The Wolf Den #1138 – The Leaders Shaping Digital Finance In D.C.

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In This Issue:

The Leaders Shaping Digital Finance In D.C.
Bitcoin Thoughts And Analysis
Legacy Markets
Tokenization Will Primarily Happen In One Place
Inflation Is A Part Of The Conversation Again
Institutions Are Selecting Ethereum
Ondo Officially Partners With WLFI
Bitcoin Plunges On Shocking CPI Report – Is the Crash Just Beginning?

The list of individuals nominated, appointed, and actively working on the crypto front in the U.S. to undo the damage caused by the previous administration and Operation Chokepoint 2.0 continues to grow.

With news relatively quiet at the moment, now seems like a good time to break down who’s actually making the decisions around crypto right now. Understanding these key players will help us know what to watch, who to listen to, and where to focus our attention moving forward.

In no particular order, here are the individuals shaping crypto policy today—and likely for years to come. This list excludes Congress, where at least half of its members are now familiar with crypto and broadly supportive of the industry.

Secretary of the Treasury: Scott Bessent

“They’re willing to take on the whole industry because of the bad behavior of one actor.”
— Bessent, referencing SBF’s donations to Democratic causes.

“I have been excited about [Trump’s] embrace of crypto, and I think it fits very well with the Republican Party, the ethos of it. Crypto is about freedom, and the crypto economy is here to stay.”

“Crypto is bringing in young people, people who have not participated in markets.”

Scott Bessent has replaced none other than Janet Yellen—one of the most prominent figures in the anti-crypto camp—and he’s staunchly pro-crypto. His appointment as Secretary of the Treasury marks a major shift away from traditional government or academic picks for the role. Instead, Bessent brings a much-needed perspective from the investment world.

For those unfamiliar with him, Bessent is the founder of Key Square Group and previously served as chief investment officer at Soros Fund Management. A fun fact: he played a key role in George Soros’s legendary 1992 bet against the British Pound, a trade that netted a $1 billion profit. If anyone understands the intersection of crypto, markets, and policy, it’s him.

Chairman of the CFTC: Brian Quintenz

Brian Quintenz is the newest name on this list, having just been selected yesterday. The former CFTC commissioner is Donald Trump’s pick to lead the federal commodities regulator. Quintenz previously served at the CFTC from 2017 to 2021, where he chaired the Technology Advisory Committee and proposed the idea of a self-regulatory organization for the crypto industry.

Most recently, he served as Head of Policy for a16z Crypto, the venture fund of Andreessen Horowitz, which played a major role in Fairshake, the crypto-focused PAC that invested nearly $140 million in the 2024 election.

Acting CFTC Chair Caroline Pham praised Quintenz’s leadership and expressed confidence in his ability to guide the CFTC on crypto and innovation.

The CEO of the DeFi Education Fund also weighed in, stating, “He has a long track record of supporting DeFi and advocating for sound policies that will enable DeFi developers and users to thrive in the United States.”

Let me reiterate: Brian Quintenz is the Head of Policy for a16z Crypto, the venture arm of Andreessen Horowitz. It doesn’t get more pro-crypto than that.

Commerce Secretary: Howard Lutnick

Trump selected Howard Lutnick, CEO of Cantor Fitzgerald, as co-chair of his transition team ahead of the November election. Lutnick is a well-known Bitcoin advocate who recently spoke for 21 and a half minutes at the Bitcoin 2024 conference, passionately endorsing both Bitcoin and Tether. He’s particularly enthusiastic about Tether, stating, “I’m a big fan of this stablecoin called Tether.”

Not long after, Trump selected Lutnick as Commerce Secretary. While he may not be a broad crypto advocate, he is strongly pro-Bitcoin—and very vocal about it. “I am a fan of crypto, but let me be very specific: Bitcoin, just Bitcoin. These other coins, they are just not a thing.”

“The easiest way to get a clear view of where Bitcoin is going over the next five years is to take a look at the past five… Traditional financial service companies want to transact in Bitcoin, they want new asset classes to transact in, that’s just a good thing, but they need the regulator to say it’s okay.”

Lutnick is essentially a Bitcoin maximalist. While a broader perspective might be useful for someone in a leadership role, maxis have a way of keeping things grounded and getting results. Love them or hate them, they’re effective. And in this case, having Lutnick in the mix is a win.

SEC Commissioner: Hester Peirce

Hester Peirce is one of five SEC commissioners, but she’s leading the SEC’s Crypto Task Force, which is why she deserves special mention. Peirce has been a strong crypto advocate for years, frequently dissenting from Gary Gensler’s anti-crypto stance, though she never had the voting power to steer the agency’s direction.

