Author: Neil Humphrey

Washington, D.C. –  The Digital Chamber (TDC) recently strengthened its advocacy efforts through the addition of Shayla Moon, Director of Government Relations. “We’re thrilled to welcome Shayla Moon as our new Director of Government Relations at the Digital Chamber. Shayla’s incredible experience, deep network, and undeniable talent make her the right leader at the right time. As Washington prepares to move the first-ever digital asset legislation over the finish line, I have full confidence in Shayla’s ability to lead that charge and deliver real results for our members and the broader industry.” – Cody Carbone – CEO of The Digital Chamber. 

“I am excited to join the Digital Chamber team during this transformative period for the blockchain and digital asset industry. Leveraging my experience in legislative affairs and my deep passion for innovation and economic empowerment, I look forward to advancing efforts to engage policymakers and stakeholders on key issues shaping the future of Web3.” – Shayla Moon – Director of Government Relations of The Digital Chamber. 

Shayla Moon is a dedicated advocate for bipartisan collaboration and global competitiveness in today’s rapidly evolving digital economy. As the new Director of Government Relations at the Digital Chamber, she will help to engage policymakers on legislative and regulatory matters that shape the future of blockchain, Web3, and emerging technologies. With a deep background in public affairs, economic development, and trade association leadership, Shayla is committed to fostering an environment where innovation thrives. 

Her career is defined by a strong commitment to bridging political divides and advancing policies that fuel economic growth. Before joining the Digital Chamber, she was Senior Vice President of the Greater Washington Board of Trade, spearheading initiatives that strengthened the region’s business ecosystem. She has also held policy leadership roles at the National Urban League and the U.S. Department of Commerce, where she influenced key legislative efforts on economic policy, housing, and international trade. Throughout her work with trade associations and nonprofits, Shayla has been a consistent champion for solutions that enhance economic resilience and expand opportunities for businesses and communities alike. 

Beyond traditional policy work, Shayla has played an instrumental role in advancing bipartisan initiatives—from supporting nuclear arms reduction through the New START Treaty to advocating for intellectual property protections in collaboration with the Motion Picture Association of America and Creative Future. Her advocacy underscores a steadfast commitment to policies that drive innovation, safeguard economic interests, and promote U.S. leadership in emerging technologies. 

A proud United States Air Force veteran and HBCU graduate, Shayla remains deeply engaged in community service, lending her expertise to nonprofit boards and advocacy organizations. When she’s not shaping the future of blockchain policy, she enjoys gaming, skiing, and adding to her sneaker collection. 

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About The Digital Chamber 
The Digital Chamber is the world’s leading trade association representing blockchain and digital asset innovators. Founded in 2014, the organization has shaped national policy, defended the industry during its most challenging periods, and secured bipartisan support for blockchain innovation. Today, The Digital Chamber is building the future of the digital economy through education, advocacy, and strategic engagement in Washington and around the world. 

Website: www.digitalchamber.org 

Washington, D.C. – The Digital Chamber proudly presented a special Hero Award to Tigran Gambaryan at the 2025 DC Blockchain Summit, recognizing his extraordinary courage, resilience, and unwavering commitment to combating illicit finance in the digital asset industry. The award was presented by U.S. Rep. Warren Davidson in a powerful moment that underscored the values of justice, freedom, and integrity. 

A former IRS Special Agent and current Binance executive, Tigran was unjustly detained in Nigeria for nearly a year in 2024 while working to promote compliance and responsible practices in the digital asset space. Despite enduring significant physical and emotional hardship, he remained steadfast in his principles — a powerful example of integrity in the face of adversity. 

“We are humbled to honor Tigran Gambaryan with the Hero Award,” said Perianne Boring, Founder and CEO of The Digital Chamber. “His life’s work — both in law enforcement and in the private sector — has made this industry safer and more accountable. His unjust detention highlighted the very real risks faced by those who uphold the rule of law. Today, we celebrate his strength, his service, and his return.” 

Congressman Davidson, a longtime advocate for civil liberties and financial innovation, delivered remarks before presenting the award and shared this statement: 

“I am proud to recognize Tigran Gambaryan – a U.S. citizen – for his resilience and bravery in the face of his unjust detention in Nigeria. His release is a relief, but it never should have happened—no American should be used as leverage by a foreign government. I’m honored to present him with the Hero Award and to welcome him home.” 
  
