TRM Weekly Roundup | January 2, 2025

Happy New Year, cryptoverse! ??

In our first issue of the new year, we say goodbye to 2024, which ended with IRS DeFi regs, and hello to 2025 — and what will surely be a flurry of activity from President Trump’s newly installed “crypto cabinet.” So join us in a toast ???to an exciting 2025, and stay tuned to the Weekly Roundup for everything you need to know all year — on your feed or in your inbox every Thursday.

Here are the stories our policy pros — Ari Redbord , Angela Ang , and Isabella Chase — are tracking this week:

• Trump appoints innovation cabinet in midst of digital space race
• Possible Trump day one crypto executive orders?
• IRS drops final broker regs, which include reporting requirements for DeFi
• China tightens crypto oversight with stricter forex rules
• Terra Luna’s Do Kwon to be extradited to the US
• CASPs get licenses as MiCA comes into force

?????Trump appoints innovation cabinet in midst of digital space race

Since the election, President-elect Trump has unveiled a team of appointees poised to transform the landscape of crypto, AI, and beyond. The speed and resourcing feel like a modern-day space race.

At the heart of Trump’s strategy is the formation of the Presidential Council of Advisers for Digital Assets, led by 29-year-old Bo Hines, a former college football star turned Republican Congressional candidate. As the council’s executive director, he is set to work closely with David Sacks, newly named White House AI and Crypto Czar. Sacks, a veteran entrepreneur and former PayPal executive, has a critical role: crafting policies that provide clarity to the crypto industry while ensuring the US remains competitive in the race to dominate the most transformative technologies of the 21st century.

Trump’s pick for SEC Chair, Paul Atkins, marks a potential departure from the enforcement-heavy approach of the current Chair. Atkins, a former SEC Commissioner and a known advocate for market-driven solutions, has been a vocal proponent of regulatory frameworks that balance innovation with consumer protection.

Meanwhile, Trump’s Treasury Secretary nominee, Scott Bessent, views blockchain as integral to freedom and economic growth. His leadership at Treasury is expected to shape policies that integrate cryptocurrency into the financial system, addressing everything from AML and sanctions to tax and domestic finance policy.

Trump’s appointments extend beyond crypto. As Director of the White House Office of Science and Technology Policy, Michael Kratsios will lead efforts to promote advancements in blockchain, AI, and other cutting-edge fields. Dr. Lynne Parker will guide scientific advisory initiatives. And Sriram Krishnan will be focused on AI policy development.

Trump’s cabinet appointments further cement his administration’s crypto-friendly stance:

• JD Vance, VP, has disclosed substantial Bitcoin holdings and advocates for regulatory reform to empower the crypto industry.
• Doug Burgum, Secretary of the Interior, leveraged North Dakota’s infrastructure to attract blockchain and crypto mining projects as governor.
• RFK Jr., Secretary of Health and Human Services, proposed a bold initiative for the US Treasury to build a Bitcoin reserve.
• Kristi Noem, Secretary of DHS, vetoed legislation that would limit crypto’s definition as money, emphasizing financial freedom.
• Howard Lutnick, Secretary of Commerce, likens Bitcoin to gold and champions its role in a decentralized economy.

Even Trump’s defense and intelligence teams are aligned with this vision. Pete Hegseth, Secretary of Defense, has praised Bitcoin’s decentralized nature, while Tulsi Gabbard, Director of National Intelligence, has publicly supported Bitcoin as a fiat alternative and a hedge against inflation. And John Ratcliffe, CIA Director, has emphasized the need to counter China’s dominance in crypto mining and digital currency development.

Trump’s appointments represent more than just a personnel shift — they signal a paradigm change in how America approaches innovation. By prioritizing regulatory clarity, public-private collaboration, and national competitiveness, the new admin is working — before day one — to position the US as a global leader.

???Possible Trump day one crypto executive orders?

So what can we expect from this crypto cabinet on January 20? Here is a list of possible day one — and beyond— executive orders.

