Six months of crypto policy: The good, the bad, and the lingering questions

We’re six months into the new administration and the 119th Congress. So much has happened that it’s difficult to keep it all straight. For clarity, here are the big news items that we’ll address in this post:

1. The President’s Working Group (PWG) report.
2. The plea deal in the Samourai Wallet developer prosecution, a guilty plea.
3. The verdict in the Tornado Cash developer prosecution: guilty on unlicensed money transmission.
4. Key crypto policy announcements and speeches at the SEC.
5. Congressional lawmaking (GENIUS) and bill progress (CLARITY and the BRCA) over the last month, and the broker rule CRA last spring.

If you put all of this together you get a clear picture of just how crypto-friendly the US government’s policies actually are at present. In this post we will comprehensively compare the recent policy results to Coin Center’s 2025 priorities and our forecast for the new administration last Winter. We’ll hit the details of all of those recent developments as we go, but rather than organize this post as just one-damn-thing-after-another it will be a report card that’s broken into the good, the bad, and several lingering questions.

So here’s a summary. Good: Congress is beating the curve with GENIUS, CLARITY, and the BRCA with the President’s support, and the SEC is charging ahead with a bold, common sense approach. Bad: no meaningful progress at the DOJ on developer prosecutions. Lingering Questions: damaging surveillance and tax policies from the last administration remain on the books and the sections of the PWG report fail to address them or even hint at doubling down.

Good: Congress and the SEC

Congress has been unusually productive:

• House Financial Services and House Agriculture shepherded CLARITY, balancing CFTC/SEC jurisdiction and protecting developer and self‑custody rights.
• Senate Banking and HFSC leadership pushed GENIUS leading to its passage, finally giving stablecoin issuers a path to federal regulation that doesn’t crush developers and other non-controlling service providers.
• Reps. Tom Emmer and Ritchie Torres, joined by Bill Huizenga and Josh Gottheimer, delivered the Blockchain Regulatory Certainty Act (H.R. 3533) by attaching it to CLARITY and winning a hearty House majority. The Senate market structure discussion draft includes the BRCA. The PWG offers support (although they qualify it quietly—more on that below). That bill is Coin Center’s top priority and represents the best long term solution to the chilling uncertainty non-controlling blockchain developers and service providers face vis-a-vis money transmission licensing prosecutions and coverage under the Bank Secrecy Act. We’re excited for Congress to be more than halfway there to making it law.

Put plainly, bipartisan crypto pragmatism is alive and well on the Hill, and the result is reasonable regulation of trusted entities and clear carve-outs for developers and infrastructure providers.

Meanwhile, the SEC has exceeded even our most optimistic expectations. Chair Atkins announced an ambitious plan, Project Crypto, to offer clear rules permitting the tokenization and peer-to-peer transfer of any financial asset. Commissioner Pierce gave a speech offering one of the clearest defenses of financial privacy in the context of crypto and new technologies yet articulated. As she says,

We should take concrete steps to protect people’s ability not only to communicate privately, but to transfer value privately, as they could have done with physical coins in the days in which the Fourth Amendment was crafted. … The American people and their government should guard zealously people’s right to live private lives and to use technologies that enable them to do so.

In the written speech there are pointers to deep analysis of the overbreadth of US financial surveillance law, including a citation to a paper Coin Center published last year on dangerous ambiguities in the Bank Secrecy Act and how they could be abused to “mandate that every American who pays or is paid [] register with the Treasury Department and regularly report the details of her monetary transactions as if she were a bank or other financial institution.” That overextension is exactly what is at stake in the unwarranted prosecutions of the Tornado Cash and Samourai Wallet developers. In her speech, Commissioner Peirce also cites two other federal laws, 6050I and Patriot Act Section 311, that are—in Coin Center’s opinion— already being abused to harm the legitimate privacy expectations of law-abiding Americans. As we’ll discuss later in this post, we would be much happier if the PWG report had echoed Commissioner Peirce’s wary perspective on those laws; instead, report was ambiguous on 6050I and Section 311 surveillance policies (more in the final section of this post), while the DOJ and Treasury together have not done enough to course-correct on Tornado, Samourai, and the BSA.