“I’m deeply honored to receive this award and want to sincerely thank The Digital Chamber, the U.S. government, my incredible wife Yuki, and the countless friends—both personal and professional—who worked tirelessly to bring me home. Your support carried me through the darkest days. I hope what happened to me never happens to another compliance professional. No one should be punished for doing the right thing.” 

Tigran’s career — from leading complex investigations at the IRS to building global compliance programs in the private sector — has left a lasting impact on the digital asset industry. As this space continues to evolve, The Digital Chamber remains committed to honoring those who lead with integrity and ensuring that no one who stands up for what’s right ever stands alone. 

For media inquiries or interviews, please contact digitalchamber@transformgroup.com. 

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About The Digital Chamber 
The Digital Chamber is the world’s leading trade association representing blockchain and digital asset innovators. Founded in 2014, the organization has shaped national policy, defended the industry during its most challenging periods, and secured bipartisan support for blockchain innovation. Today, The Digital Chamber is building the future of the digital economy through education, advocacy, and strategic engagement in Washington and around the world. 

Website: www.digitalchamber.org 

Washington, D.C. – The Digital Chamber (TDC), the world’s first and largest blockchain trade association, today announced that President Trump’s son Don Jr. has joined its updated lineup of speakers for the 10th annual DC Blockchain Summit, the premier event for blockchain professionals, policymakers, and innovators. The Summit, sponsored by Chainlink, will be held in Washington’s Capital Turnaround state-of-the-art event venue next week on March 26, 2025. 
 
Trump will be joining virtually at 11:05 a.m. as part of a panel called “Digital Liberty: Expanding Global Access to Digital Assets and DeFi,” moderated in person by IOHK Founder and CEO Charles Hoskinson. Trump will be joined by Zach Folkman, Chase Herro and Zach Witkoff, the Co-Founders of World Liberty Financial, the pioneering DeFi protocol and governance platform inspired by Donald J. Trump. Trump is also one of World Liberty Financial’s Web3 Ambassadors, along with Barron Trump and Eric Trump. President Donald Trump is World Liberty Financial’s Chief Crypto Advocate. Trump actively oversees The Trump Organization’s extensive property portfolio and the expansion of the company’s real estate, retail, commercial, hotel and golf interests. 

“The first few months of the new Trump administration have been as consequential a period as we’ve ever seen for blockchain, especially from a policy perspective. Donald Trump Jr. has undoubtedly helped inform the new administration’s receptiveness, and outside the halls of policy, remains one of the best advocates for crypto and blockchain as the future of finance,” said Perianne Boring, Founder and CEO, The Digital Chamber (TDC). “It is a crucial time to align industry and policymakers to ensure the U.S. leads the world in blockchain innovation and the DC Blockchain Summit is creating that conversation with the industry’s top thought and policy leaders.” 
 
The event’s full agenda is now live at https://www.dcblockchainsummit.com/agenda. This year’s lineup of Summit speakers comprises a broad spectrum of backgrounds, including blockchain pioneers, industry executives and policymakers to discuss the key areas of opportunity, considerations and friction points that need to be resolved to enable institutional engagement.   The event will be livestreamed exclusively on Rumble.  
  
Speakers include:   

• Michael Saylor, Co-Founder and Executive Chairman, Strategy, Inc 
• Richard Teng, CEO, Binance 
• Paolo Ardoino, CEO, Tether 
• Sergey Nazarov, Co-Founder, Chainlink
• Stani Kulechov, Founder, Aave Labs
• Avery Ching, CEO, Aptos Labs
• Tigran Gambaryan, Head of Financial Crime Compliance, Binance
• Thomas J. Lee, Co-founder, Head Of Research, Fundstrat/FS Insight
• Wyoming Governor. Mark Gordon
• Senate Banking Committee Chairman Tim Scott
• U.S. Sen. Ted Cruz
• U.S. Sen. Cynthia Lummis
• U.S. Sen. Bill Hagerty
• U.S. Sen. Tim Sheehy
• U.S. Sen Kirsten Gillibrand
• House Financial Services Committee Chair French Hill 
• Digital Asset Subcommittee Chairman Bryan Steil  
• SEC Commissioner HESTER M. PEIRCE
• Hon. David Burt, Premier, Government of Bermuda
• Among many more…  

