While the digital asset operator sector might not get the Federal Reserve interest rate cut it seeks, nearly every other aspect of this business is going its way.
The BTC token’s price has been on a downward trajectory all week as the sector awaits Friday’s speech by Federal Reserve Chairman Jerome Powell. Despite serious pressure by President Donald Trump to cut interest rates, Powell appears to be of the opinion that cutting rates wouldn’t be prudent given grim inflation and unemployment figures.
On August 14, the BTC token hit a new all-time high of $124,128, but that price was struggling to stay above $112,000 on Thursday, as nervous traders appeared to be in a ‘sell the rumor’ mood ahead of Powell’s speech.
As Powell and the rest of the Fed’s seven-person Board of Governors convened at their traditional Jackson Hole, Wyoming hideaway, the digital asset sector gathered about an hour south at a confab called the Wyoming Blockchain Symposium.
The invited speakers included Paul Atkins, chair of the Securities and Exchange Commission (SEC), who used his appearance to continue his agency’s trajectory of disavowing virtually any responsibility for overseeing digital assets. Discussing the Howey test that the SEC has used for decades to determine whether an asset is a security, Atkins said “there are very few, in my mind, tokens that are securities.”
Atkins added the caveat that “it depends on what’s the package around [an asset] and how that’s being sold … that’s how we’re going to be proceeding … our goal is to set, you know, really firm and helpful guidelines that can be changed later … we can be flexible … as the technology develops.”
The SEC recently unveiled Project Crypto, its comprehensive blueprint for how the regulator plans to address digital assets going forward. (TLDR: do what you want, you crazy crypto kids.) Following his Wyoming appearance, Atkins tweeted the need to “craft a framework that future proofs the crypto markets against regulatory mischief.”
Fed govs sing crypto’s praises
Also attending the Wyoming shindig were two Federal Reserve governors, Michelle Bowman and Chris Waller.
Bowman, who in June took on a new role as the board’s vice-chair for supervision, gave a solo address in which she said the world is undergoing “what appears to be a seismic shift in the way we think about money, value and the fabric of our financial system.”
Bowman spoke of the potential benefits of tokenization, saying “we could see a tipping point where the processes themselves are well established and legal frameworks have been updated to permit a wider range of activities relying on that new technology and tokenized asset transfers become more of a market standard.”
Bowman said banking regulators were looking to remove “supervisory impediments that have stood in the way of bank relationships.” Bowman is “committed to outreach that enhances my understanding of industry preferences, challenges and better ways to engage with both developers and adopters.”
Claiming there’s “really no replacement for experimenting and understanding how ownership and the transfer process flows,” Bowman suggested lifting prohibitions on Fed staffers personally holding digital assets. Bowman said such limits “may be a barrier to recruiting and retaining staff with necessary expertise.”
Waller’s speech focused on payments innovation, assuring attendees that there is “nothing to be afraid of when thinking about using smart contracts, tokenization, or distributed ledgers in everyday transactions.”
Waller said the Fed was “conducting technical research on the latest wave of innovations, including tokenization, smart contracts, and AI in payments.” Waller said it was important for the Fed “to understand trends in payments technology so that we can continue to support private sector firms that leverage our infrastructures.”
Waller also heralded the rise of stablecoins, saying they “have the potential to maintain and extend the role of the dollar internationally” and to “improve retail and cross-border payments.” Minutes from the Fed’s July meeting show stablecoins actually came up for discussion by the Board, apparently because they “warranted close attention.” We’ve come a long way, baby.
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DOJ says coin mixers are cool
On Thursday, two federal agencies issued announcements that appeared to leave even fewer guardrails on digital asset operators’ behavior.
First, the Department of Justice (DOJ) sent Acting Assistant Attorney General Matthew Galeotti to Wyoming to address the American Innovation Summit. The summit was put on by a new non-profit advocacy group called the American Innovation Project, whose members include all the usual crypto suspects.
Galeotti said he was sent by Deputy Attorney General Todd Blanche to discuss the DOJ’s new “focus on even-handed enforcement of the law that allows good actors in the digital asset industry to continue to flourish, while also ensuring bad actors who misuse this technology are held responsible.”
