Crypto Assets: From Utopian Dream to Political Maelstrom

Editorial: Crypto Assets Have Become the Ultimate Political Asset

An industry that once dreamed of transcending politics has now become a symbol of self-interest and power.

When the Qatari government proposed replacing Air Force One with a Boeing 747, President Donald Trump responded: “Why not? Only a fool would refuse free money.” However, the most concerning self-interested behavior in current American politics is not happening on the runway, but on the blockchain - a gathering place for trillions of dollars in Crypto Assets.

In the past six months, Crypto Assets have played an unprecedented role in American public life. Cabinet officials have invested heavily in digital assets, crypto enthusiasts are involved in regulatory management, industry giants have become major funders of campaign activities, and exchanges have invested hundreds of millions of dollars to support friendly legislators and counter opponents. Family members of the president are promoting their crypto investments around the world, and the largest investors in Meme coins have the opportunity to dine with the president. The Crypto Assets held by the first family are worth billions of dollars and may have become the largest single source of their wealth.

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This forms an ironic contrast with the origins of Crypto Assets. When Bitcoin was born in 2009, it triggered a utopian anti-establishment movement. Early adopters harbored noble goals, hoping to completely change the financial system, protect individuals from asset plunder and the harms of inflation, and shift power from large financial institutions to ordinary investors. This is not just an asset, but a technological liberation movement.

Today, it seems that all of this has been forgotten. Crypto Assets have not only fueled large-scale fraud, money laundering, and other financial crimes, but the industry has also established a special relationship with the U.S. government executive branch that surpasses Wall Street or any other industry. Crypto Assets have evolved into a core asset of political maneuvering.

This stands in stark contrast to regions outside the United States. In recent years, jurisdictions such as the EU, Japan, Singapore, Switzerland, and the UAE have successfully created new regulatory frameworks for digital assets while avoiding the conflicts of interest seen in the U.S. In developing countries, where government expropriation is common, inflation rates are high, and currency devaluation risks are severe, Crypto Assets continue to play the role envisioned by early idealists.

All of this is happening at a time when the underlying technology of digital assets is becoming increasingly mature. Although there is still a lot of speculation in the market, mainstream financial and technology companies are gradually placing more importance on encryption technology. In the past 18 months, the number of real-world assets, including private credit, U.S. Treasuries, and commodities, that have been “tokenized” and traded on the blockchain has nearly doubled. Traditional financial giants are also involved in issuing tokenized money market funds, while crypto companies are issuing tokens linked to assets such as gold.

The payment sector may be the most promising application scenario. Some companies are adopting stablecoins (digital tokens backed by traditional assets). Just last month, a major payment company announced that it would allow customers and merchants to use stablecoins for payments and settlements. Another fintech company has launched stablecoin financial accounts in 101 countries worldwide and has acquired a stablecoin platform. After abandoning related projects for three years, some social media giants may attempt to re-enter this field.

This is an opportunity for the crypto industry to take advantage of while also being at risk. Proponents argue that during the previous administration, they had no choice but to do whatever it took to survive in the face of regulatory pressure. At the time, regulators were pessimistic about the industry, embroiling many high-profile companies in enforcement actions and legal proceedings. Banks are afraid to offer services to crypto companies and to get involved in the crypto space, especially stablecoins, out of fear. From this point of view, the industry makes sense. It is neither efficient nor always fair to clarify the legal status of cryptocurrencies through the courts rather than Congress. Today, the regulatory pendulum clock has swung in the opposite direction, and most cases against crypto companies have been dropped.

The result is that the U.S. encryption industry needs self-redemption. It is still necessary to establish new rules to ensure that risks do not seep into the financial system. If politicians fail to properly regulate Crypto Assets out of fear of the industry’s electoral influence, the long-term consequences will be harmful. The risks of insufficient regulation are not purely theoretical. The three largest banks that collapsed in 2023 had significant exposure to the volatile deposits of the encryption industry. Stablecoins are susceptible to runs and should be regulated like banks.