   
The DC Blockchain Summit for the last decade has brought together the most influential voices leading the blockchain and digital asset ecosystem, connecting them with the nation’s top policymakers and regulators for crucial discussions and conversations on key issues that will define the future of the industry and its success. This exclusive event features policymakers shaping legislation and regulations impacting blockchain development, as well as CEOs, leading companies, and investors who align with The Digital Chamber’s mission to drive the industry into the future.   
  
For more information on the DC Blockchain Summit, please visit https://www.dcblockchainsummit.com.  

For media inquiries or interviews, please contact digitalchamber@transformgroup.com. 

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About The Digital Chamber 
The Digital Chamber is the world’s leading trade association representing blockchain and digital asset innovators. Founded in 2014, the organization has shaped national policy, defended the industry during its most challenging periods, and secured bipartisan support for blockchain innovation. Today, The Digital Chamber is building the future of the digital economy through education, advocacy, and strategic engagement in Washington and around the world. 

Website: www.digitalchamber.org 

The Nation’s First and Largest Trade Association for Blockchain and Digital Assets Names Cody Carbone as CEO

Washington, D.C. – The Digital Chamber (TDC), the industry’s leading advocacy organization, today announced a strategic leadership transition as it shifts from a defensive stance to a bold, proactive strategy for shaping blockchain policy in Washington, D.C.

Cody Carbone, who currently serves as President, will assume the role of Chief Executive Officer (CEO) in April. In this role, he will set the strategic direction of The Digital Chamber, drive its policy and advocacy efforts, and lead the organization into its next phase of growth. Perianne Boring, Founder and CEO, will transition into the role of Chair of the Board of Directors, where she will continue to shape the organization’s long-term strategy and policy vision.

A Turning Point for Crypto Policy in Washington

This transition comes at a pivotal moment for the digital asset industry. With pro-crypto leadership in the White House and Congress, TDC is shifting into full execution mode to cement U.S. leadership in blockchain innovation.

“For the first time, we have a government that recognizes the strategic importance of digital assets,” said Perianne Boring, Founder & CEO. “Now is the time to advance policy, drive adoption, and execute on the vision we have been fighting for over the past decade. Cody has been a tremendous leader in Washington, and I have full confidence in his ability to take TDC to the next level.”

Former CFTC Chairman, and TDC Advisory Board member Chris Giancarlo praised Boring’s leadership and TDC’s role in shaping policy for the industry. “Perianne has been a pioneering champion for the industry and has built The Digital Chamber into the preeminent policy voice for the digital asset industry. The next era of advocacy is a critical opportunity to drive the U.S. to the forefront of digital asset innovation. Cody is extremely well qualified to lead this next chapter for The Digital Chamber.”

Cody Carbone to Lead the Next Phase of Growth

Since joining The Digital Chamber, Carbone has been instrumental in shaping policy, driving regulatory engagement, and building key relationships with lawmakers and industry leaders. His leadership has played a critical role in securing major legislative victories for the digital asset space.

“I am honored to take on this role at such a defining moment for our industry,” said Cody Carbone, President and Incoming CEO of The Digital Chamber. “The Digital Chamber has been the leading voice for digital assets in Washington, and with pro-crypto momentum building, our work is more important than ever. We are ready to go on offense and drive policy that ensures the U.S. leads in blockchain innovation.”

Join the Conversation at the DC Blockchain Summit

Boring and Carbone will outline the organization’s vision at the DC Blockchain Summit on March 26, offering exclusive insights into the future of blockchain policy.

Fireside Chat: “Beyond Defense: The Digital Chamber’s Vision for the Next Decade”

This exclusive conversation will highlight TDC’s policy priorities, the road ahead for digital assets in Washington, and the industry’s path forward under the new administration.

For media inquiries or interview requests, please contact digitalchamber@transformgroup.com.