We’ll skip to the most salient point of Galeotti’s speech, namely, that when it comes to software developers who create products that might be used by bad actors to further the latter’s criminal activity, the DOJ’s view is that “merely writing code, without ill-intent, is not a crime.”
This is music to the ears of crypto devs who were alarmed by the recent verdict in the case of Roman Storm, co-founder of the Ethereum-based coin mixing service Tornado Cash. On August 6, Storm was found guilty of conspiracy to operate an unlicensed money transmitting business, while the jury deadlocked on charges of money laundering and aiding the violation of United States economic sanctions.
Galeotti cautioned that the DOJ will “continue to prosecute those who knowingly commit crimes—or who aid and abet the commission of crimes—including fraud, money laundering, and sanctions evasion.”
But he clarified that “to be guilty of aiding and abetting a crime, one has to intend to aid the commission of an underlying crime. It requires specific intent. So does conspiracy. Therefore, if a developer merely contributes code to an open-source project, without the specific intent to assist criminal conduct, aid or abet a crime, or join a criminal conspiracy, he or she is not criminally liable.”
Putting a finer point on things, Galeotti said the DOJ “will not charge regulatory violations in cases involving digital assets—like unlicensed money transmitting under 1960(b)(1)(A) or (B)—in the absence of evidence that a defendant knew of the specific legal requirement and willfully violated it.”
“Where the evidence shows that software is truly decentralized and solely automates peer-to-peer transactions, and where a third party does not have custody and control over user assets, new 1960(b)(1)(C) charges against the third-party will not be approved.”
The DOJ’s prosecution of Storm was launched when Joe Biden was president, and America’s top cops have yet to indicate whether or not they intend to pursue a second prosecution of Storm on the other charges. While Gaelotti never mentioned Storm by name, it definitely seems as if the developer can rest easy on that score.
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OCC lets Anchorage off the hook
Thursday’s other announcement came from the Treasury Department’s Office of the Comptroller of the Currency (OCC), which lifted the consent order against crypto custodian Anchorage Digital. Anchorage, the only digital asset operator to date to receive a U.S. national bank charter, was hit with the order in 2022 after the OCC determined that Anchorage’s compliance program fell well short of the anti-money laundering requirements of the Bank Secrecy Act.
The August 18 order terminating the consent order doesn’t say much beyond the fact that the OCC now “believes that the safety and soundness of [Anchorage] and its compliance with laws and regulations does not require the continued existence of the Order.” So, as you were.
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Winklevii breaking their bank for Trump
Shifting gears, this week saw the launch of the Digital Freedom Fund (DFF) political action committee (PAC), a pro-Trump group funded with 188.5 BTC worth $21 million from Cameron and Tyler Winklevoss, co-founders of the Gemini digital asset exchange.
Unlike the Fairshake PAC, which purports to spend money on behalf of pro-crypto candidates regardless of their party affiliation, the DFF is unabashedly pro-Republican. On August 20, Tyler tweeted that DFF’s mission is “to help realize President Trump’s vision of making America the crypto capital of the world.”
DFF will “identify and support champions of President Trump’s crypto agenda in primary races and the [2026] midterm elections … if the Republicans lose either the House or Senate … Democrats will have power to slow down and interfere with President Trump’s agenda.”
DFF will also fight for a “Bitcoin & Crypto Bill of Rights,” along with “thoughtful” market structure legislation, and legislation that “protects software developers and publishers” and “protects and promotes Open Banking,” and so on.
The message is full of praise for Trump, even going as far as to close with the president’s signature signoff, “thank you for your attention to this matter!” Subtle.
Tyler’s message suggests that maintaining Republicans’ congressional majorities will take precedence over whether a Democratic candidate might be more pro-crypto than their GOP opponent, which could cause some friction with the crypto sector’s less partisan advocates.
The Winklevii donated nearly $5 million to Fairshake during the 2024 election cycle, but the brothers appear to want a greater say in how their money is spent. The bulk of Fairshake’s funding comes from the Coinbase (NASDAQ: COIN) digital asset exchange, Ripple Labs, and the Andreessen Horowitz (a16z) venture capital group.
