Crypto Assets: From Utopian Ideals to Political Turmoil

Editorial: Crypto Assets Have Become a Typical Tool for Political Interests

The idealism of the past has now been replaced by selfishness.

When the Qatari government proposed to replace Air Force One with a Boeing 747, President Donald Trump responded, "Why not? Only a fool would refuse free money." However, the most controversial conflict of interest in American politics is not happening in the air, but on the blockchain — the habitat of trillions of dollars in Crypto Assets.

For nearly half a year, cryptocurrencies have played an unprecedented role in American public life. Cabinet officials are investing heavily in digital assets, crypto backers are involved in the management of regulators, and industry giants have become the main source of funding for election campaigns. Exchanges and issuers pour hundreds of millions of dollars into supporting friendly legislators and cracking down on naysayers. The president's family promotes their cryptocurrency investments around the world, and a large investor in a certain meme coin gets the opportunity to have dinner with the president. The crypto assets held by the first family are worth billions of dollars and may have become the largest single source of their wealth.

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This phenomenon stands in stark contrast to the origins of Crypto Assets. When Bitcoin was born in 2009, it was seen as a utopian anti-authoritarian movement. Early adopters harbored noble ideals, hoping to completely reform the financial system, protect individuals from asset plunder and inflation, and transfer power from large financial institutions to small investors. It was not just an asset, but also a technological liberation movement.

Today, these ideals have been forgotten. Crypto Assets have not only given rise to large-scale fraud, money laundering, and other financial crimes, but the industry has also established an unhealthy relationship with the U.S. government, to a greater extent than Wall Street or any other industry. Crypto Assets have become a typical political interest tool.

This stands in stark contrast to the situation outside the United States. In recent years, regions such as the European Union, Japan, Singapore, Switzerland, and the United Arab Emirates have successfully established transparent regulatory frameworks for digital assets, without the severe conflicts of interest seen in the United States. In developing countries, government expropriation is common, inflation rates are high, and the risk of currency devaluation is severe, with Crypto Assets still playing the role that early idealists had hoped for.

At the same time, the underlying technology of digital assets is gradually maturing. Mainstream financial and technology companies are beginning to pay attention to Crypto Assets. In the past 18 months, the number of real-world assets, including private credit, U.S. Treasury bonds, and commodities, that have been "tokenized" and traded on the blockchain has nearly doubled. Traditional financial institutions are becoming the main issuers of tokenized money market funds, and Crypto Assets companies are also participating in the issuance of tokens linked to assets such as gold.

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The payment sector may be the most promising application scenario. Some companies are adopting stablecoins (digital tokens backed by traditional assets). Recently, Mastercard announced that it would allow customers and merchants to use stablecoins for payments and settlements, and the fintech company Stripe has launched stablecoin financial accounts in 101 countries, having acquired the stablecoin platform Bridge. Three years after abandoning the Diem project, Meta may be returning to this field.

This is an opportunity that cryptocurrency companies must grasp. Proponents argue that under the Biden administration, they have no choice but to do everything possible to push the industry forward in the United States. Under Gary Gensler's leadership, the SEC took a negative view of the industry, embroiling many high-profile companies in enforcement actions and legal battles. As a result, banks are afraid to provide services to cryptocurrency companies and to get involved in the crypto space, especially stablecoins. To some extent, the industry's complaints are justified. It is neither efficient nor always fair to clarify the legal status of cryptocurrencies through the courts, not Congress. There has now been a significant shift in regulatory attitude, with most cases against crypto companies dropped.

The result is that the Crypto Assets industry in the United States needs to save itself. New rules still need to be established to ensure that risks do not seep into the financial system. If politicians are unable to properly regulate Crypto Assets due to fear of the industry's electoral influence, the long-term consequences will be very harmful. The danger of inadequate protective measures is not just theoretical. The three largest banks that collapsed in 2023—SilverGate, Signature, and Silicon Valley Bank—had significant exposure to the floating deposits of the Crypto Assets industry. Stablecoins are vulnerable to runs and should be regulated like banks.

