The Trump administration is closing investigations into cryptocurrency marketplaces

The Trump administration is closing investigations into cryptocurrency marketplaces as President Donald Trump seeks to grow the United States' footprint in the digital asset space.

The Trump administration is closing investigations into cryptocurrency marketplaces as President Donald Trump seeks to grow the United States’ footprint in the digital asset space.

Trump has taken several actions meant to signal his deregulation of cryptocurrency while calling for the United States to build a digital stockpile, moves that experts expect may lead consumers to be more comfortable investing in digital assets.

“Certainly at the moment the expectation is we are going to get a clearer regulatory framework. A more permissive regulatory approach,” William Luther, associate professor of economics at Florida Atlantic University, told UPI. “So individuals who may have otherwise been hesitant to purchase or use cryptocurrency will see that the government is more favorable to these assets than it was previously. That will give them a bit more confidence to enter into this space.”

The U.S. Securities and Exchange Commission has dropped two key cases against cryptocurrency marketplaces since Trump has taken office.

Last week, the SEC agreed to drop charges against Coinbase(NASDAQ:COIN) for allegedly illegally selling securities, according to the company. The company, a cryptocurrency exchange marketplace, said in a statement that it was a case that “should never have been filed in the first place.”

Robinhood Cryptocurrency announced that the SEC was ending its investigation into the company over potential violations of securities law. Like Coinbase, Robinhood said in a statement that the investigation should not have happened.

“As we explained to the SEC, any case against Robinhood Crypto would have failed,” Dan Gallagher, chief legal, compliance and corporate affairs Officer for Robinhood Markets, said in a statement. “We are grateful to the SEC for closing its inquiry.”

Both investigations were launched under the administration of former President Joe Biden, but Luther explains that Trump and Biden’s policies as they relate to cryptocurrency are not all that different.

“It’s not that the prior administration was opposed to crypto to the extreme,” he said. “Even Gary Gensler, when he was at the SEC, wasn't stamping out cryptocurrencies. He even indicated at times that some of the things that they were trying to do to limit the reach of cryptocurrency, particularly to retail users, wouldn't apply to assets like Bitcoin, which he described as not being a security.”

Gensler, the chair of the SEC, was often characterized by legal experts as having an aggressive focus on enforcing regulations on cryptocurrency firms. His focus on the asset was primarily in mitigating fraud and penalizing fraudsters.

Cryptocurrency is the most common form of payment fraudsters are paid with in ransomware attacks, according to the Financial Crimes Enforcement Network, an arm of the U.S. Treasury Department.

Trump has nominated Paul Atkins to be the next chair of the SEC. Atkins is a former co-chair at the cryptocurrency advocacy group the Token Alliance.

In his remarks from Miami last week, Trump said he is committed to making America the “crypto capital.” His January 23 executive order suggests he is interested in spurring along the adoption of digital assets in the United States and establishing a government stockpile.

Trump has commissioned the establishment of the President’s Working Group on Digital Asset Markets, charging it with identifying regulations, proposing regulatory frameworks and evaluating the potential creation of a national digital asset stockpile.

The government has long held cryptocurrencies, at least relative to the history of their existence. It has acquired cryptocurrencies by seizing them through its enforcement efforts, much like it has acquired cash, cars and other goods.

"Make no mistake. The U.S. government owns crypto because that's what criminals have been using," Aaron Klein, senior fellow at the Brookings Institution, told UPI. "Just like the U.S. owns some Ferraris too."

Biden similarly commissioned research into cryptocurrency, directing the Federal Reserve to explore whether the government should create its own cryptocurrency in 2022.

Months later, the Federal Reserve came back with a recommendation for the government to explore creating a cryptocurrency that it referred to as a digital dollar.

"Innovation is one of the hallmarks of a vibrant financial system and economy," then-Treasury Secretary Janet Yellen said in a statement. "But as we have learned painfully from the past, innovation without appropriately addressing the impact of these developments can result in significant disruptions and harm to the financial system."

The Trump Administration is not yet following up on this recommendation. As part of Trump's executive order, he has prohibited the Central Bank or any agency from establishing, issuing or promoting a digital currency in the United States or abroad.

$TRUMP

Hours before taking the oath of office, Trump launched a meme coin called $TRUMP. A meme coin is an often volatile form of cryptocurrency derived from internet memes.

Trump's coin experienced an almost immediate spike in value after launching but has collapsed since. With its initial spike it was trading as high as $31. The current value is a fraction of a cent, down more than 97% since launching.

First lady Melania Trump also launched a coin just as Trump was taking office. $MELANIA