State of Crypto: What the Crypto World Should Watch for in the Biden Era

The incoming president has already announced he would tap pro-crypto, pro-regulation Gary Gensler to lead the SEC, but other issues remain.

AccessTimeIconJan 19, 2021 at 2:10 p.m. UTC
Updated Sep 14, 2021 at 10:58 a.m. UTC

Hello and welcome to State of Crypto, a CoinDesk newsletter examining the intersection of cryptocurrency and government. I’m your host, Nikhilesh De.

In this week’s debut issue, I take a look at some of the key topics and stories I expect to see this year, a day ahead of the inauguration of President-elect Joseph R. Biden and as the Democratic Party takes control of both houses of Congress. 

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A new administration

Key narrative

Former Vice President Joe Biden is set to take the top office in the U.S. tomorrow. His nominees for federal office will shape crypto policy in the country for years to come. And once again, the same major party controls Congress as well as the presidency, which means a unified economic and regulatory agenda may be implemented.  

Why it matters

  • The U.S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and Office of the Comptroller of the Currency (OCC) will all see a change in leadership. Next year, so will the Federal Reserve.
  • The SEC is suing Ripple Labs and two executives on allegations they sold XRP in unregistered securities sales for over seven years, which has implications for companies that didn’t conduct initial coin offerings but may have still sold tokens.
  • The Financial Crimes Enforcement Network (FinCEN) is considering a number of rules that bring crypto transactions under closer scrutiny.
  • The OCC has issued a number of interpretative letters over the past year under an acting head that powerful Dems on the Financial Services Committee already want overturned.
  • Congress will consider how it can implement new real-time payments services and boost financial inclusion this year, targeting two goals that the crypto community has long discussed. This is a conversation the industry wants to participate in.
  • Democrats are furious at Republicans who they think helped incite the attempted Capitol insurrection in January, and that could have implications for crypto-friendly legislation spearheaded by Representatives who objected to the Electoral College votes.

Breaking it down

Let’s take things in order. 

Biden announced Monday he would tap former Commodity Futures Trading Commission Chair Gary Gensler to head the SEC. This is important for a few reasons. For one thing, Gensler understands crypto and blockchain. He’s not adored by Wall Street and it’s doubtful he’ll create a regulatory regime that the crypto industry will love, but at least there are reasonable chances of getting a clear regulatory structure. Plus, his fellow CFTC alum Jeffrey Bandman believes he may approve a bitcoin exchange-traded fund.

As far as litigation goes, I would be surprised if the SEC suit against Ripple was dropped. We are in the early stages of this litigation. While Ripple CEO Brad Garlinghouse has said previous attempts at negotiating a settlement failed, that doesn’t mean we won’t see a settlement before the court case ends.

I haven’t seen anything on who Biden might tap to head the CFTC, and the OCC's new chief hasn't been announced.  Currently the CFTC’s Heath Tarbert plans to step down from the chair role, while the OCC’s Brian Brooks left last week. The chances of having a crypto-savvy trifecta leading the three agencies are low. It’s also worth watching the Federal Reserve and Federal Deposit Insurance Corporation for how they approach the question of stablecoins and insurance for banks touching on crypto.

FinCEN: A question mark

As of my writing this, the domestic money laundering watchdog has extended the comment period on a controversial rule proposal that would require crypto exchanges to record name and address info for transactions aggregating over $3,000 per person per day that go to private wallets (also referred to as unhosted wallets, or self-hosted wallets, or just wallets). The industry wasn’t wild about this rule; it could break decentralized finance smart contracts (which have neither names nor addresses), create potential honeypots of information (remember last year’s headlines about Treasury/FinCEN being hacked and private files released?) and result in a massive burden for exchanges. Coinbase alone expected the new rule would require it to file some 7,000 reports per day. 

Treasury Secretary Steven Mnuchin was reportedly the main government official pushing the rule, and with Janet Yellen taking over that role it’s hard to know if this rule will be modified, yanked entirely or implemented. Yellen hasn’t commented on bitcoin since 2018, when she dismissed it in some public remarks. But as Fed Chair she indicated she was against heavily regulating the industry.

What’s really interesting about FinCEN’s extension of the comment period is it bifurcated the different parts of the rule. One aspect, which FinCEN said was a typical currency transaction report rule (i.e., the $10,000 reporting requirement), gets just a further 15 days. However, the record-keeping and counterparty detail is seeing a 45-day extension due to how “complex” the issue is. This was the part that raised the most ire among industry participants, so I imagine they’ll welcome the longer time period to discuss this with the regulators. Also worth watching: The thresholds rule and offshore reporting rule FinCEN brought up near the end of last year.

OCC: Brooks’ legacy 

The OCC’s in an interesting position. On the one hand, this banking regulator just granted a national trust charter to Anchorage, converting it from a South Dakota trust company to a federal one, effectively making it the first crypto-native national bank. While it doesn’t yet have benefits like FDIC insurance, the company told my colleague Ian Allison that is absolutely on the menu. Granting this charter is the capstone of Brooks’ tenure at the regulatory agency, which lasted all of eight months and also included a handful of interpretative letters that sought to define how national banks could interact with the crypto space. 