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About The Digital Chamber

The Digital Chamber is the world’s leading trade association representing blockchain and digital asset businesses. Founded in 2014, the organization has been instrumental in shaping policy, educating lawmakers, and driving regulatory clarity to support the responsible growth of the digital asset industry. For more information, visit www.digitalchamber.org.

March 13, 2025  

By: Jean-Philippe Beaudet 

Digital identity systems are becoming increasingly common worldwide, with over 90% of countries storing identification information digitally. Among these, 67% support in-person digital identity verification or authentication, and nearly 40% issue digital IDs capable of remote authentication for online services and transactions.¹ These digital IDs are used to provide services to citizens, track individuals who may pose security risks, and prevent identity theft and fraud. 

Unfortunately, despite the advanced countermeasures designed to prevent counterfeiting and fraud, fake IDs — both physical and digital — continue to circulate widely, particularly on American college campuses. Meanwhile, stolen documentation complicates efforts to secure U.S. borders against illegal migration, not to mention the financial burden on Americans. Identity theft cost Americans over $43 billion in 2022 alone. Blockchain Identity Credentials (BICs) offer enhanced security and data fidelity to protect Personally Identifiable Information (PII) from theft and fraud. According to the University of Texas at Austin’s Center on Identity, BICs could have prevented an estimated $1.59 billion in fraud and identity theft cases between 2000 and 2020.² 

Preventing Identity Fraud with Immutable Records 

Blockchain’s immutable decentralized ledger is a natural solution to the growing challenge of identity fraud. Once an identity is recorded on the blockchain, it cannot be altered or manipulated without detection. Each transaction involving a user’s digital identity – whether authentication for government services, financial institutions, or healthcare systems – can be securely logged, ensuring the integrity of their personal data. This capability drastically reduces the risk of counterfeit documents or the use of stolen credentials, strengthening border security and making it harder for adversaries to exploit weak points in identity verification systems. 

Securing National Identity Databases 

Traditional identity databases are prime targets for hackers, with breaches of government and corporate systems often resulting in massive leaks of sensitive personal information. In August 2024, a breach of National Public Data systems exposed an estimated 2.9 billion records, including names, addresses, and Social Security numbers.³ BICs reduce this risk by spreading control of personal data across multiple points, rather than storing it in one central system. Using cryptographic keys, only authorized entities can access this information, making it far more difficult for hackers to steal data. This approach makes BICs powerful tools for protecting national databases, securing citizens’ identities, and defending against cyber espionage and digital terrorism. 

Empowering Citizens with User-Owned Identities 

One of the most significant advantages of using BICs is the built-in concept of user-owned identity, which gives individuals full control over their personal data. Rather than disclosing entire documents, citizens can selectively share specific pieces of personally identifiable information (PII) as credentials for bespoke purposes—for example, proving they are old enough to buy alcohol without revealing their exact birthdate or home address. This approach enhances privacy while still providing governments and other entities with the verifiable data they need for security checks. By limiting the exposure of sensitive information, self-sovereign identity systems reduce the risk of identity theft and minimize unnecessary data collection. 

Enhancing Border Security and Immigration Control 

Blockchain Identity Credentials can significantly improve the efficiency and security of border control, customs, and immigration processes. By leveraging BICs to authenticate digital IDs in real-time, customs and immigration officials can instantly verify the legitimacy of travel documents and visas, reducing wait times and improving the detection of fraudulent credentials. BICs also enable better tracking of individuals of interest—such as those on watchlists or with criminal histories—while maintaining transparency and accountability. By streamlining identity verification, blockchain enhances immigration control and strengthens national borders against security threats. 

The Digital Chamber will continue to collaborate with policymakers, researchers, and industry leaders to advance the integration of blockchain into identity management systems to foster innovation and protect the identities and safety of U.S. citizens. 