• Establish a national Bitcoin reserve: Direct the U.S. Department of the Treasury to acquire Bitcoin and designate it as a strategic reserve asset.
• Ensure banking access for crypto firms: Prohibit banks and financial institutions from denying services to cryptocurrency companies solely based on their business model.
• Regulatory clarity for digital assets: Mandate collaboration between the SEC, CFTC, and Treasury to create clear jurisdictional boundaries and guidelines for cryptocurrencies.
• Accelerate stablecoin oversight: Direct the Treasury and Federal Reserve to expedite the establishment of stablecoin regulations, ensuring they are backed by robust reserves.
• Establish a crypto industry council: Create a government-industry task force to collaborate on regulatory frameworks, innovation promotion, and industry growth.
• Tax incentives for blockchain innovation: Provide tax benefits to companies developing blockchain technology or adopting cryptocurrency in their operations.
• Strengthen AML and cybercrime measures: In ****order to stop bad actors from abusing the growing ecosystem.
• Promote energy-efficient crypto mining: Incentivize the use of renewable energy for Bitcoin and cryptocurrency mining operations.
• Expand blockchain use in government: Require federal agencies to adopt blockchain technology for tasks such as record-keeping, supply chain management, and voting systems.
• Launch a crypto education initiative: Fund a nationwide program to educate policymakers, businesses, and the public on blockchain and cryptocurrency technologies.
• Protect against “Operation Choke Point 2.0”: Explicitly prohibit federal agencies from indirectly pressuring financial institutions to cut ties with lawful crypto businesses.
• Strengthen international collaboration on crypto standards: Direct the State Department to engage with international bodies (e.g. G20, FATF) to establish global standards for cryptocurrency regulation.

Will we see all this activity on Inauguration Day? Almost certainly not — but given campaign promises and a newly minted crypto cabinet this feels, at least, like a 100-day agenda.

????IRS drops final broker regs, which include reporting requirements for DeFi

Last Friday, the Internal Revenue Service and U.S. Department of the Treasury issued final regulations regarding digital asset reporting requirements for brokers.

The rules build on prior regulations issued earlier in 2024, which primarily addressed custodial brokers. The final framework expands to include certain decentralized finance (DeFi) platforms while excluding non-custodial entities.

Definition of brokers:

Under the regulations, brokers are defined as individuals or entities that, in the ordinary course of a trade or business, facilitate the sale or exchange of digital assets for others. This definition establishes who must comply with the reporting requirements.

Included in the broker definition:

• Centralized Trading Platforms: Platforms that directly facilitate sales and exchanges of digital assets for customers.
• DeFi Front-End Service Providers: Platforms that offer interfaces to execute digital asset transactions on DeFi networks and directly engage with customers.

Excluded from the broker definition:

• Protocol developers: Developers of decentralized software or protocols that allow peer-to-peer transactions without intermediaries.
• Wallet providers: Non-custodial wallet providers that allow users to store their digital assets without facilitating sales or exchanges.
• Operators of decentralized protocols: Entities managing the underlying blockchain technology or protocols that are not intermediaries in transactions.
• Entities that do not have access to the transaction data required for reporting, such as protocol developers or wallet providers.

Application to DeFi services:

DeFi platforms that directly interact with customers to facilitate digital asset transactions are classified as brokers under the final regulations. Specifically, this applies to platforms providing front-end services that enable customers to execute sales or exchanges on decentralized networks. This part of the definition will cause concern among some DeFi platforms, despite the fact that IRS attempts to limit the blow by excluding protocols.

Reporting requirements:

Brokers must file Form 1099 with the IRS, detailing the gross proceeds from digital asset sales or exchanges facilitated for customers. Reporting applies to both centralized and decentralized platforms that meet the definition of brokers. Brokers must provide payee statements (Form 1099) to their customers, outlining the gross proceeds from taxable events.

Reporting is required for taxable events such as sales or exchanges of digital assets, but does not apply to simple transfers of digital assets between wallets or accounts.

Now to implementation and enforcement — which is likely going to be a challenge, particularly for decentralized services that, while may operate front ends, may still not have ready access to the information required.

