By Brett Munster
The number of state Strategic Bitcoin Reserve legislation triples
In our last newsletter, we delved into the Strategic Bitcoin Reserve (SBR), exploring how states are advancing independently of federal action. At the time, four states had introduced legislation to establish an SBR. In just two weeks, that number has tripled. As of now, 12 states—Massachusetts, Wyoming, New Hampshire, Alabama, Florida, Pennsylvania, Texas, Ohio, North Dakota, Oklahoma, Arizona and Utah—have formally introduced legislation to acquire and hold bitcoin as a state reserve asset.
This development underscores two critical points. First, it’s no longer a question of if a state will begin holding bitcoin on its balance sheet but when. Second, the inherent game theory we’ve often discussed is in full effect: once one state or nation adopts bitcoin, others are compelled to follow to avoid being left behind. While the shift is currently most visible at the state level, don’t be mistaken—it’s likely happening at the nation-state level too, even if no formal announcements have been made yet. The bitcoin arms race is underway, and it’s poised to gain momentum as the year progresses.
What last week’s actions in DC mean for the industry
Last week marked a pivotal moment for digital assets as Washington, D.C. saw a series of major regulatory shifts with significant implications for the crypto industry. Among the most notable developments, President Trump signed two key crypto-related executive orders, signaling a profound shift in the federal approach to digital assets and fulfilling several campaign promises. Let’s unpack the key moves and their potential impact on the future of crypto in the U.S.
Ahead of the inauguration, SEC Chair Gary Gensler stepped down, and crypto-friendly Commissioner Mark Uyeda has stepped in as interim Chair until Paul Atkins is confirmed. Adding to the momentum, Hester Peirce, affectionately known as “Crypto Mom,” was appointed to lead a newly formed task force focused on creating clear regulatory frameworks. With a mandate to set transparent paths for compliance, improve disclosure standards, and prioritize enforcement judiciously, Peirce’s leadership brings renewed hope for pragmatic crypto regulation.
One of the SEC’s initial actions under its revamped leadership was the repeal of SAB 121, a contentious policy that had barred banks from offering crypto custody services. As we’ll explore further in the next section, this policy had been a significant roadblock since 2022, preventing banks from fully entering the crypto space despite growing interest and demand. With SAB 121 now rescinded, banks are finally free to embrace the crypto industry, offering custody, products, and services that could drive broader institutional adoption and innovation in the industry. I can’t stress enough how significant the repeal of SAB 121 is, highlighting the dramatic shift in the SEC’s approach to crypto, which seems to have done a complete 180 overnight.
On inauguration day, President Trump named Commissioner Caroline Pham as Acting Chair of the CFTC. Pham, a vocal proponent of crypto, has advocated for reasonable and balanced regulatory frameworks in the past. Meanwhile, Travis Hill took the reins as Acting Chair of the FDIC, succeeding Marty Gruenberg, who came under fire for widespread harassment scandals and being key orchestrator of Operation Chokepoint 2.0.
With the SEC, CFTC, and FDIC now led by crypto-friendly figures, the regulatory landscape is poised for a transformative shift. These agencies hold significant jurisdiction over digital assets in the U.S., and their leadership signals a more balanced and collaborative approach to industry oversight.
But the week’s notable developments didn’t end there. The first executive action came on the day after the inauguration when President Trump issued a full and unconditional pardon to Ross Ulbricht. Ulbricht, convicted in 2015, was serving multiple life sentences without parole for creating and operating Silk Road—a marketplace that utilized bitcoin for transactions and played a key role in popularizing cryptocurrency. While Ulbricht’s vision for Silk Road was rooted in libertarian ideals and allowed the buying and selling of anything on the platform, it became notorious for facilitating the illegal sale of narcotics.
For many newer participants in the crypto space, it’s difficult to fully appreciate the impact Ross Ulbricht has had on the industry. To early bitcoin advocates, Ulbricht’s punishment was widely regarded as excessively harsh, given that he merely created the Silk Road marketplace and did not directly engage in buying or selling illegal items. His case has become a symbol of overreach and a rallying point for parts of the crypto community. Trump’s campaign promise to pardon Ulbricht resonated deeply with these advocates, and last week, he delivered on that commitment, earning considerable goodwill within the bitcoin community.