Without these changes, the leaders in the encryption field will ultimately regret the compromises made in Washington. The industry largely remains silent on the conflicts of interest arising from the presidential family’s crypto assets investments. Legislation that clarifies industry status and asset definitions is necessary, providing the rational regulatory assurance that crypto companies have long desired. However, the intertwining of government business interests and public affairs makes this goal more difficult to achieve. Recently, a key crypto bill failed to pass a procedural vote in the Senate due to the withdrawal of support from several senators.

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Any industry closely associated with a political party cannot escape the influence of voter sentiment fluctuations. This industry sees Trump as a savior and has become a favored political asset, indicating that it has chosen sides. Crypto Assets play a new role in policy-making, but today, the reputation and fate of the industry are closely tied to the rise and fall of its political benefactors. Crypto Assets are substantial assets for the Trump family, but ultimately, the benefits of this relationship may only be one-sided.

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Crypto Assets industry has rapidly become the political center of the United States

Thanks to investments from powerful families, friendly regulators, and substantial election spending.

In late April, Fr8Tech, a Texas-based logistics company with a market capitalization of about $3 million, announced an extraordinary investment. The company said it would borrow up to $20 million to buy TRUMP Meme, the cryptocurrency launched by Donald Trump three days before starting his second presidential term. The president has urged fans on social media: "Join my very special community. Get your coins now. "The company that manages the coin has just announced that the largest investors will be invited to dinner with the president at the end of May. Javier Sergas, CEO of Fr8Tech, said buying the token would be an “effective way” to “advocate” the trade policy that the company wants.

In the same week, in Lahore, Pakistan, fireworks illuminated the night sky in celebration. The Pakistan Crypto Assets Committee, established by the Finance Minister in March, is celebrating its collaboration with the World Freedom Company (WLF). WLF is a company owned by Trump and his family. The company has pledged to help Pakistan develop blockchain products, convert real assets into digital tokens, and provide extensive encryption consulting. The details of the agreement, including financial terms, have not been disclosed. Indian media interpreted this as an attempt by Pakistan to appease Trump—this interpretation became even more sensitive two weeks later when Trump attributed a ceasefire in the India-Pakistan military conflict to himself. Many Indians believe that this ceasefire is too beneficial for Pakistan.

These two events mark a significant shift in the political ecology of Washington. Crypto Assets are on the rise. The President, his wife, and children are actively promoting it both domestically and internationally. The regulators appointed by the President have a friendly attitude toward the industry. Investors are flocking in large numbers. Major pressure groups are emerging like mushrooms after rain, supporting political candidates who advocate for Crypto Assets while attacking opponents. Investors and supporters, including foreign governments, find that this provides a pathway to engage with high-level officials. This emerging industry suddenly finds itself at the core of American public life, but its close ties to certain families also make it somewhat of a partisan venture. Ultimately, such enthusiasm may prove to be more harmful than beneficial for the industry.

Throughout history, many industries have had close ties to political classes. Banks, military-industrial enterprises, and pharmaceutical companies have long maintained influence in the corridors of power. In the late 19th century, railway companies exerted tremendous influence on national and local politics, gaining favorable regulations that drove a great prosperity followed by an economic downturn.

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But no industry has been able to leap from the fringes to become an official darling like Crypto Assets have at such a remarkable speed. At the start of the current government’s first term, the total value of global Crypto Assets was less than $20 billion, and today it has surpassed $3 trillion. When the government nominated the head of the regulatory agency in 2017, Crypto Assets were completely unmentioned during the confirmation hearing. Just in 2021, the same politician scorned digital assets, saying “Bitcoin looks like a scam” and “I don’t like it because it’s another currency competing with the dollar.” The following year, with the price of digital assets plummeting and an $8 billion fraud case at a major exchange, this viewpoint seemed to be confirmed, heralding the beginning of the so-called “Crypto Winter.”

Regulators are also pessimistic about many Crypto Assets. The former chairman of the Securities and Exchange Commission (SEC) insisted that many cryptocurrencies are actually securities and should only be traded on exchanges regulated by the SEC. The agency subsequently sued several large trading platforms and digital asset companies.

