a clever solution for the problem of how to execute transactions without a trusted authority, crypto assets currently do not offer widespread economic benefits,” the council writes. “They are largely speculative investment vehicles and are not an effective alternative to fiat currency. Also, they are too risky at present to function as payment instruments or to expand financial inclusion.”

The extended crypto criticism, which fills one chapter in a book-length annual report the White House sends to Congress each year, represents a stark change in tone from President Joe Biden’s administration.

One year ago, Biden signed an executive order asking federal agencies to look at ways of curtailing the risks of crypto without stifling “financial innovation.” This week’s report makes clear the White House thinks crypto can’t innovate much besides the same kinds of financial disasters that prompted Congress to regulate the banking industry a century ago.
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Crypto faces similar hostility within the legislative branch from a group of Senators led by Elizabeth Warren.

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Now, influential Democrat senator Elizabeth Warren has signaled she's "building an anti-crypto army" as part of her re-election campaign following a warning from crypto lobby group Coin Center that a crackdown on TikTok could pave the way for a bitcoin ban.

"I’m in this fight to put our government on the side of working families," the former U.S. presidential hopeful posted to Twitter, embracing a quote from a recent Politico profile that said she's "building an anti-crypto army."

Warren, who is on the Senate Banking Committee that oversees the U.S. Securities and Exchange Commission (SEC), has been at the vanguard of a slew of anti-bitcoin and crypto bills that have been introduced over the last year.
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Three Pronged Attack​


The American government is currently employing a three pronged attack on the crypto industry in an attempt to suffocate it.

Prong number one makes headlines in most news media and involves the SEC purposefully maintaining vague guidance and attacking companies with lawsuits. Their behavior has been so egregious that it has drawn dissent from their own ranks and from Congress. The SEC has apparently been tasked to be the Biden administration's Shawshank warden Samuel Norton in obtusely responding to the crypto industry. There really isn't any other way to explain SEC chair Gensler's blatant hypocrisy.

Prong number two has flown under the radar of most news media and involves the revival of Operation Choke Point - an Obama era program that aimed to de-bank lawful industries that the administration disfavored. The operation was shut down circa 2017, but is now making a comeback targeting the crypto industry. Cooper & Kirk, a law firm that sued FDIC, OCC & Fed over the original Operation Choke Point, published a detailed summary of Operation Choke Point 2.0.

Former Congressman Barney Frank, a board member of Signature Bank, alleged that the bank was solvent and seized by regulators to debank it's crypto clients. The move sparked contagion in the regional banking industry and prompted some members of Congress to question the FDIC's actions. When the FDIC solicited bids for Signature bank, they split off Signature's crypto clients effectively de-banking them.

The third prong involves legislation and executive orders designed to handcuff the crypto industry including increasing taxes on bitcoin miners and regulations.

Stablecoins - Kind of a Big Deal​


Stablecoins, such as US Dollar Coin (USDC) and Tether (USDT), are cryptocurrencies that are backed by national currencies. They are essentially tokenized forms of the underlying legal tender they represent. Unfortunately for the Federal reserve, US Treasury Dept., etc., they enable transactions that do not process through the US banking system. As such, they have drawn particular interest from the Biden administration.

Stablecoins provide an open door for global entities to conduct dollar denominated transactions that could bypass US sanctions. They provide an opportunity for people in nations with high inflation to save money in dollar denominated currency that bypasses official dollar exchanges (or prohibitions). The adoption and growth of stablecoins would appear to be a direct threat to any possible plans for a Central Bank Digital Currency (CBDC).

Futile and Stupid Gesture​


The Biden administration's effort are provoking a chilling effect of the domestic crypto industry and forcing much of America's leadership in innovation and development to expatriate to friendlier shores. What the Biden administration does not appear to realize is that crypto is global. They are not going to be able to choke the global industry with an iron fist. Pandora's box has been opened. The crypto industries will continue to innovate and grow with new financial and commercial applications. It will be a true shame if America abdicates their position in leading the charge.
 