If necessary reforms are not made, the leaders of the Crypto Assets industry will ultimately regret the agreement reached in Washington. The industry largely remains silent on the conflicts of interest arising from the President's family's investment in Crypto Assets. The industry needs legislation to clarify its status and provide a more rational regulatory framework. The intertwining of the President's business interests with government affairs makes this more difficult. Recently, a Crypto Assets bill failed to pass a procedural vote in the Senate as several senators withdrew their support.

Selfish Choice

Any industry closely associated with a specific political party cannot escape the influence of fluctuations in the emotions of American voters. The crypto industry views Trump as a savior and has become a favored "political asset," indicating that it has taken sides. Crypto Assets play a new role in policy-making, but today, the reputation and fate of the industry are closely related to the rise and fall of its political backers. Crypto Assets are indeed beneficial to the Trump family, but ultimately, the benefits of this deal will only be one-sided.

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Crypto Assets industry leaps to the center stage of American politics

The investments of the Trump family, friendly regulators, and generous political donations have collectively driven this transformation.

In late April, a logistics company in Texas with a market value of only $3 million, Fr8Tech, announced plans to borrow up to $20 million to purchase TRUMP Meme coin—the cryptocurrency launched three days before Trump took office. (He had called on social media: "Join my very special Trump community. Get your $TRUMP coin now.") The company managing this cryptocurrency has just announced that the largest investors will be invited to dinner with the president. Fr8Tech CEO Javier Selgas stated that purchasing this token is an "effective way" to advocate for the trade policies the company hopes for.

In the same week, the night sky over Lahore, Pakistan was illuminated by celebratory fireworks. The Pakistan Crypto Assets Committee, established in March, is celebrating its collaboration with the World Liberty Financial Company (WLF). WLF is a company owned by Trump and his family. The company has committed to helping Pakistan develop blockchain products, convert physical assets into digital tokens, and provide consulting for the Crypto Assets industry. The details of the transaction, including financial terms, have not been disclosed. Indian media interpreted this as Pakistan's attempt to appease Trump—two weeks later, when Trump credited himself for the ceasefire in the India-Pakistan military conflict, this interpretation became particularly awkward, as many Indians believe the truce was too favorable for Pakistan.

These events indicate that change is happening in Washington. The Crypto Assets industry is in a rise period. The President, First Lady, and their children are promoting it both domestically and internationally. The regulators appointed by Trump have taken a more lenient attitude towards the industry. Investors are flocking in, and large political lobbying groups are springing up to support political candidates who advocate for Crypto Assets and attack opponents. Investors and supporters, including foreign governments, have found this to be a way to connect with influential figures. This emerging industry suddenly finds itself at the core of public life in the United States. However, the close ties with the Trump family have also made it somewhat of a partisan endeavor. Trump's enthusiasm for Crypto Assets may ultimately do more harm than good for the industry.

Historically, many industries have had close ties to political power structures. Banks, arms manufacturers, and pharmaceutical companies have long maintained influence in the corridors of power. In the late 19th century, railroad companies exerted tremendous influence over national and local politics, gaining favorable regulations, promoting prosperity, and ultimately triggering a catastrophic depression.

But no industry has been able to leap from the margins to official darling status as quickly as crypto assets. At the beginning of Trump's first term, the total value of all crypto assets worldwide was less than $20 billion, and it has now surpassed $3 trillion. When Jay Clayton was nominated to chair the SEC in 2017, crypto assets were completely unmentioned during the Senate confirmation hearing. Just in 2021, Trump held a disdainful attitude towards digital assets: "Bitcoin looks like a scam," "I don’t like it because it’s another currency competing against the dollar." The following year, when the prices of digital assets plummeted and an $8 billion fraud case occurred at a major crypto asset exchange, the industry entered a slump known as the "crypto winter," seemingly confirming his viewpoint.

Regulators also hold a negative attitude towards many Crypto Assets. Gary Gensler, the SEC chairman appointed by Biden, insists that many cryptocurrencies are actually securities and should only be traded on exchanges regulated by the SEC. The agency subsequently filed lawsuits against several large cryptocurrency trading platforms and other digital asset companies.