1. Metz, A., Casher, C., and Clark, J. 2024. ID4D Global Dataset Volume 2: Digital Identification Progress and Gaps. Washington, DC: World Bank. License: Creative Commons Attribution CC BY 3.0 IGO.
2. How Much Identity Management with Blockchain Would Have Saved Us? A Longitudinal Study of Identity Theft. R. Nokhbeh Zaeem, K. Suzanne Barber, UT CID Report #20-14, July, 2020. Pp 9-11.
3. Emily DeLetter, Social Security Hack Exposes 2.9 Billion Records in National Public Data Breach. USA Today. August 15, 2024. https://www.usatoday.com/story/tech/2024/08/15/social-security-hack-national-public-data-breach/74807903007/

March 12, 2025  

On October 24, 2024, the Financial Industry Regulatory Authority (FINRA) published The Metaverse and the Implications for the Securities Industry, analyzing the metaverse’s potential impact on broker-dealers and investors. The Digital Chamber (TDC) responded with a comment letter supporting FINRA’s proactive approach and advocating for a balanced, technology-neutral regulatory framework.

Assessment of the Report

TDC commends FINRA’s efforts to explore metaverse applications in financial services, such as trading, investor education, and virtual consultations. The Metaverse Report provides a thorough analysis of the metaverse’s potential, outlining both opportunities—such as enhanced customer engagement, operational efficiencies, and new investor education tools—and regulatory challenges. FINRA’s detailed examination of real-world use cases, including virtual branches, gamified investor education, and VR financial advisors, reflects its commitment to staying ahead of technological advancements. By addressing these elements, the report lays a strong foundation for continued dialogue between regulators and industry stakeholders. 

TDC’s Recommendations

In close collaboration with TDC members, we submitted comments addressing these emerging use cases and potential regulatory considerations. Highlights from that comment letter are as follows: 

1. Maintain a Technology-Neutral Framework

FINRA’s existing regulatory framework should remain adaptable to emerging technologies without necessitating broad overhauls. Broker-dealers need clarity on how current regulations apply to metaverse-related activities to foster innovation while ensuring compliance. 

2. Foster Industry Collaboration

FINRA should continue to proactively engage with broker-dealers, platform developers, and other industry participants to identify compliance challenges, data privacy concerns, and best practices for investor disclosures in immersive environments. 

3. Monitor Trends

To ensure its rules remain relevant, FINRA should track adoption rates, evolving definitions of metaverse technologies (VR, AR, digital twins), and emerging cross-border regulatory challenges. 

4. Provide Targeted Guidance Where Needed

The metaverse introduces unique challenges related to compliance, supervision, and recordkeeping. Rather than implementing sweeping new rules, FINRA should clarify how existing regulations apply to decentralized platforms, virtual branch offices, avatar-based interactions, and other novel use cases. Providing targeted guidance will enable firms to implement effective oversight and risk management practices. 

5. Consider Practical and Operational Implications

To ensure regulatory clarity and compliance, FINRA should assess how firms apply existing compliance processes to metaverse innovations rather than imposing outdated standards. A principles-based approach will support responsible adoption while maintaining investor protections. Where rule modifications or new rules may be needed, FINRA should actively solicit feedback from member firms to ensure they have a full understanding of the practical implications involved that necessitate such changes. 

6. Ensure Continued Regulator Education

FINRA should expand its Crypto Hub to include metaverse-related advancements, ensuring a consistent and informed regulatory approach. Centralizing expertise, improving internal knowledge-sharing, and aligning examination and policy efforts will better support responsible innovation in this evolving space. 

Conclusion

TDC remains committed to collaborating with FINRA and other regulators to establish a regulatory framework that supports responsible innovation in the metaverse. As the technology evolves, regulators must remain adaptable, working closely with industry stakeholders to refine policies and address emerging challenges. A flexible, principles-based approach will ensure that innovation can thrive while maintaining market integrity and investor protection.  

We look forward to ongoing discussions with FINRA and policymakers to shape a regulatory landscape that fosters compliance, industry growth, and technological advancement. In addition, we appreciate the contributions to this comment letter by Gavin Meyers, Elaine Critides, and Gene Burd of Pierson Ferdinand LLP for their expertise and leadership in putting together our response. For more information or to get involved in these discussions, please contact us at membership@digitalchamber.org.

By: Jean-Philippe Beaudet

March 10, 2025  

Artificial intelligence (AI) has quickly cemented itself into the national security discussion and will remain a key focus area where the U.S. must maintain dominance in ingenuity and development. While U.S. adversaries execute AI-enhanced cyber-attacks and deploy fully autonomous weapons systems, more subtle threats from AI likewise hold drastic implications for American national security. Blockchain-based decentralized AI solutions are the most promising options for our developing national AI ecosystem.  