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I think it's fair to say that the U.S. Securities and Exchange Commission’s (SEC) investigations and enforcement actions against crypto companies has now escalated into an all-out legal war, with crypto companies filing lawsuits and rolling out entire press approaches to tackle the SEC.
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Breaking it down

Last month, Ethereum developer ConsenSys pre-emptively sued the SEC for injunctive relief. The firm asked a federal court in Texas to block the regulator from investigating it, bringing charges against the MetaMask wallet or MetaMask services and to declare ether (ETH) a not-security. In an unredacted version of the suit filed later, ConsenSys alleged that the SEC launched a formal investigation into whether ETH was a security (though the SEC does not appear to have actually come to a conclusion yet, based on the filing).

They join the DeFi Education Fund and a company called Beba, who sued the SEC at the beginning of the month, the Blockchain Association and Crypto Freedom Alliance of Texas, who sued earlier in the week over how the SEC is defining a "dealer" and a company called Lejilex, which wants to launch a crypto exchange literally called "Legit.Exchange." Each of these lobby groups or companies has been sued on various charges. Still, they share the same fundamental view: that the SEC is overstepping its boundaries in how it regulates crypto or that the fundamental question of how crypto fits into securities laws needs a more definitive answer.

It’s a growing tactic among crypto companies, which pointedly filed in federal districts known for being less than wholly supportive of the administrative state.
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More:

 
This could have fit in the crypto crime thread or the We the People forum (once charges are actually filed), but IMO, it really belongs here because this isn't about crime - it's about the War on Crypto. It's really about the fundamental issue at the heart of it all.

On April 24, two lead developers of Samourai Wallet (SW), the most-advanced privacy-centric wallet in the bitcoin ecosystem, were arrested and charged with money laundering and money transmitters offenses by order of the United States Department of Justice (DOJ). This is just the latest assault of an escalating war waged by US regulators on financial privacy and freedom.
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The actions of the DOJ are not by chance but by design: the objective is not to combat crime but to drain liquidity from crypto tools that make it possible for individuals to escape the traditional financial system. ...

More (highly recommended):

 
A bipartisan pair of U.S. senators is questioning Attorney General Merrick Garland about the "unprecedented interpretation" of law the Department of Justice (DOJ) is using to pursue cryptocurrency software services as unlicensed money-transmitting businesses.

Sens. Ron Wyden (D-Ore.) and Cynthia Lummis (R-Wyo.) sent a letter to Garland questioning the approach against such firms as Samourai Wallet and Tornado Cash, highlighting that the Treasury Department's Financial Crimes Enforcement Network (FinCEN) has previously held that non-custodial crypto services shouldn't be treated as money transmitters.
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The letter:
May 9, 2024​

Hon. Merrick Garland
Attorney General of the United States
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530

Re: Money Transmitting Business Registration and Non-Custodial Crypto Asset Software

Dear General Garland,

We write to express our grave concerns regarding the U.S. Department of Justice's (DOJ) recent policy arguments that dramatically expand the scope of the Federal prohibition on operating an unlicensed money transmitting business.1 The DOJ's unprecedented interpretation of this statute in the context of non-custodial crypto asset software services contradicts the clear intent of Congress and the authoritative guidance of the Department of the Treasury's Financial Crimes Enforcement Network (FinCEN). This interpretation threatens to criminalize Americans offering non-custodial crypto asset software services.

The Federal money transmitting business statute (18 U.S.C. § 1960) makes it a criminal offense to “knowingly conduct … an unlicensed money transmitting business.”2 Criminal liability applies when a person: (1) was required by a State to become licensed as a money transmitter; (2) when a person is required by Federal law to register; or (3) if the person is engaged in money transmission (whether registered or not) and is engaged in illicit finance.3

The Bank Secrecy Act (31 U.S.C § 5330) defines “money transmission” as “accepting currency, funds, or value that substitutes for currency and transmitting the currency, funds, or value that substitutes for currency by any means.”4 The use of the term “accepting” which is commonly defined as “to receive (something offered) willingly”5 provides clear evidence that Congress intended a requirement that a money transmitter have taken control of users’ assets as the sine qua non of activities within the scope of the statute.