Appointed in 2018, Peirce has earned a reputation for pushing for regulatory clarity and supporting innovation in digital assets. As head of the SEC’s Crypto Task Force, she is actively working on key issues surrounding crypto regulation. Her term ends in 2025, but Trump has the power to reappoint her. Losing her would be a setback, but with the SEC finally under new leadership, the agency is already heading in a better direction.

SEC Chairman: Paul Atkins

Paul S. Atkins currently serves as CEO of Patomak Global Partners LLC, a consulting firm specializing in financial services regulation, risk management, and compliance. But his background runs much deeper.

Atkins is a former SEC commissioner (2002–2008), where he played a pivotal role in corporate governance reforms, improving shareholder communication, and overseeing the resolution of the Bennett Funding Group Ponzi scheme, recovering significant value for investors. A fun fact: Atkins was responsible for hiring current commissioners Hester Peirce and Mark Uyeda.

Following his tenure at the SEC, Atkins co-chaired the Token Alliance at the Digital Chamber of Commerce, further solidifying his experience in crypto policy.

“I mean, it’s been a really interesting time to see the whole blockchain area kind of thrive, and obviously we’ve come into a rough patch here, to say the least, in the last few years.”

“To have something that isn’t controlled by any particular entity, isn’t centralized, and operates as a trustless product—where you have different miners or validators confirming transactions and appending them to the blockchain—makes a lot of sense.”

Crypto and AI Czar: David Sacks

President-elect Donald Trump has appointed David Sacks, former PayPal COO, as his “White House A.I. & Crypto Czar.”

For anyone unfamiliar with the term “czar” in U.S. government, it refers to an informal but high-level position overseeing a specific policy area or emerging issue. These roles don’t require Senate confirmation, which allows for faster action in shaping policy compared to traditional bureaucratic processes.

Sacks has also been tasked with evaluating the concept of a Bitcoin Reserve. He confirmed this during a recent press conference alongside lawmakers Tim Scott, French Hill, Glenn Thompson, and John Boozman, in a discussion on the future of crypto policy.

Tulsi Gabbard and Stephen Miran: Director of National Intelligence and Chairman of the Council of Economic Advisers

While neither Tulsi Gabbard nor Stephen Miran will have a direct role in shaping crypto regulations, both hold high-ranking positions and have expressed pro-crypto views. Gabbard recently stated, “There is value in the U.S. having its own Strategic #Bitcoin Reserve.”

For the first time in Bitcoin’s 15-year history—and in crypto’s broader decade-long rise—there are more pro-Bitcoin and pro-crypto leaders shaping policy, innovation, and national strategy than ever before.

Digital assets are unstoppable, but with the right people in charge, adoption will accelerate at an unprecedented pace.

I couldn’t be more bullish on where this industry is headed. The right pieces are in place, and as a result, good things will come to those who wait.

DAILY CHART

Sharing this chart each day has become redundant. Bitcoin is sideways below multiple areas of resistance. Yesterday pump, today, dump right back. Nothing to see here.

The euro surged, and European stocks hit record highs as optimism grew around potential US-Russia negotiations to end the Ukraine war. The euro extended its longest winning streak of the year, gaining as much as 0.6%, while the dollar weakened. Oil prices fell further on speculation that easing geopolitical tensions could reduce risks to Russian supply, and Ukrainian dollar bonds outperformed emerging-market peers.

Europe’s Stoxx 600 rose 0.7%, driven by strong earnings reports from Nestlé and Siemens. Meanwhile, US equity futures remained flat as markets processed Wednesday’s hotter-than-expected US inflation data, which pushed expectations for the Federal Reserve’s next rate cut to December. Treasury yields edged higher after their biggest selloff since December, with traders watching upcoming producer-price inflation data and a 30-year bond auction.

The British pound climbed after the UK economy posted an unexpected 0.1% growth in Q4 2024, defying expectations of a contraction. In political developments, President Trump disclosed that he had spoken with Russian President Vladimir Putin to initiate discussions on ending the Ukraine war. While no concrete details emerged, markets responded positively to the news, boosting European asset prices.

Among corporate movers, Barclays plunged after maintaining its earnings outlook, while Siemens rallied on strong demand for electrification products. Unilever announced plans to list its ice cream division, and Nestlé outlined a strategy to boost sales growth through price hikes. Nissan warned of significant losses following the collapse of merger talks with Honda. Meanwhile, British American Tobacco dropped over 8% on weaker-than-expected revenue guidance for 2025, impacted by regulatory changes in Australia and Bangladesh.

Markets will now focus on upcoming inflation data and the ongoing geopolitical discussions, with investors weighing the broader economic and market implications of easing trade and war risks.

