A New Era for Crypto Policy: The Need for Retail Representation
Last week, President Trump took a significant step toward reshaping the future of digital assets by establishing a Crypto Council led by investor and entrepreneur David Sacks. This Executive Order, coupled with the recent reversal of SAB 121 – an ill-conceived policy that made it prohibitively difficult for banks to custody crypto assets – demonstrates that the new administration is serious about removing barriers to crypto adoption.
This council represents a golden opportunity to undo significant damage inflicted on the crypto industry during the Biden Administration. Instead of regulatory hostility, Trump’s Crypto Council can help chart a path toward innovation, responsible oversight, and, most importantly, the protection of the customers and retail investors who helped him win the election.
While the involvement of major crypto companies like Coinbase, a16z, and Ripple is crucial, the council should not be composed solely of industry giants. For too long, retail investors, the backbone of the crypto revolution, have been ignored, exploited, or outright attacked, not only by the Sam Bankman-Frieds of the world but by the very regulatory agency designed to protect them. If the new administration is serious about fostering fair and effective crypto policy, it must include a voice for the everyday American.
The Need for Retail Representation
During the past four years, the Biden administration, through officials like Senator Elizabeth Warren and former SEC Chair Gary Gensler, waged an unfair war against the crypto industry. Chokepoint 2.0 proved to be a coordinated effort to cut crypto companies off from the banking system, restricting access to essential financial services. It crippled innovation in the U.S., sending customers and retail investors offshore into the hands of Bankman-Fried. Gensler’s regulation-by-enforcement approach left entrepreneurs and investors alike navigating an unpredictable and hostile regulatory environment.
I witnessed firsthand how these reckless policies harmed retail investors. As an attorney working pro bono, I represented 75,000 XRP holders in the Ripple case and submitted the thousands of affidavits from retail investors ultimately cited by Judge Analisa Torres in her landmark decision. I also served as amicus counsel in other critical cases, including LBRY and Coinbase, standing up for those who lack the resources to lobby Congress or fight back against government overreach.
The newly established Crypto Council must not make the mistake of becoming an exclusive club of industry elites. It must include advocates for retail investors, people who have been in the trenches and understand the real-world consequences of policy decisions. It is one thing to speak in abstract terms about market structure and innovation. It is another to stand alongside individuals whose financial futures depend on fair and transparent regulations.
A Legislative Blueprint for Success
While the national conversation has recently focused on things like a Strategic Bitcoin Reserve, this administration has a once-in-a-generation opportunity to pass meaningful crypto legislation that fosters growth while ensuring investor protection. It must act quickly because the midterm elections will be here before we know it.
Several key priorities must be addressed:
1. Stablecoin Legislation. Create a framework that drives demand for U.S. Treasuries while reducing friction and fees for cross-border payments, allowing stablecoins to serve as reliable financial tools for global commerce and inclusion.
2. Market Structure Reform. Grant clear authority to the CFTC to oversee digital assets while establishing definitive guidelines for when a token constitutes a security and thus, governed by the SEC.
3. Centralized Exchange Oversight. Require centralized exchanges to segregate customer funds, preventing any commingling with corporate assets; introduce legislation to ensure customer funds are legally protected in bankruptcy proceedings, never to be treated as assets of the bankrupt entity; mandate exchanges to maintain 100% reserves; ban the rehypothecation of customer funds, preventing hidden risks and contagion in the industry; and, imposing limits and safeguards on leverage trading to prevent retail investors from being wiped out by excessive risk.
5. Tax Policy Reform. Reverse outdated policies that treat the use of crypto as currency as a taxable event. Small, everyday transactions should not trigger capital gains taxes.
A Call for Inclusive Governance
The Crypto Council will only be as effective as the voices it includes. If it becomes just another gathering of industry executives and venture capitalists, it will fail in its mission to create fair and inclusive policy.
Retail investors and those who use digital assets for payments, remittances, savings, and investment deserve a seat at the table. They are not only stakeholders in this industry but also voters who played a pivotal role in electing this administration into office. Their interests must be prioritized, not just the interests of powerful institutions.
Conclusion
This is our chance to build a framework that fosters trust, fairness, and economic opportunity while embracing an America First Agenda. The newly established Crypto Council must include retail investors and those who have been affected by the industry’s growth. Only by doing so can we create a fair and inclusive policy that benefits all Americans.
FAQs
Q: What is the purpose of the Crypto Council?
A: The purpose of the Crypto Council is to establish a framework for digital assets that promotes innovation, responsible oversight, and the protection of retail investors.
Q: Who should be included in the Crypto Council?
A: The Crypto Council should include a diverse group of stakeholders, including retail investors, entrepreneurs, industry executives, and government officials.
Q: What are the key priorities for crypto legislation?
A: The key priorities for crypto legislation include stablecoin legislation, market structure reform, centralized exchange oversight, and tax policy reform.
Q: Why is it important to include retail investors in the Crypto Council?
A: It is important to include retail investors in the Crypto Council because they have been ignored, exploited, or attacked by the very regulatory agency designed to protect them. They deserve a seat at the table to ensure their interests are prioritized.
Q: What is the impact of Chokepoint 2.0 on the crypto industry?
A: Chokepoint 2.0 has had a devastating impact on the crypto industry, crippling innovation in the U.S. and sending customers and retail investors offshore into the hands of foreign companies.
Q: What is the significance of the Trump Executive Order?
A: The Trump Executive Order demonstrates the new administration’s commitment to removing barriers to crypto adoption and creating a more favorable regulatory environment for digital assets.