Fairshake’s biggest scalp in the 2024 campaign was crypto critic Sen. Sherrod Brown (D-OH), who chaired the Senate Banking Committee but lost his race to challenger Bernie Moreno after Fairshake and related PACs plowed $40 million into the race to oust Brown.
Sen. Tim Scott (R-SC) addressed Brown’s defeat at the Wyoming confab, saying, “thank you to all of y’all for getting rid of” Brown. Scott encouraged the crypto sector to “fire” other legislators “that are in your way,” offering a rather bleak vision of cash-and-carry democracy in action, but never mind.
Brown has thrown his hat back into the ring for 2026, vying to unseat Jon Husted, who assumed Ohio’s other senate seat after J.D. Vance became vice president. Brown’s campaign charged out of the gate this week, raising $3.6 million in the first 24 hours after officially announcing his candidacy. In a sign of strong grassroots support, Brown’s team said 95% of the donations were under $100. Your move, crypto…
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Crypto goes to bat for Quintenz
DFF and Fairshake aren’t the only examples of pro-Trump largesse the Winklevii have dispensed. The brothers anted up $844,600 apiece in two individual donations to Trump’s 2024 campaign, sponsored a Trump inaugural party in January, and most recently contributed $4 million to Trump’s MAGA Inc PAC.
Since Quintenz had two scheduled Senate committee confirmation hearings cancelled at the last minute, it seemed like the Winklevii had gotten their way. But on August 19, Crypto in America journo Eleanor Terrett tweeted that Quintenz had been “reaching out to members of the crypto industry for meetings” and that leading blockchain trade groups were prepping a “letter of support” to Trump that sang Quintenz’s praises.
That letter surfaced the next day, showing the Blockchain Association, Crypto Council for Innovation, DeFi Education Fund, Digital Chamber, and other groups writing to Trump, “united in respectfully reiterating our strong support for your nomination” of Quintenz. The groups added that Quintenz’s “prompt” confirmation is “essential” to achieving Trump’s crypto agenda.
Each of the groups cites knowledge of Quintenz’s “deep expertise, sound judgment, proven leadership, and integrity,” saying he will bring “much needed practical and deep technical expertise” to digital asset oversight. Quintenz is “quite simply, the right person at the right time to lead the CFTC.”
If nothing else, this sets up a highly public test of the Winklevii’s clout—or lack thereof—with Trump.
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Market structure plans shaping up
Speaking on Day 2 of the Wyoming crypto confab, Sen. Cynthia Lummis (R-WY) said she “hopes” to have a finished digital asset market structure bill on President Trump’s desk for signing by Thanksgiving (Nov. 27). Should those Turkey Day hopes be dashed, Lummis nonetheless expects Congress to get the job done “before the end of the year.”
While the Senate Banking Committee has released a 35-page discussion draft of its market structure legislation, Lummis suggested the Senate would use the CLARITY Act, which passed the House of Representatives in July, as “the base bill.” Lummis noted that CLARITY had enjoyed significant bipartisan support in the House, and she wanted to “honor the House’s work.”
Sen. Scott, who chairs the Banking Committee, told the Wyoming attendees that he expects 12-18 Democratic senators to support the GOP’s market structure bill. Senate Dems have offered their critiques of the discussion draft, including their desire to see limitations put on Trump’s numerous crypto ventures.
This view was echoed by Rep. Angie Craig (D-MN), who told the Wyoming attendees that it was “no secret that my side of the aisle would prefer not to see any President—I won’t name one—participating in this market while a sitting president unless those assets are in a blind trust.”
Craig called the Trump family’s crypto ventures “the elephant in the room,” and the GOP’s refusal to do anything to limit those operations was “a stumbling block to get more Democrats to support the legislation.” Despite those concerns, Craig said the fact that so many Americans were now involved with digital assets gave legislators “the responsibility to step up and creates rules of the road for our constituents.”
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USD1 mints, preps Coinbase debut
That’s a natural segue into the news that the Trump Organization’s corporate website has finally begun featuring the family’s decentralized finance (DeFi) project World Liberty Financial (WLF) in its list of operations.