AI is increasingly integrated into software across all industries, from home thermostats and map apps on every phone to the industrial control systems that monitor tank pressure in nuclear reactors and prevent meltdowns. Alongside this growing reach, the machine learning models that ‘teach’ AI are opaque, vulnerable, and their operation requires enormous amounts of energy and computation. The decentralized, open, and immutable nature of blockchain technology offers solutions to these key challenges.   

Shining Light Into AI’s Black Box   

Decentralized AI (DeAI) – (i.e. models rooted in and built on blockchain networks) provides an alternative to the opaque nature of traditional AI, whose learning processes, disturbingly, the world’s best computing experts cannot fully explain. By basing AI models on blockchains throughout AI model construction, every decision, training step, and data point involved in AI processes can be recorded transparently. This allows stakeholders to audit and verify how AI models learn and make decisions, ensuring we understand the possibilities and vulnerabilities of this technology as both we and our adversaries deploy it in the national security context. After all, if AI is guiding our missiles or identifying the targets, we should endeavor to understand how and why it is reaching its conclusions.  

Data Integrity and Poisoning Defense   

Blockchain’s immutable and transparent ledger ensures that data used in AI models remains tamper-proof and trustworthy. Since each data point is securely recorded and distributed across the network, any attempt to alter or corrupt the data is easily detectable. This feature defends against “model poisoning” attacks, where adversaries insert malicious or biased data to manipulate an AI’s learning process. Blockchain safeguards the integrity of the data-feeding AI models, preventing unauthorized changes and ensuring the reliability and accuracy of AI outputs critical to national security.   

Decentralized Computing and Energy Demands   

AI requires extreme amounts of computing power and energy to function effectively. Relying on centralized data centers to handle the computing and power demand can create cooling, physical security, local grid capacity, cybersecurity, and service delay issues for distributors. DeAI allows networks to pool, distribute, and redirect resources as necessary to meet these increased demands. This is exactly why major cloud computing providers have dispersed their data centers worldwide – but this dispersed, centralized AI infrastructure introduces single points of failure that threaten our national security and economic dynamism. For example, if a major cyber-attack disabled Amazon Web Services (AWS), the leading global cloud service provider, 34% of the globe’s cloud computing would fail, costing U.S. businesses an estimated $11.4 billion per day.1 This type of centralized digital infrastructure is far less resilient than the decentralized alternatives blockchain technologies enable.  

By leveraging blockchain’s immutable and distributed nature the U.S. can mitigate AI’s black-box risks, defend against adversarial manipulation, and create a more robust computational backbone for our nation’s AI-driven security applications. A decentralized approach ensures that America’s AI ecosystem remains resilient, verifiable, and resistant to the single points of failure that threaten centralized architectures. In an era where technological superiority dictates geopolitical power, embracing blockchain-based AI is not just an option—it is a necessity. 

If you have any questions, please reach out to Policy@digitalchamber.org. 

Who We Are 

The Digital Chamber (TDC) advocates for national and international standards that leverage blockchain’s inherent strengths to mitigate AI’s greatest risks and unleash AI’s economic dynamism. 

Citations 

1. Parametrix Insurance, “Cloud Outage and the Fortune 500”, 2023. 

The Digital Chamber Continues its Efforts to Shine a Light on the SEC’s Unfair Practices Towards the Digital Asset Industry  

For over a decade, the SEC has imposed shifting, inconsistent, and often baseless regulatory roadblocks against digital asset innovation. Time and again, its actions have been driven not by clear legal standards but by subjective policy preferences, effectively acting as a merit regulator rather than an impartial enforcer of the law. 

Its resistance to digital assets has been met with mounting legal challenges, growing frustration from market participants, and, ultimately, a historic course correction, but only after investors were forced to miss out on significant opportunities. 

The Crypto Conundrum: A History of Unfair Bitcoin ETF Denials 

In 2022, The Digital Chamber published The Crypto Conundrum: Why Won’t the SEC Approve a Bitcoin ETF?, detailing how the SEC’s Division of Trading and Markets consistently denied applications for exchange-traded funds (ETFs) that applications that had sought to allow the listing and trading of exchange-traded funds (ETFs) that directly held bitcoin. 

