You can provide services in this "World Crypto Capital," but you may only see this world from inside a prison.

Written by: L0La L33Tz

Translated by: AididiaoJP, Foresight News

Donald Trump is far from being a "pro-Bitcoin" president. Although the U.S. Securities and Exchange Commission (SEC) has dropped some of its most aggressive cases, there are still legal risks in the U.S. for building non-custodial and privacy-enhancing technologies. You might be able to provide services in this "World Crypto Capital," but you may only see that world from inside a prison cell.

Donald Trump has been serving as the 47th president of the United States since January 20, 2025. As his term just surpassed 200 days, it seems a good time to review how this "Bitcoin president" has paved the way for the U.S. to become what he claims is the "World Crypto Capital," and where we might be headed in the future.

First, during Trump's second term, many well-known industry participants have achieved favorable outcomes in the legal dilemmas they faced under his predecessor's administration.

Do Kwon, the founder of Terra/Luna, reached a plea agreement with the Department of Justice, admitting guilt on only two of nine charges related to causing over $40 billion in losses to investors in just a few days. The Second Circuit Court overturned the insider trading conviction of former OpenSea product manager Nathan Chastain. The SEC dropped lawsuits against cryptocurrency exchanges Gemini and Coinbase, paused litigation against Binance, and reportedly concluded investigations into Consensys, Robinhood, and Uniswap.

Meanwhile, Tron founder Justin Sun, who previously faced SEC charges regarding the offering of unregistered securities and was reportedly under investigation by the DOJ, is now dining with the president.

On the regulatory front, things are also improving. From Ripple to Wyoming, everyone (and their stakeholders) is announcing plans to issue stablecoins, thanks to the only legislation that has become law to date: the "GENIUS Act." Although we still do not know how much Bitcoin the U.S. government holds, as 200 days is clearly insufficient for a comprehensive audit, the cheers for a Bitcoin strategic reserve continue, though the government seems to have no actual plans to purchase Bitcoin but will instead turn to seizing Bitcoin from certain places.

Everyone is a Money Transmitter

Most notably, every industry participant mentioned above heavily relies on the development of open-source technology. Without open-source, none of the platforms mentioned could facilitate transactions, let alone be built. However, for developers of open-source technology, the president's plans do not seem optimistic but rather quite severe.

In July, Samourai Wallet developers Keonne Rodriguez and William Hill pleaded guilty to charges of conspiring to operate an unlicensed money payment business, facing up to five years in federal prison. A week later, Tornado Cash developer Roman Storm was found guilty of the same crime by a jury in the Southern District of New York.

Both prosecutions occurred after a memorandum released by Deputy Attorney General Todd Blanche in April, which was widely praised for being seen as ending the DOJ's attempts to create new laws through prosecution and explicitly called for the DOJ to stop prosecuting software developers for user actions. Despite the praise, the memorandum left so much room to continue such prosecutions that its reliability is almost on par with the Trump administration's promise to release the Epstein list.

Since then, regulatory clarity for developers has reached a historical low. Based on the outcomes of the Samourai Wallet and Tornado Cash cases, non-custodial software developers may no longer be prosecuted for lacking a money transmission license, but they could be charged for transmitting illegal proceeds. So, are non-custodial software developers money transmitters who might face criminal charges in the U.S.? Our guesses are the same as yours.

The verdict against Roman Storm has set what is called a "persuasive precedent," meaning anyone building non-custodial tools could potentially be charged with federal crimes at the discretion of the DOJ.

Introducing the Patriot Act to Digital Assets

In terms of digital asset legislation, the past few months have also been tumultuous. Although the "GENIUS Act" is highly anticipated, arguably more so by those in suits (industry insiders) and those who pay them (stakeholders), it also opens the door for the application of the Bank Secrecy Act, a law that mandates anti-money laundering and Know Your Customer (KYC) requirements.

While the "GENIUS Act" formally codifies certain rules for stablecoin issuers into financial institution regulations, the Treasury has since sought public input on the application of digital identity in so-called DeFi services, which is related to the "GENIUS Act" and will require non-custodial service providers to verify users' identity credentials before executing transactions.

Overall, the Treasury's thinking is that its actions align with one of Trump's earliest executive orders on "strengthening American leadership in digital financial technology," aimed at promoting the "responsible growth and use of digital assets, blockchain technology, and related technologies," with the keyword being "responsible."

Last month's first White House digital asset report ultimately revealed the meaning of this "responsible" growth, calling for Congress to create a new subclass for digital assets under the Bank Secrecy Act and asking the Financial Crimes Enforcement Network to consider next steps for the Biden-era mixer rules: this regulation would nearly suffocate any possibility of transaction privacy, including the use of new, non-KYC addresses.

If this sounds unconstitutional to you, because in this country code is law, I regret to inform you that in the place we are heading, we will not need the Constitution. Most of the ideas proposed by the president are governed by the Patriot Act, and the White House has specifically requested Congress to extend it to digital assets, while the Patriot Act has consistently overridden the Constitution.

In short, the term of the Bitcoin president may sound great on paper, but in reality, the environment for software development in the U.S. has never been so hostile. If the Trump administration aims to truly fulfill its promises to Bitcoin users, it must significantly change course.

Until then, when the government invites us to "come home" and build our services in the World Crypto Capital, it seems we should proceed with caution, as you may only see it from inside a prison cell.

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