Launchy Regulatory Roundup #23 - Musk Eyes Blockchain for Government Efficiency, SEC Forms Crypto Task Force

US Crypto After Trump Inauguration | SEC Rescinds SAB 121: Key Changes for Crypto

Marco Manoppo & Muhammad Reynaldi Ariananda Arkiang
January 26, 2025

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Good Morning.

Welcome to our 23rd edition of the regulatory roundup. If you know anybody who would benefit from this content, please help us spread the word!

Good Morning,

Trump is rapidly signing executive orders, Musk wants to put federal spending on-chain, and the SEC just reversed its stance on crypto custody. Congress is debating Bitcoin retirement funds and debanking investigations.

Regulation is shifting fast, power players are making moves, and if you blink, you might miss the next policy bombshell.

In Today's Edition:

Headline: Musk Eyes Blockchain for Government, SEC Crypto Task Force 🇺🇲
Global Legal Roundup: US Crypto After Trump Inauguration 🇺🇲
Case Study: SEC Rescinds SAB 121: Key Changes for Crypto 🏆️

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HEADLINE

Musk Eyes Blockchain for Government Efficiency, SEC Forms Crypto Task Force

State of play: Elon Musk, head of the newly formed Department of Government Efficiency (DOGE), is reportedly exploring blockchain technology to track and reduce U.S. federal spending.

DOGE aims to enhance transparency by securing data, managing payments, and optimizing government operations.
The initiative aligns with Musk’s broader goal of cutting $1T in federal expenditures.
The department has consulted public blockchain networks and launched its website on Jan. 21, adopting Dogecoin’s logo.

Meanwhile, The SEC has established a dedicated crypto task force led by Commissioner Hester Peirce.

Announced on Jan. 21, the task force aims to define clear regulatory guidelines, provide registration pathways, and optimize enforcement.
Acting Chairman Mark Uyeda introduced the initiative, which will collaborate with federal and international regulators, including the CFTC.
The move comes as Trump’s administration is expected to introduce clearer regulations for crypto businesses, including potential frameworks for securities classification and oversight.

What’s Next: Musk’s DOGE department may pilot blockchain for government spending, while the SEC’s crypto task force will draft clearer regulations. Trump’s administration is also expected to outline its crypto policies soon.

Why it Matters: Blockchain in government could revolutionize transparency and accountability, while the SEC’s shift signals a move from enforcement to structured compliance.

Our Take: Musk’s initiative challenges entrenched government inefficiencies, but political resistance and bureaucratic inertia could stall implementation.

The SEC’s pivot under Peirce is a long-overdue correction, yet industry scepticism remains after years of regulatory uncertainty

GLOBAL LEGAL ROUNDUP

America:

🇺🇲 Trump pardons Silk Road creator Ross Ulbricht.
🇺🇲 Coinbase files to dismiss BiT Global lawsuit over wBTC.
🇺🇲 Ripple seeks deadline for cross-appeal brief in SEC case.
🇺🇲 SEC’s crypto actions dropped by 30% in Gensler’s final year.
🇺🇲 Trump promises to make US ’world capital’ of AI, crypto at Davos.
🇺🇲 Coinbase asks appeals court to rule crypto trades aren’t securities.
🇺🇲 Oversight committee Republicans launch debanking investigation.
🇺🇲 Kansas bill aims to allocate 10% of retirement funds to Bitcoin ETFs.
🇺🇲 House Democrats want ethics probe on Trump over crypto projects.
🇺🇲 US court overturns Tornado Cash sanctions in pivotal case for crypto.
🇺🇲 Crypto czar David Sacks likens Trump’s memecoin to a ‘baseball card.’
🇺🇲 North Dakota bill seeks to cap crypto ATM transactions to tackle fraud.
🇨🇦 Canada to monitor crypto transactions for drug money.

Europe:

🇪🇺 Crypto donations to extremist groups rise in Europe.
🇪🇺 ECB member doubles down on digital euro after Trump’s crypto EO.
🇪🇺 EU regulator urges nations to ensure compliance with stablecoin rules soon.

CASE STUDY

SEC Rescinds SAB 121: Key Changes for Crypto

Credits to Cointelegraph and Callum Reid for the Original Article

State of play: The SEC has rescinded SAB 121 and replaced it with SAB 122. SAB 121 required institutions to classify customer crypto holdings as liabilities, a rule widely criticized for being burdensome and limiting crypto adoption by banks.

Following Trump’s inauguration, the SEC announced the repeal on Jan. 23, 2025, responding to industry concerns.

Key Changes with SAB 122:

Institutions will now assess liability risk instead of reporting full custodial assets as liabilities.
The new rules apply retroactively from Dec. 15, 2024, with early adoption options.
Companies must continue disclosures on safeguarding obligations but with more practical accounting standards.

Impact on Crypto Custody & Regulation:

Simplifies custody operations for financial institutions.
Encourages traditional banks to enter the crypto market.
Boosts trust in institutional crypto custody.
Signals a shift toward balanced regulation, supporting broader crypto adoption.

Our Take: The rescinding of SAB 121 removes a major regulatory hurdle, allowing financial institutions to integrate crypto more seamlessly into their operations.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our comprehensive database of crypto regulations around the world👇

NOTEWORTHY READS & MEME

Coin Center’s article on New CFPB rulemaking.
CEDAR’s thread on debunking Elizabeth Warren’s claims on AML and crypto.
Alex Thorn’s read on crypto legal & policy activity since Trump's inauguration.

— Mike Dudas (@mdudas)
5:21 PM • Jan 25, 2025

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.