Bad: DOJ continues to persecute developers

Last winter we wrote about our divided expectations for policy progress in the new Trump Administration:

We anticipate good policy may be easier to achieve in the areas of securities and banking regulation, with the potential for clearer rules governing centralized secondary markets and centralized stablecoin issuers. The outlook is less certain in the anti-money laundering, tax-reporting, and sanctions arenas.

Unfortunately, the uncertainty in anti-money laundering (AML), tax, and sanctions (together, financial surveillance policy) continues. We’ve had mixed messages from the DOJ and Treasury and many anti-crypto Biden-era policies are being carried on quietly or by default.

The Tornado Cash and Samourai Wallet prosecutions are a prime example. Last spring the Deputy Attorney General released a memo calling for an end to “regulation by prosecution.” The memo suggested that the DOJ would focus on actual narco-trafficers and others who were palpably using crypto to commit crimes rather than chasing developers whose neutral tools were employed by others to do bad things. Nonetheless, the prosecutions against the Tornado Cash and Samourai Wallet developers proceeded mostly without moderation. Only one of two unlicensed money transmission charges were dropped in those cases and other charges for money laundering and sanctions evasion remained. Essentially, these prosecutions continued the very regulation by prosecution ostensibly disclaimed by the DAG memo: pushing one developer team, in Samourai, to a guilty plea and another, in Tornado, to a lengthy fight, a bad ruling on the legal questions of what constitutes money transmission, and—perhaps inevitably after that legal error—a guilty verdict from the jury.

Because of the Samourai plea, the facts in that case will remain untried. Had it gone to a jury we might have learned more clearly if and why operating a coinjoin server or publishing wallet software for coinjoin transactions qualifies as money transmission and whether a developer performing those activities without a license is guilty of a federal crime. At best, this is a major missed opportunity for the Trump administration. While the political independence of the DOJ may have made changing course in Samourai difficult, we saw very little effort to offer leniency or clarity on these questions apart from the DAG memo.

Both the Tornado Cash and Samourai prosecutions dealt with questions of unlicensed conduct. Regarding that conduct, FinCEN’s 2019 Guidance couldn’t be clearer: developers who don’t have “total independent control” over customer funds are not money transmitters and don’t need to register. So why in 2025 are we still seeing non-controlling devs prosecuted for unlicensed money transmission? Why are we still rebutting dangerous, misguided and potentially binding interpretations of that law, like the denial of the Tornado motion to dismiss, without clarifying statements from the administration?

The DAG memo is correct in spirit but light on substance, and we’ve separately seen no clarifications or course corrections from Trump’s Treasury department on this topic. The PWG report called for passage of the BRCA, a law that would codify the FinCEN guidance, but the report did not offer a ringing endorsement of FinCEN’s 2019 Guidance and the “total independent control” test for money transmission. Indeed, the PWG subtly suggested that that guidance may need to be revisited, altered, or even rescinded.

Coin Center supports software developer Michael Lewellen’s civil lawsuit against the DOJ to seek clarity on the limits of licensing obligations. If Lewellen wins, the DOJ would need to bring their prosecutorial theories in line with FinCEN’s excellent guidance, ending years of conflicting statements and uncertainty. But as the defendant in that lawsuit shifted last winter from Biden’s AG Garland to Trump’s Bondi, we noticed no change in the defensive posture. When pressed, Bondi’s DOJ refused to concede that software developers like Lewellen are not money transmitters, and offered no agreement that developers are free from liability for merely publishing software and maintaining a front-end. Instead, Bondi’s DOJ called for Lewellen’s case to be dismissed for lack of standing, citing “no credible threat of enforcement” while they simultaneously pursued prosecutions against similarly situated devs.

Dismissal of Lewellen’s case would leave developers with the same legal uncertainty and threat of regulation by prosecution they’ve faced under the previous administration. We are supporting Lewellen’s fight against that dismissal and hope the courts will force the admin to be more forthright in offering clarity and a reasonable interpretation of criminal statutes that can be so easily abused to jail developers and discourage innovation. We’re hopeful, but also wonder why our fight hasn’t gotten any easier in light of President Trump’s promise to make America the crypto capital of the world. As it stands, America might be a good capital for regulated crypto ETF funds but the last place you’d want to live as a bitcoin open source wallet developer facing felony criminal liability for failure to license.

