Regulatory capture has taken centre stage in America’s crypto policy under Donald Trump. In less than a year, Trump’s administration has systematically dismantled U.S. crypto enforcement, reshaping the regulatory landscape. Through hand-picked appointments, agency restructuring, and deregulatory policy shifts, watchdogs like the SEC, CFTC, and DOJ are now seen as enablers rather than enforcers. The result is a historic rollback of crypto oversight, one that benefits industry giants and Trump-linked ventures while raising questions about market integrity.
The most visible symbol of this shift came in April 2025, when Deputy Attorney General Todd Blanche abruptly disbanded the National Cryptocurrency Enforcement Team (NCET). Created in 2021, NCET has pursued high-profile cases like the Tornado Cash investigation involving more than $1 billion in laundered funds, and the conviction of trader Avraham Eisenberg for a $110 million market manipulation scheme. Blanche’s memo declared that the Justice Department would no longer pursue cases against crypto exchanges or wallet services, dismissing the Biden-era strategy as “regulation by prosecution.” From now on, federal prosecutors would focus only on crimes linked to terrorism, narcotics, or human trafficking. For the broader crypto industry, the message was clear: enforcement was over.
The Securities and Exchange Commission (SEC) quickly followed suit. Its Crypto Assets and Cyber Unit, once responsible for lawsuits against Binance, Coinbase, and Kraken, was gutted under Trump’s appointees. By February 2025, the SEC had withdrawn key guidance on how banks should handle crypto custody. Three months later, the agency dropped its blockbuster lawsuit against Binance “with prejudice,” permanently ending one of the most significant enforcement cases in crypto history. Binance celebrated the dismissal as vindication, but critics noted the timing: just weeks earlier, the company had signed a $2 billion partnership with World Liberty Financial (WLF), the Trump family’s flagship crypto venture.
At the centre of this transformation are Trump’s personnel choices. He appointed Paul Atkins as SEC Chairman, a long-time crypto advocate who previously ran a consulting firm advising blockchain firms and served on the Digital Chamber of Commerce. Markets immediately celebrated his nomination, with Bitcoin prices surging past $100,000. Atkins wasted no time, declaring that “most crypto assets are not securities” and launching Project Crypto, a sweeping initiative to bring Wall Street fully “on-chain”.
Working alongside him is Commissioner Hester Peirce, nicknamed “Crypto Mom,” who was tapped to lead a new Crypto Task Force. Staffed almost entirely by industry-friendly officials, the Task Force is focused on deregulation rather than enforcement. Peirce has openly promised exemptions for token launches, airdrops, and experimental cross-border crypto sandboxes. Absent from the task force are consumer protection voices, reinforcing concerns that the SEC is now functioning as an industry partner rather than a regulator.
The Commodity Futures Trading Commission (CFTC) has also fallen in line. Acting Chair Caroline Pham announced a “Crypto Sprint” to “usher in a Golden Age of Crypto,” granting crypto exchanges permission to trade perpetual derivatives and operate 24/7 markets. The agency even opened the door for international crypto firms to service U.S. clients without registering locally, providing a gift to offshore giants like Binance.
All of these shifts have had direct benefits for Trump-linked ventures. World Liberty Financial, in which the Trump family holds a controlling stake, has been granted exemptions under Regulation D and Regulation S that allow it to raise hundreds of millions internationally while avoiding U.S. disclosure rules. Its WLFI tokens have not been classified as securities, despite clearly offering governance and revenue rights that normally fall under securities law. And when the IMF initially resisted Pakistan’s massive 2,000MW Bitcoin mining allocation, pressure from Washington led the fund to soften its stance — a move that conveniently opened billions in mining opportunities for WLF’s partnership with Pakistan.
Critics warn that this dismantling of oversight represents a dangerous experiment. Senate Banking Committee members have raised alarms that the GENIUS Act — Trump’s flagship crypto law passed in July 2025 — contains no safeguards against conflicts of interest, despite directly benefiting Trump’s family-run stablecoin USD1. Financial experts argue the U.S. is moving toward a “Wild West” market that may invite fraud, money laundering, and systemic instability. Lawrence Trautman, in his study Crypto Regulation in the Time of Trump, warns that dismantling enforcement while encouraging rapid growth “poses fundamental risks to the soundness of U.S. capital markets”.
The theory of regulatory capture explains much of what is happening. Nobel economist George Stigler described how industries invest heavily in influencing regulators while ordinary citizens lack the resources to fight back. The result is agencies that operate as advocates for private companies rather than protectors of the public. Trump’s appointments, many of whom have deep financial ties to crypto, fit this model perfectly. For the Trump family and allied firms, the benefits are concentrated and immense: billions in wealth, freedom from enforcement, and preferential treatment in global markets. For ordinary Americans, the costs are dispersed, hidden in weaker protections, higher risks, and potential financial instability.
Trump’s regulatory revolution may secure America’s place as a short-term crypto hub, but it risks eroding trust in financial markets and weakening democratic accountability. By aligning public policy so closely with private family business, the administration has blurred the line between governance and profiteering. Whether this strategy ultimately strengthens or destabilises the U.S. economy remains uncertain, but one thing is clear: crypto’s future in America is being written not by regulators, but by those it was meant to regulate.