Two days later, Trump signed the “Strengthening American Leadership in Digital Financial Technology” executive order. This landmark directive includes several impactful measures aimed at bolstering U.S. leadership in the global digital economy:
- Protecting Transactional Freedom: The order guarantees Americans the right to use open blockchains, ensuring their freedom to transact, mine, and self-custody digital assets without fear of government persecution.
- Promoting Stablecoins: It prioritizes the development of dollar-backed stablecoins to maintain the U.S. dollar’s position as the backbone of global commerce.
- Ensuring Fair Access to Banking Services: The administration mandates fair access to banking for law-abiding individuals and businesses in the digital asset space, effectively ending Operation Chokepoint 2.0.
- Clarifying Regulations: The order seeks to eliminate regulatory uncertainty, providing clear boundaries to foster blockchain innovation.
- Banning CBDCs: It prohibits the creation and use of a U.S. central bank digital currency (CBDC), citing risks to privacy, financial stability, and national sovereignty.
- Establishing a Digital Assets Council: Chaired by White House AI & Crypto Czar David Sacks, the council will develop a federal framework for stablecoin oversight, digital finance risk management, and strategies such as creating a national crypto reserve. Notably, the Federal Reserve and FDIC are excluded from the council due to their historically adversarial stance on crypto.
The executive order stops short of creating a “Strategic Bitcoin Reserve” but does instruct the council to evaluate the creation of a national digital asset stockpile. The language in the order uses “crypto” rather than just “bitcoin,” leaving room for the reserve to include multiple digital assets.
There are a couple of key points to consider regarding the strategic reserve. First, a reserve established through legislation would have greater longevity than one created solely by executive order, which could be easily overturned by a future administration. The White House appears to be setting the table for a Congressional act rather than an executive order, ensuring its durability. Second, it’s worth considering the possibility that a classified executive order has, or will authorize bitcoin purchases, with public disclosure delayed in an effort to prevent market frontrunning. Such a move would allow the administration to maintain its campaign promises while strategically maximizing the number of bitcoin it can acquire. Bottom line, we will know more about a potential SBR in coming months.
Overall, this executive order is a substantial and strategic initiative aimed at protecting individual freedoms, ensuring financial sovereignty, and reaffirming U.S. leadership in the global digital economy. Its implications are far-reaching, though many may not yet grasp the magnitude of the changes underway.
Just two weeks ago, Gary Gensler was leading the SEC and still issuing enforcement actions against crypto companies. Now, he is gone and for the first time ever, the SEC is working on developing a comprehensive and transparent regulatory framework for digital assets.
Two weeks ago, it was effectively impossible for banks to custody cryptoassets due to SAB 121. Now the new SEC has rescinded SAB 121 clearing the path for banks to actively participate in the crypto industry for the first time.
Two weeks ago, DeFi protocols were the target of lawsuits and aggressive action by federal agencies. On inauguration day, the President’s own DeFi company, World Liberty Financial, made waves by purchasing over $100 million in crypto tokens, signaling a dramatic shift in federal attitudes toward decentralized finance.
Two weeks ago, Solana was under scrutiny as an alleged illegal securities offering by the SEC. Today, it has gained unexpected legitimacy as the platform hosting a meme coin launched by the President himself.
Two weeks ago, we had an administration who had been openly hostile to the crypto industry for years. Now, the new administration’s policy emphasizes “supporting the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy.”
It is now unmistakably clear that digital assets are rapidly emerging as a foundational pillar of economic growth. With the administration’s stated policy actively supporting the responsible development and adoption of blockchain technology across all sectors of the economy, the shift in Washington’s approach to crypto represents a seismic transformation. This profound change in policy and tone has yet to be fully reflected or priced into the broader market.
Coinbase FOIA documents
Over the last two years, we’ve covered the federal government’s ongoing attempts to debank the crypto industry, commonly referred to as Chokepoint 2.0. We reported on the mysterious shutdown of the two primary banks serving the crypto industry, Signature Bank and Silvergate, despite both being fully solvent. We also highlighted the SEC’s SAB 121 rule, which effectively made crypto custody unviable for traditional banks, bypassing proper regulatory procedures. Additionally, we delved into reports alleging that banks were verbally warned—without written directives—to avoid banking crypto companies or to limit crypto-related business to less than 15% of their total activity, under threat of increased regulatory scrutiny.