FinCEN regulations mirror this language regarding acceptance and transmission. The relevant rule states that money transmission “means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means.”6 The statutes and regulations are clear that direct receipt and control of assets are required elements of money transmission. Indeed, this limiting factor is essential, otherwise a wide range of additional services such as internet service providers or postal carriers could inadvertently be caught in the definition of a money transmitting business since they routinely send, receive and process information and messages regarding payments.

Consequently, non-custodial crypto service providers cannot be classified as money transmitter businesses because users of such services retain sole possession and control of their crypto assets. At no point when operating or providing non-custodial services do such service providers "accept" crypto assets from their users. At all times, users retain exclusive custody and control over the private keys to their crypto assets. All transactions are signed and processed on the user’s local device without third party access.

Consistent with Congress’ intent, statutory language and existing regulations, FinCEN has consistently taken this same position in published guidance that non-custodial services are not within the scope of money transmission registration requirements. Over a decade ago, FinCEN published guidance which explained that activities which “involve neither ‘acceptance’ nor ‘transmission’ of the convertible virtual currency . . . are not the transmission of funds within the meaning of the Rule.” 7 Additional FinCEN guidance from 2019 further confirmed that the definition of “money transmitter” is anchored in the custodial function of the putative registrant with relevant factors including “where the value is stored” and “whether the person acting as an intermediary has total independent control” of the assets.8 FinCEN explicitly held that “in so far as the person conducting a transaction through the unhosted wallet is doing so to purchase goods or services on the user’s own behalf, they are not a money transmitter.”9 Contemporary analysis of this 2019 guidance by law firms clearly establishes this fact as well.10

Consequently, as the primary interpretive authority for the Bank Secrecy Act and Federal money transmitting business registration requirements, FinCEN has clearly established that non-custodial crypto asset software—where the developer or publisher of the software does not have unilateral control of user assets—are not subject to money transmitting business registration, just like existing internet service providers are not required to register when routing data packets between a customer and their bank. It is very concerning that DOJ would adopt an interpretation of this registration requirement that is contrary to another Federal agency.11 This makes it difficult for ordinary Americans to determine what their legal obligations are.

This reasoning also comports with common sense. Assets like Bitcoin may be natively digital, but they are not amorphous such as heat or electricity. Bitcoins have a clear unilateral owner at all times. If a user wishes to transfer Bitcoin to someone else, they use their private key to sign a transaction which transfers the Bitcoins to a new address. At no point in the transaction process is there uncertainty over where ownership resides. Custody and control are, therefore, the logical touchstone of where “acceptance” and “transmission” occurs on Bitcoin or other crypto networks, just like traditional assets. Analogies to heat or data transfer via USB made by the DOJ fundamentally misunderstand how this technology operates.

The DOJ should not diverge from the clear, logically sound, and well-established definition of “money transmission” established by FinCEN. Subjecting developers of non-custodial crypto asset software to potential criminal liability as unregistered money transmitters contravenes the well-established interpretation of this provision and will only serve to stifle innovation and shake confidence in the DOJ's respect for the rule of law.

We urge you to discard this flawed interpretation of Section 1960. Safeguarding the rule of law and nurturing the development of transformative technologies are not mutually exclusive, we expect that the DOJ can chart a wise course that accomplishes both.

 


Twitter/X is on fire this morning with folks mocking Elizabeth Warren over this.
 