The Crypto Conundrum argued that the continual denials were based not on objective and dispassionate application of law and precedent, but rather on policy judgments made by the SEC’s staff regarding digital assets. Put more concisely, the agency wasn’t just enforcing regulations: it was acting as a merit regulator, arbitrarily picking winners and losers in the marketplace. 

This position was resoundingly vindicated less than a year after the publication of The Crypto Conundrum when the D.C. Circuit Court of Appeals unanimously decided that the SEC’s denial of a Bitcoin ETF application constituted “arbitrary and capricious” behavior and a violation of the Administrative Procedures Act.   

The result? The opinion paved the way for the approval of eleven Bitcoin ETFs in 2024 in what would turn out to be the most successful ETF launch in history. 

Beyond Merit: The SEC’s Investment Management Division and Digital Assets 

While The Crypto Conundrum focused on the SEC’s Division of Trading and Markets, TDC’s latest report, Beyond Merit: How the SEC’s Division of Investment Management Blocked Permissible Investments in Digital Assets, shifts the spotlight to the Division of Investment Management, the division responsible for regulating investment companies and advisors. 

Based on interviews with numerous issuers, this report details the vast lengths to which the Division of Investment Management has gone to prevent registered investment companies from providing meaningful exposure to bitcoin and other digital assets. Instead of following clear legal guidance, the SEC imposed constantly shifting standards with no basis in rule, statute, or law: Once again, acting as a merit regulator rather than an unbiased enforcer. 

This isn’t a story about any one administration or SEC chair. The report explicitly rejects any notion that the SEC’s inappropriate treatment of digital assets can be laid at the feet of a particular political party, administration, or individual.  

Dating back nearly a decade, the first anecdote recounted in this report occurred in 2015 when Barack Obama was President and Mary Jo White was the SEC Chair. The Dalia Blass Letter cited in the report was issued during Jay Clayton’s term as SEC Chair during Donald Trump’s first administration, and it was the Gary Gensler-led SEC that unsuccessfully litigated seeking to prevent the issuance of Bitcoin ETFs.  

This is a story of how the Division of Investment Management, over nearly a decade, has consistently operated beyond its mandate. It is not the actions of any one individual, but a pattern of regulatory overreach embedded within the division itself. 

Why it Matters 

In recent years, the SEC has increasingly faced accusations that it has been wandering into the “unbounded, dangerous territory of merit regulation,” as SEC Chairman Hester Peirce artfully described in 2020, and is one of the most common refrains heard by TDC members. 

Accordingly, TDC set out to chronicle and highlight such instances with the hope that shining a light on such behavior might encourage the SEC to return to the authorized path on which it was initially set. 

The report made the problem clear: The agency overstepped its mandate—as it relates to a registered investment company’s exposure to digital assets. The SEC had never encountered an asset quite like bitcoin before—one that is purely digital in nature—and perhaps feared that the average investor was swept up in a speculative fever over an asset class lacking a clear investment rationale. As the agency sought to indulge its impulse to save investors from themselves, it found very few tools at its disposal to effectuate its aims. This was by design, as seeking to save investors from themselves, is explicitly not what Congress intended for the SEC when it created the agency. Congress had considered and actively pivoted away from merit-based regulation. 

In its efforts to limit exposure to bitcoin and digital assets, the SEC took positions that lacked legal justification, fueling widespread disillusionment and accusations of regulatory bias. Yet, despite the agency’s attempts to stifle the market, bitcoin’s adoption and value only grew. In trying to “protect” investors, the SEC instead deprived them of missing out on the large gains such investors would have otherwise experienced. 

Time for Change 

As we enter 2025 and with the SEC set to enter a new chapter in its history, our report seeks to play a very small part in encouraging the SEC to return to the authorized path on which it was initially set. There will always be a new asset or company that inspires wonder on the part of investors and skepticism on the part of the SEC. It is our hope the SEC will learn from its experience with digital assets, and in the future, resist the siren song of merit regulation. 

What is S.J.Res.3?  