Despite the extensive documentation and investigations into these practices (credit to Nic Carter for his excellent work), the broader public has met these revelations with skepticism. Critics outside the crypto industry dismiss concerns about restricted banking access as the result of banks’ natural reluctance to engage with an industry marked by price volatility and regulatory ambiguity. The forced closures of Signature and Silvergate have often been brushed off as conspiracy theories. Even with growing evidence, sworn testimony, and multiple corroborating reports, the industry lacked the definitive “smoking gun” to prove this was a coordinated, deliberate campaign. Until now.
In October of last year, Coinbase submitted two Freedom of Information Act (FOIA) requests, demanding disclosure of documents related to the FDIC’s efforts to debank crypto companies. By December, the FDIC handed over court-ordered documents. These revealed a series of “pause letters” advising banks to avoid or halt expansion into crypto services. These letters dated back much earlier than previously believed. However, the documents were so heavily redacted that it was nearly impossible to derive meaningful insights.
While redactions are sometimes necessary to protect private customer information, the extent of these redactions suggested the FDIC was hiding something significant. Coinbase filed a second FOIA request, this time demanding less redacted versions. The court sided with Coinbase, ordering the FDIC to revise the redactions and resubmit the documents in January. The judge condemned the FDIC’s “lack of good faith” and warned that it must “make more thoughtful redactions and be prepared to legally justify every single one.”
In January, Coinbase received the less redacted documents—and they were damning. The newly revealed material proved a coordinated effort by the FDIC to discourage banks from engaging with the crypto industry. This effort extended beyond basic Bitcoin transactions to a wide array of crypto-related products.
The documents revealed that between March 2022 and May 2023, at least 25 letters were sent to banks discouraging them from offering crypto-related products or services. Many of these letters referred to a specific product enabling customers to buy bitcoin and Ethereum directly within banking apps. This is believed to be linked to a product developed by NYDIG, which was reportedly ready to launch in early 2022 with over 100 banks but was abruptly shelved. The FDIC’s objection to this product—designed as a pass-through service with no exposure or risk for banks—suggests the agency was actively attempting to block retail access to Bitcoin.
The letters further revealed the FDIC sought to dissuade banks from offering a variety of other crypto products, including internal blockchain-based payment networks, bank-issued stablecoins, reserve deposits for stablecoins, bitcoin rewards debit cards, and bitcoin-collateralized lending services.
An internal FDIC memo from June 2022 indicated this strategy originated at the agency’s headquarters in Washington, D.C. The memo instructed regional FDIC offices to monitor all crypto activity proposed by banks and issue warnings that such activities “may pose significant safety, soundness, and consumer protection risks, as well as financial stability concerns.” These offices were directed to collaborate closely with Washington, which reviewed the tracking data.
While the FDIC lacked the legal authority to outright ban banks from offering crypto products, it made clear that any bank doing so would face heightened regulatory scrutiny. The implicit threat—bolstered by the closures of Signature and Silvergate—served as a powerful deterrent. This practice of issuing “pause letters” instead of formal rulemaking is particularly insidious because it leaves banks with little recourse, even as such informal directives persist for years. Some of these letters date back two years, and yet no resolution has been reached.
It’s now evident the FDIC went to great lengths to cover up its actions. The heavy redactions in the initial FOIA request were not simply about protecting confidential information; they sought to conceal evidence of the FDIC’s attempts to suppress bitcoin transactions, blockchain technology development, and stablecoin-related banking products. Moreover, whistleblowers have come forward with additional allegations that the FDIC destroyed documents regarding crypto policies, staff were instructed to inaccurately label documents to avoid FOIA disclosure, agency resources were used to monitor and investigate critics of the FDIC, and employees were threatened with legal action to silence them. Senator Cynthia Lummis has confirmed contact with these whistleblowers and has vowed to take legal action if these allegations are substantiated.