However, since Trump's return to the White House, those financial regulators who attempted to curb Crypto Assets during Biden's term have suddenly changed their stance, because Trump appointed staunch supporters of the industry to leadership positions. The new SEC chairman, Paul Atkins, served as co-chair of a Crypto Assets industry organization for eight years. Trump's nominee for the Commodity Futures Trading Commission chairman, Brian Quintenz, was previously the head of Crypto Assets policy at the well-known venture capital firm a16z.

The leadership changes at the SEC have led to a major shift in policy. There is now a narrower definition of which Crypto Assets fall under the regulatory scope of securities. Hester Peirce, who is in charge of the newly established crypto task force, is affectionately known in the industry as "Crypto Mom." Since Trump took office, over a dozen enforcement actions against crypto companies have been halted, including actions against major exchanges, key crypto asset issuers, and the first crypto company to obtain a state banking license. All of this has naturally boosted industry confidence: venture capital funds invested nearly $5 billion in crypto companies in the first quarter of 2025, a new high in nearly three years.

It is not uncommon for significant shifts in regulatory policy to occur when a new president takes office and appoints like-minded officials. Regulatory concepts often shift from intervention to laissez-faire when a Republican government replaces a Democratic one. However, it is unusual for the president and his family to be deeply involved in industries that benefit from deregulation.

A few months ago, the presidential family’s investment in the Crypto Assets sector is rapidly expanding. The WLF company, in which the Trump family holds a 60% stake, was established in September 2024 and launched a new stablecoin called USD1 in March 2025 (a Crypto Asset pegged to the US dollar). This token has a market value of over $2 billion, making it one of the largest US dollar-pegged Crypto Assets in the world.

Steve Witkoff, a key foreign policy advisor to Trump, is the "honorary co-founder" of WLF; his son, Zach Witkoff, is the "co-founder." Trump himself is the "chief encryption advocate," and his sons are also part of the "team." A footnote on the website warns: "Any mention or reference to Donald Trump or his family members should not be interpreted as an endorsement." A company spokesperson stated that WLF is a private enterprise with no political background, and no one from the Trump administration holds a position in its management.

In addition to WLF, Trump also owns other crypto assets. The TRUMP Meme coin saw its value soar after its launch on January 17, reaching a peak market capitalization of about $15 billion, before dramatically dropping. Companies associated with the Trump family own 80% of these tokens. First Lady Melania Trump launched another Meme coin on January 19, which also experienced a surge in value followed by a collapse.

The president also has direct financial interests in the Crypto Assets sector through the Trump Media & Technology Group (a social media company in which he owns a 52% stake). In April of this year, the company announced a partnership with a major trading platform to sell an exchange-traded fund involving digital assets and other securities (ETF). The Trump Media & Technology Group stated that it is considering launching its own encryption wallet and coin.

The volatility of these assets and the uncertainty of ownership make it difficult to accurately estimate the wealth of the Trump family associated with these investments. Crypto Assets now may constitute the family's largest single business line. The TRUMP Meme coin held by the family alone is worth nearly $2 billion, which is not far off from the total of all their properties, golf courses, and clubs.

It's not just the Trump family that has helped the crypto revival. Large electoral political action committees (PAC) have been investing heavily to promote the interests of the industry. Affiliate super PAC networks such as Protect Progress, Fairshake, and Defend American Jobs spent more than $130 million on the eve of last year's election, making it one of the highest-spending groups on the campaign trail. These organizations were all formed after the last presidential election. Fairshake, which earned $260 million in revenue last election cycle, is not only the largest PAC advocating for a specific industry, but also the largest nonpartisan super PAC of all types. By comparison, the National Association of Realtors raised only about $20 million.

Fairshake does not emphasize candidates' positions on Crypto Assets, but rather advertises issues that may enhance the support of politicians or hinder those who oppose them. It helped a Democratic woman legislator in California lose in the Senate primary while also supporting the tough-on-crime stance of a Congressman in New York. "Many industries have tried this approach. The difference lies in its single focus, which is where the real game-changing aspect is," said a spokesperson for Fairshake. "The founding strategy remains: support supporters, oppose opponents."

