More US regulators becoming pro-‘crypto’ in Trump 2.0 era

Two more United States regulators have received a fresh coat of MAGA colored paint, with changes at the Office of the Comptroller of the Currency (OCC) and Consumer Financial Protection Bureau (CFPB) bringing both agencies in line with the Trump 2.0 pro-digital asset agenda.

On February 7, the CFPB, a U.S. consumer watchdog established after the global financial crash of 2008, received the dubious honor of welcoming Donald Trump’s budget chief Russell Vought as acting head in a move seemingly intended to hamstring its financing and operations.

A couple of days later, the OCC, a federal agency that regulates and supervises national banks and federal savings associations, saw the arrival of new acting chief Rodney Hood, the digital currency-friendly former chairman of the U.S. credit-union regulator.

Both moves are in keeping with a string of recent appointments that appear to favor more lenient oversight of the digital asset space, with the new boss of the OCC in a position to dial back—supposedly—strict digital asset banking policies while the—potentially soon-to-be-gutted—CFPB has faced criticism from certain digital asset sector quarters of being an “activist organization” that harms the industry.

Trump 2.0—shaping the regulatory space

President Trump started imposing his agenda on federal agencies almost as soon as the final election count was made last year.

On December 4, he announced his pick for the new head of the Securities and Exchange Commission (SEC), Paul Atkins; on January 20, he continued his reshaping of regulatory leadership with the appointment of Travis Hill as Federal Deposit Insurance Corporation (FDIC) acting head; and a week later the President confirmed Scott Bessent as Treasury Secretary.

One shared characteristic that makes these appointments conspicuously Trumpian picks is that they’re all known for pro-digital asset leanings.

Atkins, who takes over from the unfairly maligned Gary Gensler, was hailed by Trump as someone who “has worked on and studied the digital assets industry” and “recognizes that digital assets and other innovations are crucial”; Hill kicked off his reign by announcing the FDIC would be “providing a pathway for institutions to engage in crypto- and blockchain-related activities”; and Basset told Fox Business last July that he had “been excited about the president’s embrace of crypto” and that “Crypto is about freedom, and the crypto economy is here to stay.”

Now, two more potential regulatory obstacles to Trump’s crypto-El Dorado appear to have been softened: the OCC and CFPB.

The OCC

In 2021, the OCC published a letter confirming that national banks and federal savings associations must demonstrate that they have adequate controls in place before engaging in certain digital currency, distributed ledger, and stablecoin activities.

Similar advice came from the FDIC, an independent agency that aims to maintain stability and public confidence in the financial system, and the Federal Reserve, the central banking system of the United States.

This led to complaints that regulators and lawmakers were attempting to stifle the industry through de-banking—discouraging banks from getting involved with digital assets.

Enter Hood, the new digital asset-friendly stand-in chief of the OCC, who, as former chairman of the U.S. credit union watchdog in 2021, said:

“I believe the cryptocurrency market is something vitally important not just to credit unions but the overall financial services market.”

He argued that “if you don’t have it it’s going to hurt your ability to compete with other financial services providers.”

If Hood brings this same energy to banking oversight, then it’s likely that before too long, the OCC’s 2021 guidance on increased controls over digital assets activity will be updated to a more laissez-faire approach.

Meanwhile, in a February 5 hearing on “Investigating the Real Impacts of Debanking in America,” Trump’s new acting head of the FDIC, Hill, said he’s already ordered “a comprehensive review of all supervisory communications with banks that sought to offer crypto-related products or services,” with the aim of opening a further path for banks to engage with digital assets.

CFPB

When it comes to the CFPB, rather than appointing another digital currency convert to the top job, it appears Trump has taken a more hacksaw approach, deciding to simply have the organization gutted.

Republicans and a particular set of digital asset players have long had issues with the CFPB’s fight with corporations on behalf of consumers. Brian Armstrong, the CEO of Coinbase (NASDAQ: COIN)—the subject of almost 8000 consumer complaints logged on the agency’s database—said in a post on X that the agency “should be deleted,” calling it an unconstitutional “activist organization that has done enormous harm to the country.”

On top of its mandate to protect consumers, the CFPB’s previous leadership sought additional policy authority over the industry—naturally putting the wind up of those in the industry who already don’t like dealing with the agency.

Therefore, Trump’s installation of his budget chief Vought as the acting head of the agency was a cause for celebration for those hoping to see the Republican former director of the Office of Management and Budget tighten the purse strings on the CFPB’s operating funding.

However, not everyone was as happy with the appointment as Coinbase. Democratic lawmakers, including Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, and Representative Maxine Waters, ranking member of the House Financial Services Committee, voiced their concerns.

“Elon Musk and the guy who wrote Project 2025, Russ Vought, are trying to kill the Consumer Financial Protection Bureau,” Warren said in a video released on Monday. “This is the payoff to the rich guys who invested in his campaign and who want to cheat families — and not have anybody around to stop them.”

SEC falling in line

As if this wasn’t enough of a sea change in favor of the digital asset space, the SEC’s interim acting chief, Mark Uyeda—seemingly wanting to prove himself as on board with Trump’s agenda as soon-to-be permanent head Atkins—recently removed the agency’s much-maligned staff accounting bulletin 121 (SAB 121).

SAB 121 was released in March 2022 as a policy guideline, outlining how virtual asset service providers (VASPs) must handle accounting for digital assets and putting additional capital requirements on banks wanting to handle digital assets for clients.

The controversial bulletin contained strict guidelines for institutions looking to custody digital assets, which included, among other things, that VASPs must record a liability and a corresponding asset on their balance sheets at fair value for users’ digital assets in their custody. In other words, VASPs had to maintain their users’ digital asset holdings on their own balance sheets.

SAB 121 was pilloried by digital currency advocate industry figures, regulators, and lawmakers for further discouraging digital asset adoption by traditional finance institutions, and an attempt to remove the Bulletin was eventually vetoed by Biden back in June last year.

However, after being appointed stand-in SEC chair on January 21, Uyeda, who once called the regulator’s approach to the digital asset space a “disaster for the whole industry,” wasted no time, and a new staff accounting bulletin, SAB 122, was published on January 23 rescinding the previous guidance.

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