On August 20, the market cap of WLF’s dollar-denominated USD1 stablecoin surged by ~10% ($205 million), boosting its cap to over $2.4 billion. The surge dovetailed with the HTX exchange’s launch of its new Stablecoin Earning Zone, which offers users “yields of up to 20%.” This is in no way the least bit suspect, given that the interest rate on 10-year U.S. Treasury bills is currently under 4.3%.
HTX was the first exchange to list USD1 after the token’s launch this April. HTX is owned by Justin Sun, founder of the TRON blockchain and a major supporter of President Trump’s crypto projects. USD1 is listed among the dollar-based stablecoins eligible to participate in HTX’s new ‘zone,’ although there’s a “maximum subscription amount” of $1 billion for all you USD1 whales out there.
USD1 got a further boost on August 21 when Coinbase announced that USD1 had been added to its ‘roadmap,’ the process by which tokens are added to the exchange for offering to customers. For some perspective, August 20 saw Coinbase make Useless Coin (USELESS) available to customers after it successfully navigated this roadmap. For what it’s worth—and that ain’t much—USELESS is down nearly one-fifth over the past 24 hours.
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WLF proxy drama
Finally, last week saw WLF transfer 3.58 billion of its WLFI tokens to digital asset custodian BitGo, which also custodies the fiat reserves backing USD1. It was the largest WLFI transfer in seven months and came around the time that WLF announced its $1.5 billion deal with Nasdaq-listed ALT5 Sigma Corporation (NASDAQ: ALTS) that will see ALT5 acquire 7.5% of the total supply of WLFI for its ‘treasury.’
Bloomberg recently profiled some of the investors who plowed into ALT5 following its WLF announcement, including Steve Cohen’s Point72 Asset Management (4% stake) and ExodusPoint Capital Management (4.75%). But it’s ALT5’s executive ranks that are now drawing closer scrutiny.
Earlier this week, The Information reported that the SEC was probing Jon Isaac for allegedly inflating the company’s earnings and insider trading involving its shares. The SEC has yet to make any statement regarding this report but ALT5 was quick to tweet that it was unaware of any SEC probe and that Isaac “is not—and never was—the President of ALT5 Sigma and he is not an advisor to the company.”
The same day, Isaac tweeted his own denial of the reports that he was ALT5’s president or under any SEC investigation. Isaac said he “took over ALT5’s predecessor company [JanOne], years ago, in a hostile takeover.” Isaac added that he owns “over 1 million shares in ALT5” and “continue[s] to buy stock daily.” Isaac claimed the reports “appear to contain significant factual errors regarding my role and current regulatory status.”
An SEC filing from this March shows that, in March 2024, ALT5 “entered into a two-year Consulting Agreement” with Isaac, for which he was to receive 200,000 restricted shares of ALT5’s common stock. Isaac’s responsibilities included strategic financial advice, sales and business development advice, and “weekly update calls with management to align on progress of objectives and goals.”
JanOne rebranded as ALT5 Sigma in July 2024, shortly after its “strategic realignment” as a fintech firm following its acquisition of ALT5 several months earlier. At the time, JanOne’s CEO was Tony Isaac, father of Jon, and ALT5 still lists Tony Isaac as one of its directors, with Tony’s involvement dating back to May 2015.
Jon Isaac’s denial tweet tagged WLF/ALT5 CEO Zach Witkoff as well as the president’s two sons, WLF co-founders Don Jr. and Eric. If Isaac was hoping for a show of support from this trio, he was left hanging.
If The Information’s report is true, this would be the second run-in that Jon Isaac has had with the SEC. In 2021, he was named in a financial and disclosure fraud complaint involving backdated contracts and overstated earnings. Isaac and his fellow defendants denied the charges but the suit remains unresolved.
ALT5 closed Thursday’s trading at $5.51 (-6.4%), about where it was before the WLFI hoopla kicked off last week.
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Watch: Digital Asset Recovery takes token recovery seriously
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Source: https://coingeek.com/tokens-tank-but-future-bright-for-us-crypto-operators/