S.J.Res.3 is a joint resolution introduced by Sen. Cruz (R-TX) and Rep. Mike Carey (R-OH). The resolution provides for congressional disapproval under chapter 8 of title 5, (5 U.S.C. § 8) of the rule submitted by the Internal Revenue Service (IRS) relating to “Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales”. The rule was finalized December 30th, 2024.  

Why does 5 U.S.C. § 8 Matter? 

• This harmful rule/regulation broadens the definition of a “broker” to encompass operators of custodial digital asset trading platforms, certain providers of hosted digital asset wallets, processors handling digital asset payments, and individuals who act as vendors in transactions with customers.
  • This would include owners of digital asset kiosks, brokers accepting digital assets as commission payments, brokers dealing in digital assets, and issuers of digital assets who regularly offer redemption services for those assets. 

• This rule also defines decentralized financial (DeFi) participants as “brokers,” subjecting them to stringent and overly burdensome requirements that DeFi technology does not have the technical capability to meet.
  • In adopting this standard, the Treasury Department and IRS rejected numerous comments from the public that various types of trading front-end service providers do not have sufficient visibility to be able to know the nature of these transactions.  

This rule undermines the purpose of DeFi technology: to allow individuals to freely buy, sell, and exchange digital assets. 

The Digital Chamber encourages regulators and lawmakers to support market freedom for the buying and selling of digital assets, as well as simplicity and privacy in rulemakings for their tax-filing process. 

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Advancing Digital Assets with Over 70 Industry Leaders on Capitol Hill 

The Digital Chamber (TDC) proudly kicked off the 119th Congress with a fly-in and welcome event, bringing together over 70 digital asset companies to engage with policymakers on Capitol Hill. This event set the stage for a transformative legislative session focused on advancing pro-crypto initiatives. 

This Congress marks a historic turning point for digital assets, as it represents the first “pro-crypto” majority Congress, alongside the first pro-Bitcoin and digital asset President. The evolving political landscape provides a significant opportunity to establish clear, forward-thinking digital asset policies, and TDC is committed to ensuring that the United States leads the global blockchain revolution.

A Day of Advocacy on Capitol Hill 

On January 22nd, TDC and its members met with Congressional leaders from both parties, sharing a clear and unified message: the United States must act decisively to foster innovation and establish itself as a global leader in digital asset technology. 

The discussions focused on three critical priorities: 

• Implementing clear and thoughtful digital asset regulations. 
• Encouraging collaboration between lawmakers, industry leaders, and regulators. 
• Promoting proactive policymaking and education to drive innovation. 

Freshman members of Congress demonstrated an impressive understanding of digital asset technology, underscoring that this is the most crypto-educated Congress in history. Both new and veteran members expressed enthusiasm about working with TDC and industry stakeholders to advance policies that will shape the future of the digital asset economy. 

Key Highlights from the Day 

• Freshman Representation: The 119th Congress includes 63 freshman Representatives (33 Democrats, 30 Republicans) and 12 freshman Senators (4 Democrats, 8 Republicans). Many are pro-crypto, reflecting the growing bipartisan recognition of the importance of blockchain technology. 
• New Senate Subcommittee on Digital Assets: The Senate Banking Committee has established a subcommittee on digital assets, chaired by Senator Cynthia Lummis. This signals that digital asset legislation will be a priority in the months ahead. 
• Bipartisan Momentum: A strong bipartisan effort is underway to drive legislation that promotes the growth of the U.S. digital asset economy. Discussions moved beyond the security vs. commodity debate, with lawmakers expressing interest in addressing stablecoin, NFT, custody, and blockchain-enabled AI legislation. 

Building Momentum for 2025

The day concluded with a bipartisan celebration hosted by TDC and Constellation Network, where policymakers and industry leaders reflected on the progress made and discussed the exciting opportunities ahead. The event highlighted a shared commitment to advancing digital asset innovation and positioning the United States as the crypto capital of the world. 

As we look to 2025, TDC remains dedicated to fostering collaboration across the public and private sectors to drive meaningful progress in the digital asset ecosystem. We extend our gratitude to Constellation Network for sponsoring this milestone event and look forward to the work ahead. 

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