As described earlier, Coin Center also champions a Congressional fix for the money transmission issue, the Blockchain Regulatory Certainty Act. Congressional leadership gets the credit for tee-ing up that solution, attaching it to CLARITY, passing the house, and including it in the Senate discussion draft. If negotiations in the Senate go as well as they have in the House, we’ll finally get the safe harbor from these prosecutions that we’ve long needed. It will be too late for the Samourai and Tornado Cash developers but a bulwark against further mistaken prosecution. Trump’s administration deserves credit for its support of the BRCA, but—as we’ll describe in the next section—that support is worryingly qualified in the PWG report.

In many ways the administration’s hands are tied with respect to ongoing prosecutions at the DOJ. The President’s Working Group report was an opportunity to express concerns over these policy areas and work towards finding solutions. The PWG report supports the passage of the BRCA, and for that we are grateful, but it also vaguely hints at preserving bad tax and surveillance policies from the last administration. We’re left with many questions and we’ll unpack all of that in the next few sections.

Lingering Questions and Mixed Messages on Financial Surveillance in the PWG Report.

Much of the PWG report is excellent, particularly those sections dealing with the SEC and banking regulators. But there are four areas where the PWG report is particularly disappointing for Coin Center and anyone else hoping for a pro-privacy, pro-developer-rights approach from the administration: (1) 6050I reporting, (2) FinCEN’s mixer rulemaking, (3) New BSA categories, and (4) IRS block reward rulings. We’ll address each in turn and then come back to the larger question: why is the report so mixed in light of President Trump’s clear call for a pro-crypto America?

Issue #1: 6050 I Still Watching You

As a reminder, 6050I is the part of the tax code that, as amended by the Infrastructure Investment and Jobs Act of the prior administration, requires anyone receiving $10,000 or more in crypto to collect and report to the IRS the name, address, and social security number of the person who is paying them. Coin Center along with our co-plaintiffs is challenging the 6050I provision in federal court, arguing that it compels warrantless disclosures of associational and transactional data, in violation of the First and Fourth Amendments. A bipartisan group in the last Congress introduced legislation to address these privacy violations. But what did the PWG say on the subject?

“Congress should … ensure that the information required to be reported to FinCEN … conforms with the information required … under 26 U.S.C. § 6050I.”

In other words, rather than clearly recommending repeal of the IIJA’s unconstitutional and privacy-violating provisions, the PWG floats expanding the 6050 I dragnet so that BSA rules “mirror” IIJA’s tax‑reporting mandate. That would double‑down on warrantless collection of peer‑to‑peer transaction data—something Congress deliberately avoided when it revoked the broker rule’s unreasonable surveillance requirements last spring with the CRA. The Trump Administration’s leadership was central to the broker rule repeal and they can and should say “no thanks” to 6050I surveillance as well.

It’s not hopeless though, there’s a way to honor the PWG’s recommendation that also honors the administration’s stated policy priority of individual freedom and privacy: Congress can repeal the 6050I amendment, which would bring the provision into harmony with the BSA. The report’s neutral framing leaves that as a possibility, although a true pro-crypto agenda would have simply asked for it directly.

Issue #2: FinCEN’s Mixer Rulemaking

FinCEN’s October 2023 proposal on cryptocurrency mixers took an alarmingly broad view of who should be subject to financial surveillance. This proposed rule would designate all “mixing” transactions as a “primary money laundering concern” under standards found in Section 311 of the US PATRIOT Act. It would require financial institutions to report information on each of their customers who had any direct or indirect connection with a mixer. If finalized in its current form, the rule would sweep-in ordinary users of cryptocurrencies who engage in privacy-preserving behavior, like avoiding address reuse or using basic tools to protect transaction data. Villanizing innocent crypto users who take good technical steps to protect their privacy is anything but a pro-crypto policy. So what did the PWG say on the subject?

They acknowledge the 2,200 public comments in the rulemaking and the privacy stakes—but then simply advise Treasury to “consider next steps.” A genuine reset would have withdrawn the NPRM entirely, just as Treasury did with the unhosted‑wallet proposal. Kicking the can is not progress, especially when the can is the de facto criminalization of privacy.

Issue #3: New BSA Categories for Crypto

Rather than simply endorse the 2019 FinCEN guidance that rightly drew a bright line for BSA-obligations between persons with “total independent control” over customer crypto and those without, the PWG:

“recommends that Congress … provide statutory changes to the BSA that define with greater certainty the actors in the digital asset ecosystem.”

