James Richardson
Political uncertainty surrounding the cryptocurrency industry is increasing, according to a recent analysis by TD Cowen’s Washington Research Group, led by Jaret Seiberg. In a Monday note, the group warned that former President Donald Trumpโs expanding involvement in the crypto space could jeopardize the advancement of regulatory and legislative frameworks in the United States.
โWhile we donโt yet believe political risk has completely derailed the crypto agenda in Washington, the level of threat is climbing,โ Seiberg wrote. He emphasized that the political climate has become a critical risk factor for investors evaluating the future of digital asset regulation in the U.S.
Regulatory Momentum at Risk Amid Trump-Linked Crypto Activity
U.S. regulators and lawmakers have recently made headway in establishing clearer rules for crypto markets, including discussions on stablecoin oversight and overall market structure. The Securities and Exchange Commission (SEC) has been dropping several enforcement cases, and Acting SEC Commissioner Mark Uyeda even hinted at potential exemptions for crypto exchanges looking to trade tokenized securities.
However, Seiberg cautioned that this progress may be undermined by Trump-affiliated crypto initiatives. One particular area of concern is a planned stablecoin launch connected to Trumpโs business network, which could provoke a political backlash and stall constructive efforts in Washington.
AML Policies and Controversial Crypto Ties Raise Red Flags
TD Cowenโs note also highlighted worries about shifting anti-money laundering (AML) stances under a potential second Trump term. For instance, the removal of sanctions on crypto mixing service Tornado Cash and the reported reduction of crypto-related money laundering investigations by the Department of Justice were noted as warning signs.
Adding to the concern is a recent Wall Street Journal report stating that executives from Binance met with U.S. Treasury officials to discuss scaling back oversight โ while also exploring a possible partnership with World Liberty Financial, a Trump-associated crypto venture. The report also pointed out that Justin Sun, founder of Tron, is the largest external investor in World Liberty and serves as an adviser.
According to blockchain analytics firm TRM Labs, over $26 billion in illicit crypto transactions last year occurred on the Tron network โ more than half of all such activity globally.
Crypto Reforms Still Advancing, But Political Risk Looms
Despite these challenges, Seiberg believes crypto regulation is still progressing, for now. However, he stressed that the political risks are intensifying and could soon become a major obstacle to legislative clarity in the crypto space.
โThis isnโt about current derailment โ itโs about increasing risk,โ Seiberg noted. โAnd thatโs what crypto investors need to prepare for.โ