House Financial Services Committee Ranking Member Maxine Waters (D-Calif.) and House Agriculture Committee Ranking Member David Scott (D-Ga.) – the leading Democrats on their respective committees – have sent an email to Democratic members of the House of Representatives saying they "strongly oppose" H.R. 4763, the Financial Innovation and Technology for the 21st Century Act (FIT21), but are not whipping their members against the bill Politico reported.
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FIT21 is supported by a coalition of digital assets organizations and companies, including Coinbase, Kraken, Andreessen Horowitz and 50 others, as it provides a regulatory framework for the digital assets industry, its supporters say, which is something the U.S. currently lacks.

The bill creates a definition for whether a digital asset is a security or a commodity, expands the CFTC's authority to register and regulate digital commodities, and requires the CFTC and SEC to jointly issue rules for assets not otherwise classified.


Consider this news coming on the back of the twitter bomb about the ETH ETFs. Is the tide starting to turn in DC?
 


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Mike Novogratz, CEO of Galaxy Digital, also said the latest development indicates Democrats are changing their tune on crypto in the lead up to the 2024 elections.

“But assuming, you know, the market is right, and the market is usually pretty smart, it feels like someone at the Biden White House made a call and said, guys, we can’t be the party against crypto anymore,” Novogratz said during an interview with CNBC’s Squawk Box on Tuesday. “I think that’s a seismic shift. If those things actually happen, prices are going to be much higher than here.”

Novogratz reiterated his point for clarity, saying the Democrats don’t want crypto to cost them the election.

“I am sensing a widespread shift amongst Democrats that don’t want to let crypto be a big election issue,” he said. “The crypto super PACs (Political Action Committees) have raised over $150 million, and they have targeted Sherrod Brown and Jon Tester, elections that matter dearly to Democrats in swing states, in vulnerable Senate seats.”

Novogratz stressed that “Crypto should be bipartisan. And quite frankly, for our industry to do well, it needs to be bipartisan.”

“It has been really Elizabeth Warren and a small group of people that have held the Democrats hostage on this,” he concluded. “What the Senate broadly said, Chuck Schumer being the Senate leader who voted to overturn against Elizabeth, was, enough, enough. Like, this is becoming dumb. And so I’m sensing a real shift.”


^ Finally some common sense beginning to reign in the bullshit from Elizabeth Warren.
 
^^^^^

U.S. House Approves Crypto FIT21 Bill With Wave of Democratic Support​

  • The U.S. House vote goes 279-136 to approve the Financial Innovation and Technology for the 21st Century Act with a very strong showing from House Democrats.
  • The passage of the crypto market-structure bill marks the industry's most significant legislative accomplishment in Congress.
The crypto industry recorded its biggest-ever U.S. policy win on Wednesday when the House of Representatives approved a wide-reaching bill to establish regulations for digital assets markets, recording a 279-136 vote that saw Democrats crossing party lines to support it.

More:

 
A federal judge has ordered the United States Securities and Exchange Commission (SEC) to pay roughly $1.8 million in attorney and receivership fees related to the regulator’s civil case against Digital Licensing, the firm doing business as Debt Box.

In a May 28 filing in the U.S. District Court for the District of Utah, Judge Robert Shelby signed off on an order requiring the SEC to pay roughly $1 million for attorney fees and costs and $750,000 for receiver fees and costs. The order came the same day as one dismissing the case without prejudice.

The judge cited a March ruling in which a court found the SEC “engaged in bad faith conduct” over a temporary restraining order to freeze Debt Box’s assets. The firm later filed documents with the court claiming that the commission’s information was inaccurate, leading to the threat of sanctions.

The sanctions against the SEC required the commission to cover “all attorney fees and costs arising from the improvidently entered ex parte relief.” Judge Shelby essentially ruled that all costs requested by the defendants in the case were “appropriate,” except one $649 fee.
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Great job Gary.
 
The U.S. Department of the Treasury is not attempting to ban cryptocurrency mixing services, a top official said Wednesday.

