The US Crypto War Is Far from Over—It’s Just Reframing Battlefields

For years, the US Securities and Exchange Commission (SEC) has employed a heavy-handed “regulation by enforcement” approach, casting a long shadow over the crypto landscape. The absence of a transparent regulatory framework has driven companies offshore, undermined innovation, and compelled industry-wide calls for overhauling.  

However, with a new administration, a named crypto czar, and sweeping federal legislation on the horizon, many believe that the so-called “war on crypto” is finally dying down. But that assumption could be sooner than expected. 

A Federal Shift Toward Crypto Acceptance 

In a turnabout, Donald Trump, formerly an outspoken crypto critic, is the first U.S. president to endorse the industry openly. His administration has taken aggressive actions, such as appointing David Sacks as the country’s first “Crypto Czar,” establishing a President’s Working Group on Digital Asset Markets, and placing interim SEC and Commodity Futures Trading Commission (CFTC) chairs who stated they are receptive to digital assets. 

While these steps mark a warmer federal approach, the fight is far from over. State regulators and Attorneys General—driven by public indignation at fraud and financial instability—are apt to push aggressive regulation. 

States Take Up Where the SEC Left Off 

While the SEC recedes, state regulatory agencies such as the New York Department of Financial Services (NYDFS) are relentless. NYDFS just received a $37 million payment from a crypto lending firm, which shows its eagerness for aggressive enforcement. Other jurisdictions are following suit.  

California’s recently signed Digital Financial Assets Law gives its Department of Financial Protection and Innovation sweeping powers to oversee digital assets. Illinois legislators are otherwise discussing the Digital Assets and Consumer Protection Act, enabling the state to oversee any crypto company that does business with Illinois residents.