However, after the shift in political winds, those financial regulatory agencies that tried to curb Crypto Assets suddenly became enthusiastic about supporting it. This is because the new government appointed staunch industry supporters to lead them. The new SEC chairman previously served as the co-chair of an Crypto Assets industry organization for eight years. Another financial regulatory agency’s chairman nominee is the head of crypto policy at a well-known venture capital firm.

The change in the leadership of the US SEC has led to a sea change in policy. It now takes a narrower definition of which crypto assets fall under the category of securities. The officials in charge of the committee’s newly formed crypto task force are affectionately known in the industry as “crypto moms.” Since the inauguration of the new administration, more than a dozen enforcement actions against crypto companies have been halted, including lawsuits against two major trading platforms, a major crypto issuer, and the first crypto company to receive a state banking license. All this naturally boosted industry confidence: VC funds poured nearly $5 billion into crypto companies in the first quarter of 2025, the highest in nearly three years.

When a new government takes office and installs like-minded officials, significant regulatory shifts are not unprecedented. When a conservative government replaces a progressive one, policies often shift from intervention to laissez-faire. However, it is unusual for government leaders and their families to be deeply involved in industries that benefit from deregulation.

Just a few months ago, a specific family had just begun their investments in the Crypto Assets field, and they have now rapidly expanded. The financial company in which the family holds a 60% stake was established in September 2024 and launched a stablecoin named USD1 in March 2025. This encryption asset, which is pegged to the US dollar, has a market value of over $2 billion, making it one of the largest US dollar-pegged tokens in the world.

The company’s “Honorary Co-founder” is the president’s chief foreign policy advisor; his son is a “Co-founder.” The president himself is the “Chief Crypto Advocate,” and his children are also part of the “Team.” A footnote on the company’s website warns: “Any mention, citation, or related images should not be interpreted as an official endorsement.” A spokesperson stated that this is a private enterprise with no political background, and no one from the government is in its management.

In addition, there is a type of Meme coin (a Crypto Asset created to leverage trends or memes) whose value skyrocketed after its launch on January 17, reaching a market cap peak of about $15 billion, before crashing. Companies related to this family hold 80% of these tokens. The First Lady launched another Meme coin on January 19, which also saw its value soar before a significant drop.

Political families also have direct financial interests in the Crypto Assets sector through their 52% stake in a social media company. In April this year, the company announced a partnership with a trading platform that recently had a lawsuit withdrawn by regulators to sell ETFs involving digital assets and other securities. The social media company stated that it is also considering launching its own encryption wallet and coin.

The volatility of these assets and the uncertainty of ownership make it difficult to accurately calculate how much wealth a specific family has related to these investments. Crypto Assets may now constitute the family’s largest single business line. The Meme coins held by the family alone are worth nearly $2 billion, which is not far off from the total value of all their properties, golf courses, and clubs.

Not only specific families have helped revitalize Crypto Assets, but also large election pressure groups have been heavily investing to promote industry interests. Several affiliated Super Political Action Committees like Protect Progress, Fairshake, and Defend American Jobs spent over $130 million in the lead-up to last year’s elections, making them one of the highest-spending groups in campaign activities. These organizations were all established after the last presidential election. With $260 million in revenue from the previous election cycle, Fairshake is not only the largest PAC advocating for a specific industry but also the largest nonpartisan SuperPAC of all types. In comparison, the National Association of Realtors raised only about $20 million. A certain Crypto Assets company and trading platform is Fairshake’s largest corporate donor, while the founder of a well-known venture capital firm is the largest individual donor.

Fairshake does not emphasize candidates’ positions on Crypto Assets, but rather targets issues that can enhance their favored politicians or hinder those they dislike with advertisements. It previously assisted in the defeat of a California Democratic female congresswoman in the Senate primary with an ad accusing her of selling a list of campaign donors. Another ad supporting a New York congressman praised his firm stance against crime. “Many industries have tried this strategy. The difference lies in our singular focus, which is where the real game-changer is,” said a Fairshake spokesperson. “Our strategy has always been: support supporters, oppose opponents.”