Even the incoming FDIC chair, Travis Hill, has acknowledged the agency’s misconduct. He confirmed the existence of a coordinated effort to debank the crypto industry and called for significant reform:
“Closely related to the agencies’ recent approach to digital assets is the problem of “debanking.” Over the past few years, there have been various accounts of individuals and businesses associated with the crypto industry losing access to bank accounts without explanation. This follows a long history of other types of customers experiencing the problem of debanking, including the politically disfavored business groups targeted by the original “Operation Choke Point,” individuals associated with certain religious or political groups, and many others. Efforts to debank law-abiding customers are unacceptable, regulators must work to end it, and there is no place at the FDIC for anyone who has pushed — explicitly or implicitly — banks to stop serving law-abiding customers.”
With the incoming administration putting an end to discriminatory practices like those seen in Operation Chokepoint 2.0, I initially considered not revisiting this topic. However, I believe three takeaways from these findings are particularly important to highlight.
First, there is now undeniable proof that this was a coordinated effort at the highest levels of the FDIC to target the crypto industry and sever its access to banking. This is no longer a matter of speculation or dismissed as a “crypto conspiracy.” The evidence shows that the FDIC actively discouraged banks from serving crypto companies and ultimately shuttered two banks—Signature and Silvergate—that refused to comply. This is not just illegal; it’s a dangerous abuse of power. The implications go far beyond crypto. If unelected bureaucrats can arbitrarily deny lawful businesses access to basic financial services, it sets a chilling precedent for unchecked authority. When government agencies bypass Congress and proper regulatory channels to secretly suppress industries they disfavor, it threatens innovation, competition, and economic freedom. This issue must be brought to light, as it raises fundamental questions about fairness, accountability, and the rule of law in our financial system.
Second, it’s clear that banks were eager to support the crypto industry and develop related products and services but were expressly discouraged by regulators. The narrative that banks avoided crypto due to its inherent risks has been debunked. These documents reveal that banks were not only willing but actively working on crypto offerings that were ready to launch before being blocked by the FDIC. Each letter represents a lost opportunity—a product or service that could have expanded access to crypto for consumers but was instead shelved. Banks were poised to adopt crypto on a large scale in 2022, and these efforts were deliberately stifled. This underscores how regulatory interference, rather than market hesitance, stymied progress.
Finally, these findings point to an incredibly bullish outlook for crypto moving forward. Even with active suppression by the most powerful government in the world, crypto adoption has surged. Today, 90 million Americans own crypto, and Bitcoin’s value skyrocketed from $17,000 to $100,000 during this period of suppression. The landscape is now shifting dramatically. With a new pro-crypto administration and supportive leadership at the FDIC and SEC, the barriers to entry are beginning to crumble. The banks that were ready to embrace crypto in 2022 now finally have the freedom to do so in 2025 with SAB 121 rescinded and Chokepoint 2.0 ended. As access becomes more seamless—allowing people to buy and hold Bitcoin directly in their bank accounts—the path to mass adoption will accelerate. The opportunities for growth, innovation, and mainstream integration of crypto have never looked brighter.
For those outside the crypto space, it’s difficult to grasp just how stifling the environment has been. Over the last four years, banks were essentially barred from engaging with crypto—no custody, no purchasing, no credit. This systemic suppression is finally poised to end, and the resulting wave of capital could be unprecedented. The potential for this shift has not yet been fully recognized or priced into the market. Between banks gaining access, the likely passage of clear regulatory frameworks, and the intensifying global competition among nations to lead in crypto innovation, 2025 could mark a truly seismic transformation for the industry. The scale of this shift is something most people are still dramatically underestimating.
In Other News
Judges ruled that the SEC violated the administrative procedures act (APA) in denying Coinbase’s petition for rulemaking on crypto and security laws and demand SEC “explain itself.”
Bitcoin ETFs exceeded expectations in 2024, but just wait for 2025.
Next Ethereum upgrade, Pectra, scheduled for March.
Analysts say the Trump presidency marks ‘a turning point’ in US crypto policy.
Bitcoin Whales in “Accumulation Phase” after Trump inauguration.
US securities regulator opens door for Wall Street banks to hold crypto.
Trump’s crypto executive orders help drive $1.9 billion in digital asset fund flows.
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital.
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital or Onramp Invest.
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