Creating new BSA-regulated sub-categories could be done well, but opening up the definition of financial institution creates risks that those new categories could be overinclusive. It also would not be a technology neutral approach to regulation, unlike the current MSB classification which is focused on any person with control over currency or currency substitutes. This is not bad policy per se but it can open the door for bad policymaking and privacy intrusions if we are not careful in how those new categories are defined.

Coin Center thinks the existing 2019 FinCEN guidance is sufficient and should simply be codified, e.g. by the BRCA. Also note that the administration’s support for the BRCA and a control-based carve-out from BSA surveillance obligations was qualified in the PWG report as “particularly for money transmitters.” If they start creating a whole new range of BSA-regulated entities apart from money transmitters it’s unclear whether control would remain their bellwether for defining those new categories; if not, that could be a problem. The BRCA could create well-deserved clarity on the question of whether one is a money transmitter and needs to register, but some new category of “digital asset service provider” might recreate all the overbreadth and uncertainty that got us into the bad state of affairs we find ourselves in today. One step forward could turn into two steps back on developer freedom and financial privacy. If Congress takes on the PWG’s call for newly defined categories of BSA-obligated entities in crypto, Coin Center will redouble its efforts to ensure that only trusted entities with voluntarily provided customer records are obligated, as demanded by the First and Fourth Amendments.

Issue #4: Block‑Reward Guidance Still Stands

On the tax front generally we are happy that the report highlights the need for a de minimis carve out and better treatment of mining and staking. Nonetheless it is disappointing that the PWG did not go further and simply call for the rescinding of the 2023 block reward ruling. That ruling treated newly created property from block rewards as immediately taxable income. That bad policy is why we are supporting Josh Jarrett’s lawsuit against the IRS and commonsense efforts in Congress to clarify the code. The administration could make those fights a lot easier by simply rescinding guidance that was wrong from the start: a new bitcoin you mine is not income just as a new ear of corn you grow or book you write is not income. None of those should be taxed until they are sold.

The Bigger Question: The Working Group’s Split Personality

There’s plenty to applaud in the 168‑page report—especially its call for Congress to “expeditiously advance market‑structure legislation” alongside the BRCA safe-harbor from money transmission licensing liability. We also applaud the report’s recognition that AML rules must “respect the lawful use of digital assets … and acknowledge Americans’ privacy rights.”

But those bright spots sit awkwardly beside the tacit support or indifference towards surveillance‑friendly policies like 6050I reporting, the mixer rulemaking. Messaging has been good on “ending regulation by prosecution,” supporting the BRCA, and offering tax clarity but we’ve seen little in the way of firm commitments or details. The PWG report sometimes reads like two sub‑committees stapled their drafts together: one embracing Congress and the SEC’s momentum toward sensible, tech‑neutral regulation; the other clinging to Biden‑era policies that treat every crypto user as a suspect.

Congress is over‑delivering; independent regulators like the SEC are massively course‑correcting. But the lingering questions write themselves:

• Does the White House endorse new 6050 I‑style surveillance obligations on peer‑to‑peer users?
• Does the White House agree with the 2019 FinCEN guidance, or do they think non-controlling developers should face prosecutions for failure to license as money transmitters?
• Will FinCEN withdraw a mixer rule that even the PWG admits threatens legitimate privacy practices?
• Can Congress and Treasury modernize the BSA without obligating mere developers to license and surveil the users of their tools?
• Does the White House endorse treating new crypto as income and taxing it as it is created rather than when sold?

Until those answers are clear, the Administration’s crypto policy will look less like a coordinated strategy and more like a tug‑of‑war with itself. There are simple fixes: 1. call for Congress to repeal 6050I, 2. Endorse the 2019 FinCEN guidance and keep it as a guide for any future category of BSA regulation, 3. Withdraw the mixer rulemaking, and 4. Rescind the 2023 block reward revenue ruling.

We’ll be watching when the Senate gavels back in and the SEC moves forward with Project Crypto. But the biggest question may not be whether Congress can finish the job on BRCA and CLARITY; but rather whether the Treasury will allow today’s growing pro‑innovation consensus to become tomorrow’s regulatory reality.