"This is the most blatant display of money and power I've ever seen in a legislative body," said an executive from a financial regulatory advocacy organization. Fairshake has $116 million in cash ready for the 2026 midterm elections.

The "war fund" of the crypto industry is expected to help persuade Congress to adopt its preferred policies. Most importantly, it hopes that Congress will clarify the legal status of crypto assets to prevent regulatory attitudes from wavering again in future elections. After all, the president and his appointed officials come and go, while legislation often lasts longer.

The crypto industry wants to classify most cryptocurrencies as commodities that are regulated by the Commodity Futures Trading Commission (CFTC) not the Securities and Exchange Commission (SEC). The CFTC is responsible for regulating the majority of financial derivatives transactions and is the smaller of the two regulators. For the fiscal year, the CFTC filed a budget of $399 million with 725 full-time employees, compared to the SEC's budget of $2.6 billion with 5,073 employees. The crypto industry sees the CFTC as a more lenient regulatory option.

The bill designating the CFTC as the primary regulatory agency for crypto assets was blocked in Congress last year. However, Republicans, who tend to favor light financial regulation, have controlled both houses of Congress since the beginning of this year. More importantly, many Democrats also recognize the necessity of placing crypto assets under a clearer legal framework. However, the Trump family's enthusiasm for crypto assets is making it harder for the industry to gain sufficient support in Congress.

Trump's apparent conflict of interest has sparked criticism from Democratic lawmakers. They argue that many investors do business with the Trump family or buy related crypto assets simply to curry favor with the president – which is effectively accusing Trump of peddling power. For example, after the announcement of a dinner with Trump for big investors, the price of the TRUMP Meme coin soared. In another controversial case, a government investment company in Abu Dhabi decided to use WLF's USD1 as a vehicle to invest US$2 billion in a trading platform. The use of cryptocurrencies to fund such large-scale investments is inherently unusual, and the business rationale for using brand-new, unproven cryptocurrencies is even less clear. But WLF benefited enormously: the deal catapulted USD1 from obscurity to become the world's seventh-largest stablecoin.

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On May 8, a bipartisan bill aimed at creating a clear regulatory framework for stablecoins failed to pass in the Senate. Supporters of the bill had been confident about its passage, but previously supportive Democrats began to worry that it could encourage the president to peddle influence. Two Democratic senators introduced a bill aimed at prohibiting the president, members of Congress, and senior White House officials from issuing, sponsoring, or endorsing crypto assets. Even Republican Senator Cynthia Lummis, who has consistently advocated for clear cryptocurrency regulation and is a co-sponsor of the bill, stated that Trump’s Meme coin dinner "made me hesitate."

Concerns about regulation of Crypto Assets are not limited to the connections between the president and the industry. Steven Kelly from Yale University's Financial Stability Project believes that a rapidly growing Crypto industry, regulated by small institutions that adhere to non-interventionism, could pose risks to financial stability. He points out that Crypto Assets were a core factor in the banking crisis in the United States in 2023. The banks initially affected had extensive business dealings with Crypto companies and investors, and thus were severely hit by the Crypto winter. When worries about their losses evolved into a bank run, panic quickly spread to the broader financial system. Critics argue that normalizing the use of unstable Crypto Assets will inevitably inject greater risks into the financial system.

In public, Crypto Assets supporters remain optimistic, believing that the industry will receive supportive legislation. However, privately, some industry leaders express criticism of the president's encryption ventures. They are concerned that the industry’s image as a tool for the president to sell influence will make it difficult for legislators to support favorable laws. Notable Crypto Assets investor and Trump supporter Nick Carter is one of the few willing to openly state that the economic interests of the president's family in the Crypto Assets industry are hindering relevant legislation. He stated that the government reacted negatively to such criticism: "When I brought this up, government officials contacted me expressing their dissatisfaction." However, attempts to prevent people from stating obvious facts are unlikely to succeed. "Conflicts of interest do exist," Carter said, "and no one can really deny that."