?????China tightens crypto oversight with stricter forex rules

According to the South China Morning Post SCMP , China's State Administration of Foreign Exchange (SAFE) has introduced new regulations requiring banks to intensify scrutiny of foreign exchange transactions, particularly those involving cryptocurrencies. Banks are expected to monitor and report "risky foreign exchange trading behaviors," which encompass activities related to “underground banking, cross-border gambling, and illegal financial operations involving cryptocurrencies,” reported the Post.

These measures compel banks to assess transactions based on factors such as the identities of the parties involved, funding sources, and trading frequency. Additionally, banks must implement risk-control protocols to manage identified entities and limit certain services to them.

All crypto transactions have been banned in China since 2021, and the People’s Bank of China’s recently published 2024 Financial Stability Report also underscores the financial stability risks of crypto. China is in the midst of tightening AML laws on emerging tech, including crypto — and legal experts anticipate that China's regulatory approach toward cryptocurrencies will continue to tighten.

?????Terra Luna’s Do Kwon to be extradited to the US

Today, a judge in Montenegro ruled that Do Kwon, the crypto entrepreneur behind the USD 40 billion TerraUSD-Luna collapse in 2022, will be extradited to the United States to face criminal charges.

The decision by Montenegrin Justice Minister Bojan Bo?ovi? ends over a year and a half of legal battles between the US and South Korea — both of which sought to prosecute Kwon following his arrest in March 2023 at a Podgorica airport with a fake Costa Rican passport.

Kwon, a South Korean national, faces eight criminal fraud charges in New York, where legal experts suggest he may receive a harsher sentence than in his home country.

His US lawyer, Sean Hecker, criticized the decision, arguing that Kwon should be sent to South Korea, where he was first charged, and noted potential subversion of Montenegrin law. Neither the US nor South Korea have extradition treaties with Montenegro, so it was essentially up to court to decide de novo.

Kwon promoted TerraUSD as a stablecoin pegged to the US dollar. Investors poured billions into the token, drawn by promises of nearly 20% yields through Terraform Labs’ Anchor Protocol. However, TerraUSD’s algorithmic structure caused it to collapse in May 2022, triggering Luna’s downfall and a cascade of bankruptcies across the crypto industry, including FTX.

In September 2022, South Korea issued an arrest warrant, prompting Kwon to go into hiding in Serbia while denying he was a fugitive.

In April 2024, Kwon and Terraform Labs were found liable for USD 4.5 billion in SEC civil penalties for securities fraud, offering a glimpse into the challenges he faces in his criminal trial in the Southern District of New York.

?????CASPs get licenses as MiCA comes into force

As of December 30, 2024, the European Union’s Markets in Crypto-Assets (MiCA) regulation is fully enforceable, establishing a comprehensive legal framework for crypto assets across EU member states.

Notably, it requires crypto asset service providers to obtain appropriate licenses and comply with stringent operational standards.

In line with MiCA’s implementation, companies like MoonPay have secured licenses to operate as regulated crypto businesses within the EU. On December 30, MoonPay announced that it received approval from the Dutch Authority for the Financial Markets, allowing it to continue offering fiat-to-crypto and crypto-to-fiat services under the new regulatory framework.

We are likely to see lots more license approvals and, eventually, enforcement across the block as MiCA settles in.

• ???Angela Ang (TRM’s Senior Policy Advisor) made a recent appearance on Bloomberg News , in a discussion on global crypto policy developments with Haslinda Amin and Avril Hong . Check out the highlights of her discussion in this post.
• ????Caroline Horres (U.S. Department of the Treasury, Office for Terrorism and Financial Intelligence) joins Ari Redbord on our latest episode of #TRMTalks, discussing Treasury’s playbook for mitigating illicit finance risk in the cryptocurrency space. Listen to the full episode, out now.
• ???Before ringing in 2025, we reflected on all we accomplished as a community in 2024. From combating pig butchering to implementing robust crypto compliance controls, our customers have done some truly impactful work. Read our 2024 Wrapped post here.