Speaking at CoinDesk’s annual Consensus conference in Austin, Brian Nelson – the Treasury’s Under Secretary for Terrorism and Financial Intelligence – addressed the Financial Crimes Enforcement Network’s (FinCEN’s) 2023 proposal to classify mixers as a “primary money laundering concern” and require virtual asset service providers (VASPs) to report any crypto transactions that involved mixing to the agency.

FinCEN’s proposal – along with an increasing number of enforcement actions by the U.S. Department of Justice against mixing services including Tornado Cash and Samourai Wallet – have been seen by many in the industry as evidence of a coming attempt to ban crypto mixing in the U.S. entirely, which the Treasury is firmly denying.
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No one with at least 2 brain cells is buying what Mr. Nelson is selling.
 
Why do we want crypto's regulated? It'd be better to just apply the 10th Amendment to it by leaving it in the realm of The People, imho.
Agreed. They are a payment method, and of course some are better than others. When some choose to use these, they are risking their money in favor of easy payment. It is like when I decided to use paypal for my ebay sales. I read all the horrible stories about paypal, but I finally signed up after taking safety measures.

Paypal has fought against the claim that they are a bank, and should not be regulated as one. How are the "crypto" currencies any different?

And what exactly is the benefit from using one of these "crypto" currencies? I do not want my financial and buying details to be public knowledge. Nor do I want Jeff Bezos to have that same information. The same for ebay. Now, what?! What is a good answer to the question?
 
Paypal has fought against the claim that they are a bank, and should not be regulated as one. How are the "crypto" currencies any different?
They shouldn't be.

And what exactly is the benefit from using one of these "crypto" currencies? I do not want my financial and buying details to be public knowledge. Nor do I want Jeff Bezos to have that same information. The same for ebay. Now, what?! What is a good answer to the question?
If ya do it right, which to be honest I'm not sure is even possible any more, no one would know if "you" even have any. I got mine for cash on a street corner using a pseudonym. Also used to be able buy at bitcoin atm's where you just stick cash in and out popped a receipt with your bitcoin on it. No ID required, and no cameras on it. It was just a small metal box on the wall of a local restaurant. Not sure if those even exist anymore. They may have been regulated out of business by now. I ain't bought any for years now.

If people woulda jumped on it back when I was talkin' it up on GIM2, all y'all could be in the same boat, but there were too many actively trying to scare people away from it back then, 'cause they was scared of it for some reason, and they grossly outnumbered me and the few others trying help members get some.

Edited to add: now everyone is gonna eventually be roped into using a cbdc instead, just like I said 8 years ago was gonna happen. If the masses had jumped on it back then, the gov wouldn't have been able to do anything about it. Now enough time has passed for it to be regulated to death.

Edited again to further add: there was one guy on Gim2 who I bought $50 worth for, and mailed him the atm receipt for it. It's now worth North of $3K. That's a 6500% increase as of today. What else has gone up that much?
 
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Why do we want crypto's regulated? It'd be better to just apply the 10th Amendment to it by leaving it in the realm of The People, imho.

It's not about "wanting it regulated". It's about wanting regulatory clarity. The Biden admin's War on Crypto - using the SEC as a litigious bulldog (you might beat the rap, but you won't beat the ride) while laws and regulations about what is legal are not settled/clear is casting a chilling effect on the entire industry (here in the USA at least). It limits investment (increases risk), drives innovation overseas (companies/developers leave the USA) and curtails the American market from access to innovations (many crypto services right now simply prohibit access to potential USA customers - the entire country is blackballed).

Agreed. They are a payment method, ...

Paypal has fought against the claim that they are a bank, and should not be regulated as one. How are the "crypto" currencies any different?
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Not all crypto are equal. It's a developing/evolving industry/technology. There are many crypto projects that are much, much more than just a payment method. Unique use cases are still developing. I've posted a bit about this subject in various threads/posts including:That list will only grow in time. This industry is still very, very young.

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If ya do it right, which to be honest I'm not sure is even possible any more, no one would know if "you" even have any. ...