“This is the most blatant display of money and power I have seen in a legislative body,” said the head of a lobbying group advocating for stronger financial regulations. The head was formerly the chief of staff for a former SEC chairman. Fairshake alone has $116 million in cash ready to deploy in the 2026 midterm elections.

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The powerful “war fund” of the crypto industry should help persuade Congress to adopt its policy preferences. Most importantly, it hopes Congress will clarify the legal status of crypto assets to prevent regulatory swings in future elections. After all, government officials come and go, while legislation tends to be more lasting.

The encryption industry hopes to define most Crypto Assets as commodities, regulated by the Commodity Futures Trading Commission ( CFTC ), rather than as securities regulated by the SEC. The CFTC is responsible for overseeing most financial derivatives trading and is the smaller of the two regulatory agencies. Its budget request for this fiscal year is $399 million with 725 full-time employees, while the SEC’s budget is $2.6 billion with 5,073 employees. The encryption industry views the CFTC as a more lenient regulatory option.

A bill that would make the CFTC the main regulator for Crypto Assets stalled in Congress last year. However, since January, Republicans, who tend to favor lighter financial regulation, have controlled both chambers. More importantly, many Democrats also recognize the necessity of placing Crypto Assets on a clearer legal foundation. However, the fervor of certain families for encryption is making it harder for the industry to gain sufficient support in Congress.

The obvious conflict of interest has sparked a wave of criticism from Democratic lawmakers. They believe that many investors do business with specific families or purchase related Crypto Assets merely to appease high-ranking government officials. For example, they pointed out that after the announcement of hosting a dinner with high-ranking government officials for major investors, the price of related Meme coins surged. Another controversy involves the investment company established by the Abu Dhabi government deciding to use a specific stablecoin as a tool to invest $2 billion in a trading platform. It is unusual in itself to fund such a large-scale investment with Crypto Assets, and the business logic behind choosing a brand new and unverified cryptocurrency is even less clear. However, this deal propelled the stablecoin from obscurity to become the seventh largest stablecoin in the world.

On May 8, a bipartisan bill aimed at creating a clear regulatory framework for stablecoins failed to gain Senate approval. Supporters of the bill had previously been confident about its passage. However, Democrats who had previously been optimistic began to worry that it could fuel what they see as power trading behaviors. Two Democratic senators introduced the bill, which aims to prevent the President, members of Congress, and senior government officials from issuing, sponsoring, or endorsing Crypto Assets. Even the Republican senator who has been an active advocate for clear encryption regulation and is a co-sponsor of the bill said that the specific Meme coin dinner “made me hesitate.”

Concerns about regulation of Crypto Assets go beyond the relationship between government and industry. Experts from Yale University’s Financial Stability Program believe that a rapidly growing Crypto Assets industry regulated by a small, non-interventionist agency could pose risks to financial stability. They point out that Crypto Assets are at the heart of the 2023 banking crisis in the United States. The banks where the crisis began had extensive business dealings with Crypto companies and were severely affected by the Crypto winter. As concerns about their losses evolved into a bank run, panic quickly spread to the broader financial system. Critics argue that normalizing the use of volatile Crypto Assets will inevitably pose greater risks to the financial system. Another Democratic senator stated that the stablecoin bill would increase the risk of financial collapse.

On the surface, supporters of Crypto Assets remain optimistic that the industry will gain supportive legislation. However, privately, some industry leaders are critical of the political elite’s Crypto adventure. They worry that the industry’s image as a tool for power trading will make it difficult for legislators to support favorable bills. Nick Carter, a well-known investor in the Crypto industry and a government supporter, is one of the few willing to publicly state that the economic interests of political families in the Crypto industry make it harder for Crypto-friendly legislation to pass. He stated that the high-level response to such criticisms has been poor: “When I mentioned this, certain government officials contacted me and expressed their displeasure.” However, trying to silence those stating obvious facts is unlikely to work. “Conflicts of interest do exist,” Carter said. “No one can truly dispute that.”