The Chopping Block• Jan 25, 2025• 1:00:50Interview

Crypto as a Public Good: The Case for Open and Free Blockchain Tech – The Chopping Block

From The Chopping Block

Peter•Executive Director, Coin Center

Executive Summary

The new Trump administration is signaling a significant pro-crypto policy shift, starting with an executive order that revokes Biden-era policies, prohibits CBDCs, and establishes a new digital assets working group.
Key regulatory battles are shifting in favor of the crypto industry, evidenced by the SEC's rescission of SAB 121 and a Fifth Circuit Court ruling against OFAC's sanctions on Tornado Cash.
A primary focus for advocacy group Coin Center is the ongoing legal fight to protect non-custodial software developers from being classified as money transmitters, a battle being fought in the courts (Tornado Cash, Samurai Wallet) and through proposed legislation.
There is cautious optimism for achieving regulatory clarity through multiple avenues—executive action, new congressional committees, and the judiciary—though risks of poorly implemented policy remain.

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Concerns Raised

Ongoing DOJ prosecutions of non-custodial software developers under a broad interpretation of money transmission laws.
The risk of well-intentioned but poorly implemented pro-crypto policies creating new, unforeseen problems.
Uncertainty over how the SEC will function and what rules it will create before a new chair is confirmed.

Opportunities Identified

A new, crypto-friendly administration and Congress can pass comprehensive market structure legislation.
The new Senate Digital Assets Subcommittee, led by advocates, can proactively address industry-crippling issues like banking access.
Favorable court rulings, like the Fifth Circuit's Tornado Cash decision, can be used as precedent to protect developers' rights.
The SEC, under new leadership, may establish clearer, more reasonable paths for token registration and decentralization.

Key Themes

A New Era of US Crypto Policy

The discussion centers on the "tectonic shifts" in policy under the new Trump administration, which has immediately begun reversing the previous administration's more aggressive stance. This includes a new executive order, the pardon of Ross Ulbricht, and the appointment of pro-crypto figures to key roles, signaling a more favorable environment.

This political realignment could fundamentally alter the regulatory landscape for crypto in the United States, moving from an era of enforcement-led regulation to one that potentially fosters innovation and provides clearer rules.

Protecting Developer Freedoms

A core concern is the legal jeopardy faced by developers of non-custodial, open-source software. The DOJ's prosecution of developers behind Tornado Cash and Samurai Wallet for unlicensed money transmission is highlighted as a critical threat to innovation and civil liberties in the space.

If writing and publishing code is treated as a regulated financial activity, it could have a chilling effect on open-source development, pushing talent and innovation out of the U.S. and undermining the core principles of decentralized technology.

The Battle for Regulatory Clarity

The episode details the ongoing struggle to define which agencies regulate crypto (SEC vs. CFTC) and under what rules. Key developments like the rescission of the SEC's SAB 121 and the creation of a new Senate Digital Assets Subcommittee are seen as positive steps toward establishing a coherent legal framework for the industry.

Lack of clarity has been a major impediment to the industry's growth and institutional adoption in the U.S. Establishing clear jurisdictional lines and rules is essential for businesses to operate with certainty and for the U.S. to remain a competitive hub for digital assets.

The Role of Advocacy and Litigation

The conversation underscores the importance of organizations like Coin Center in defending the technology's core principles through policy education and strategic litigation. The successful Fifth Circuit challenge to OFAC's Tornado Cash sanctions is presented as a landmark victory achieved through persistent legal advocacy.

As a nascent industry facing powerful incumbent systems and government agencies, strategic legal challenges and consistent policy advocacy are crucial tools for shaping favorable law and precedent, ensuring the long-term viability of crypto.

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