It is definitely still possible. There are numerous on ramps to acquiring crypto from KYC compliant exchanges to less rigorous pay with a credit card (even pre-paid "burner" cards) and get crypto ramps to just having a private party send you some in a private exchange. Even in the case of acquiring crypto via a KYC compliant ramp, you can easily (with a hardware/self custody wallet solution like the Ledger Nano) create multiple wallets and move things around (paying a small amount of gas/transaction fees for each transaction - the price for true privacy) to break the traceable chain of custody. Services like simpleswap.io let you do this without the need for using a mixing service.
 
It's not about "wanting it regulated". It's about wanting regulatory clarity
Only clarity I want, is no regulations. It needs to be the way it was in the beginning. Ie: people doing what they want when they want with their own property. All gov does is fuck shit up.


while laws and regulations about what is legal are not settled/clear is casting a chilling effect on the entire industry (here in the USA at least). It limits investment (increases risk), drives innovation overseas (companies/developers leave the USA) and curtails the American market from access to innovations (many crypto services right now simply prohibit access to potential USA customers - the entire country is blackballed).
Imo, that just opens the door to banks, big business, etc taking it over. Ie: the same ones that fuck th People on everything else.

Anything good the People try doing for their own benefit, just ends up ruined by those types. Cryptos needs to be hands off, by the gov and their ilk. They ruin everything and are the cause of virtually every problem we face today.

There's never been a more useless and parasitical group of people than the ones who've weasled their way into running those institutions.
 
The United States Securities and Exchange Commission (SEC) will continue its regulation-by-enforcement approach to the cryptocurrency industry for as long as it can to satisfy its goal of “choking” the industry, according to crypto exchange Coinbase.

“The SEC is serious about the destruction of digital assets,” Coinbase declared in a May 31 filing with the U.S Court of Appeals in its ongoing effort to push the court to force the SEC to begin making fair rules for the crypto industry.
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... the Supreme Court of the United States issued two important cases which will likely have wide ranging impacts for Bitcoin and crypto. The decisions are National Rifle Association of America v. Vullo (NRA) and Cantero, et al. v. Bank of America, N. A. (Cantero).

In NRA, the Court addressed a critical issue impacting not only traditional advocacy groups but any disfavored, but legal, industry. This ruling draws parallels to Operation Choke Point 2.0, where U.S. regulators have allegedly been targeting crypto businesses through financial exclusion. Moreover, the recent Cantero decision sheds light on how this legal framework might impact Custodia Bank's appeal against the denial of their master account by the Federal Reserve.
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Conclusion

The Supreme Court’s decisions in NRA and Cantero both provide steps toward addressing Federal overreach related to Bitcoin, impacting both Operation Choke Point 2.0 and Custodia Bank’s access to the financial system. While NRA is more immediately useful, and I believe will be used in short order to attack aspects of Operation Choke Point 2.0, and de-banking of legal but disfavored industries and individuals, Cantero seems to suggest that Custodia is on solid ground in its appeal. But on a more general level, it further exposes the unrestrained nature of the modern administrative state that we also saw deployed against Bitcoin mining in the EIA case.
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More (details, details):


The two decisions are also discussed in their own threads here:


 

Update:

SEC to Shutter Office Behind Failed DEBT Box Crypto Lawsuit​


The judge dismissed the SEC case against DEBT Box last week, after the regulator filed for dismissal without prejudice.

The Securities and Exchange Commission's Salt Lake City office – notorious in the crypto world for its failed fraud lawsuit against DEBT Box – will shut down after seeing "significant attrition" among its staff, some of whom were pushed out over the case.

SEC lawyers Michael Welsh and Joseph Watkins resigned in April after a federal judge sanctioned them for committing a "gross abuse of power" in seeking to freeze the assets of Utah-based crypto company DEBT Box on misleading grounds. Just last week the judge dismissed that case and ordered the SEC to pay DEBT Box $1.8 million in legal fees.