The attention Brooks paid to crypto guidance angered several House Democrats, who asked him to focus more on pandemic and economic relief late last year. House Financial Services Committee Chair Maxine Waters (D-Calif.) went a step further, writing an open letter to Biden asking him to rescind all recent rulemaking and guidance under the Trump era, which would include all of the OCC letters. 

The charter likely cannot be easily revoked though, and while Brooks may have sped the publication of these letters, Senior Deputy Comptroller Jonathan Gould told me last year that the agency had already been looking into much of its guidance over the last few years, a statement Brooks echoed at a public seminar last week. In other words, despite what some lawmakers might want this guidance might be here to stay. Whether any bank acts on it is another question entirely.

Meanwhile, Politico is reporting Biden might tap Professor Mehrsa Baradaran of the University of California, Irvine, or Dean Michael Barr of the University of Michigan Ford School of Public Policy to succeed Brooks. Baradaran has testified on crypto multiple times in Congress, while Barr joined Ripple's board of advisers in 2015.

Congress: Bringing back real-time payments

Let’s get to the really interesting bits: Sen. Sherrod Brown (D-Ohio) is going to run the Senate Banking Committee for the next congressional session, and one focus will be on real-time payments and how to implement them, as well as bringing the financially excluded onto payment rails. An idea being tossed around is postal banking, where post offices (which are plentiful) are able to provide certain financial services. Rohan Grey, a legislative adviser who helped create the STABLE Act, said FedAccounts will likely receive a lot of attention. Brown himself mentioned the concept during a virtual media availability. “The Fed will administer, not subsidize, a no-fee account. It can be done online, it can be done at post offices … you can get access perhaps at a small bank in your neighborhood,” he said of the idea.

One common perception around crypto is that proof-of-work networks like Bitcoin are incredibly energy intensive and are primarily powered by oil or coal plants. Industry participants say hydroelectric and other forms of renewable energy sources are used instead. Either way, regulators like the New York Department of Financial Services and CFTC are warning their regulated firms to be mindful of the environmental costs of their services. Crypto miners in the U.S. in particular may see new requests or regulations heading their way.

The other major storyline to watch out for is how exactly Congress will proceed in the coming weeks and months. We all saw the mob breach the U.S. Capitol building in January, followed by several Republican senators and representatives objecting to accepting certified Electoral College votes from Arizona and Pennsylvania. Several members of the Congressional Blockchain Caucus gave speeches and voted against accepting the votes – essentially disagreeing with consensus, to use a rough crypto analogy. Punchbowl News reported that some Democratic lawmakers and aides are considering freezing the objectors out of parts of the legislative process. 

This could mean bills introduced by blockchain proponents including Rep. Warren Davidson (R-Ohio), such as the Token Taxonomy Act, might go nowhere if they’re introduced or reintroduced this year. Kristin Smith, executive director of the Blockchain Association, said the “political tensions right now are incredibly high,” and noted that “there’s currently a lot of pressure on Democrats to stop working across the aisle with anyone who voted the other way” last week, though she expects this to subside as time moves on. “The Democrats may have the White House, the House and the Senate today but they won’t always be on that side of things and they’ll want to work across the aisle when they’re in the minority as well,” she said. “I’m hopeful we’ll return to seeing some bipartisanship.”

Speaking of the insurrection, Twitter banned outgoing President Donald Trump, as did other social media firms. Big Tech’s role in society was already going to be a question for Congress, but after deplatforming the U.S. president, expect those conversations to take on a new level of importance. Also important, but perhaps less discussed: Some payment processors also deplatformed Trump supporters and his campaign. 


  • Alt-Right Groups Received $500K in BTC Month Before Capitol Riot: Chainalysis: Actually, there’s more about this insurrection we should talk about. Last week, analytics firm Chainalysis published a blog post noting that 13.5 BTC had been sent to 22 wallets, some of which were tied to far-right activists who participated in the mob on Jan. 6. The bitcoin appears to have been sent by a French computer programmer who has since passed away, according to Chainalysis. Crypto has been tied to extremists before, and as the new legislative session begins it would not surprise me if legislation to combat terrorist funding via crypto is raised again. The other concern legislators and regulators may have is that these funds reportedly came from overseas – foreign funds involved in U.S. politics is a sticky area for local lawmakers. 
  • Tron-Owned Video Platform Criticized for Hosting Extremists, US Capitol Rioters: People deplatformed from YouTube and Twitch for espousing hate and/or violence turned to DLive, which pays creators in crypto and is owned by Tron. Mind you, Tron/DLive is now also kicking off anyone who streamed from the Capitol.
  • Jerome Powell on CBDCs: ‘We Don’t Feel a Need to Be First’: Fed Chair Jerome Powell talked about stablecoins and CBDCs last week. In short: he said stablecoins might pose risks, and the U.S. is working with other nations on this (more libra talk?), and central bank digital currencies are probably coming later rather than sooner. I’ll just refer you to my colleague Nate DiCamillo’s reporting above.

Outside crypto

If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at or find me on Twitter @nikhileshde

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See y'all next week!


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