Eurozone industrial production, Thursday
US initial jobless claims, PPI, Thursday
Eurozone GDP, Friday
US retail sales, industrial production, business inventories, Friday
Fed’s Lorie Logan speaks, Friday

Some of the main moves in markets:

S&P 500 futures were unchanged as of 6:08 a.m. New York time
Nasdaq 100 futures rose 0.1%
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 rose 0.7%
The MSCI World Index rose 0.3%

The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.4% to $1.0424
The British pound rose 0.4% to $1.2502
The Japanese yen rose 0.4% to 153.79 per dollar

Bitcoin fell 1.5% to $96,243.68
Ether fell 0.2% to $2,678.35

The yield on 10-year Treasuries declined two basis points to 4.60%
Germany’s 10-year yield declined three basis points to 2.45%
Britain’s 10-year yield declined two basis points to 4.53%

West Texas Intermediate crude fell 1.3% to $70.43 a barrel
Spot gold rose 0.4% to $2,916.74 an ounce

There’s an ongoing debate about where tokenization will take place. It’s a fair discussion, and I don’t expect a winner-takes-all scenario. However, I do believe there will be one dominant chain—and that will be Ethereum.

Consider this: BlackRock, which has been championing tokenization for some time, has a spot ETH ETF with cumulative net inflows of $4.4 billion. In March 2024, it launched BUIDL, an institutional digital liquidity fund, on Ethereum in partnership with Securitize—the same Securitize that also backs USDtb, the Ethena Labs stablecoin. Notably, BlackRock has not filed for a Solana ETF and has openly stated, “I think it will be a while before we see anything else,” referring to expanding its ETF lineup. Larry Fink himself said ETFs are “stepping stones towards tokenization.”

Meanwhile, Fidelity has remained largely silent on the issue. If tokenization is going to scale meaningfully, it will have to come from major players like BlackRock, Fidelity, or Coinbase. Sure, Ondo, Franklin Templeton, and Hashnote are making moves, but until the biggest institutions fully commit, tokenization will continue advancing at a slow but steady pace—primarily on Ethereum.

Inflation came in hotter than expected, and the market went haywire yesterday. Ten-year yields spiked, while gold, stocks, Bitcoin, and bonds all dropped. To put it simply:

When yields rise, capital moves away from risk-on assets, triggering the declines we just saw—though they may be short-lived. Predictably, Trump blamed Biden for inflation, which was hardly a surprise.

The real question is: how will the Fed respond?

The Fed is now stuck in a tough spot—cut rates to appease investors (and Trump) but risk fueling more inflation, hike rates to combat inflation but risk a market meltdown, or do nothing and hope the problem sorts itself out.

I have four Ethereum stories for this segment! Let’s start with Tether and Arbitrum.

Tether has chosen Arbitrum, an Ethereum Layer 2 solution, as the infrastructure provider for USDT0, its new cross-chain US dollar stablecoin. Arbitrum One will serve as the main hub connecting USDT deployments across Ethereum, Tron, TON, and Celo to USDT0. For those unfamiliar, USDT0 is how USDT reaches new chains, such as Ink, Berachain, and MegaETH. It’s designed to be secure and omnichain.

Next is the Goldman Sachs news.

Goldman Sachs significantly increased its cryptocurrency ETF holdings in Q4 2024, ramping up its Ether ETF exposure by 2,000%, from $22 million to $476 million. Most of this investment went into BlackRock’s ETHA and Fidelity’s FETH, with an additional $6.3 million in Grayscale’s ETHE. Goldman also boosted its Bitcoin ETF holdings by 114%, reaching $1.52 billion, with a major increase in IBIT shares and Fidelity’s FBTC.

Second to last, we have World Liberty Financial.

WLFI just added 1,917 ETH for $5 million, bringing its total ETH holdings to 78,538 ETH, worth $216 million. That’s almost 61% of their portfolio. Retail might be frustrated with Ethereum’s price action, but Wall Street and the big players are still all in. Follow the whales—not the X accounts pushing doom and gloom for engagement and their own bags.

Finally, 21Shares has proposed staking for Ethereum ETFs.

It was only a matter of time before spot ETH ETF issuers started proposing staking for their products. I expect nearly every issuer to follow suit as they finalize the necessary details. This could be a game-changer for inflows, giving ETH a second wind—especially with its recent inflows already looking solid. Boomers love dividends and yields, and staking is about to give them both.

Yesterday, when I first shared this news, it was briefly posted and then completely scrubbed from the internet—almost like someone jumped the gun on the announcement. Now, it’s officially out, unchanged, so I’ll just leave it at that. World Liberty Financial is likely gearing up for a series of partnerships and collaborations this year, further solidifying its position in the market.