More:

 
The charged political landscape around cryptocurrencies continues to get more electric as lawmakers in the House are looking to implement a House Appropriation budget that could prevent the U.S. Securities and Exchange Commission (SEC) from implementing its controversial Staff Accounting Bulletin 121 (SAB 121).
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Crypto fans rejoiced at the rare bipartisan approval achieved in both chambers of Congress, but the celebration was short-lived as President Biden vetoed the legislation late on Friday.

Numerous lawmakers, including Senator Cynthia Lummis (R-WY), vowed to continue fighting against the measure, which many in the crypto industry say will only serve to stifle innovation and put the U.S. even further behind more welcoming jurisdictions.

And it didn’t take long for the next step in the battle to emerge as FOX Business reporter Eleanor Terrett reported on Tuesday of the appearance of a new item on the docket for the House Appropriation budget bill set to be debated on Wednesday.

“Look what has found its way into a @HouseAppropsGOP budget bill that is set to be marked up at a hearing tomorrow at 8:30AM EST,” Terrett tweeted. “One of the provisions, or ‘policy riders,’ of the bill prohibits the @SECGov from using appropriated funds to implement SAB 121, as well as its controversial climate disclosure rule.”

“It also provides the SEC with just $2B in overall funding in fiscal year 2025, compared to the $2.59B requested by @GaryGensler earlier this year,” she added. “It also cuts back funding of the SEC’s ‘aggressive’ Enforcement Division by $168M.”

“I’m told the bill will likely pass on party lines tomorrow and then will have to be negotiated with any appropriation bill the Senate passes,” Terrett said. “But positive news for the SAB 121 policy rider is that many Senate Dems also voted to overturn SAB 121, including @SenSchumer, so it’s likely that the provision will be kept in when the final bill ultimately finally gets voted on.”
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Some perspective on how various forces are at work within the government with respect to crypto:
The Honorable J. Christopher Giancarlo served as the 13th chairman of the U.S. Commodity Futures Trading Commission. He also was a member of the U.S. Financial Stability Oversight Committee, the President’s Working Group on Financial Markets and the Executive Board of the International Organization of Securities Commissions. Giancarlo is also the author of CryptoDad—The Fight for the Future of Money, an account of his oversight of the world’s first regulated market for Bitcoin derivatives and the coming digital network transformation of financial services.

In this discussion we cover the current regulatory landscape in crypto, the outlook for new pieces of crypto legislation, whether the U.S. is falling behind the rest of the world, and how a Trump vs. Biden presidency will impact the industry over the next four years.
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More (long):

 
A piece of legislation with heavy implications for the digital assets sector made it through the Senate Select Committee on Intelligence's funding package recently without most in the industry – and many in Congress – apparently aware of it, but industry insiders consider its chances for survival to be limited.

A Senate bill meant to fund U.S. intelligence operations included a section borrowed from an earlier bill aimed at preventing the use of cryptocurrency to support terrorism. That provision, as written, could require a massive shift in the crypto industry toward identifying users' identities to prevent sanctions that could strangle digital assets businesses. Were it to become law, it would mark the most important U.S. crypto policy yet adopted – and all without significant debate about its merits.

This section of the intelligence funding effort would speed and automate the process to sanction "foreign digital asset transaction facilitators" – including crypto exchanges – that are linked to users who support terrorism groups.

Though the Intelligence Authorization Act cleared the committee in a unanimous 17-0 vote, its crypto section wasn't mentioned publicly nor listed among the major provisions of the bill when Sen. Mark Warner (D-Va.), the committee's chairman, announced the passage in a press release. Now, Warner's office has been setting up meetings with people in the crypto sector to talk about that section, according to three people familiar with the discussions, and the Digital Chamber, an industry lobbying group, confirmed it's among those in the talks.

The dialogue suggests the matter is still in play as the spending package advances toward wider Senate consideration, potentially within the must-pass National Defense Authorization Act (NDAA).
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