Since the Trump administration was sworn into office on January 20, 2025, it has shown incredible restraint from interfering with major American industries. In fact, the artificial intelligence industry has entered a state of self-regulation, which is a sharp contrast with the short leash the Biden administration afforded the industry. The Trump administration appears to be trying a similar hands-off approach with the crypto industry. In the last week alone, the SEC dropped investigations into major players, Robinhood and Coinbase. A breath of fresh air from regulation by enforcement The U.S. SEC under the leadership of Gary Gensler regulated the crypto sector by enforcement actions, characterized by unpredictable crackdowns on the crypto projects that popped up on its radar. The return of the Trump administration in January 2025 signaled a paradigm shift, and the resolution of two high-profile cases against Robinhood Crypto and Coinbase are perfect exhibits of the new era for crypto. On February 21, 2025, the SEC’s Enforcement Division sent a letter to Robinhood Crypto (RHC) saying it concluded its investigation and will not move forward with any enforcement actions. This is a sequel to the May 2024 Wells Notice the watchdog issued to the crypto RHC, which many readily point out as an example of the agency’s overreach. Robinhood’s Chief Legal Officer, Dan Gallagher, stated that the investigation should have never been opened, arguing that the company has always operated within federal securities laws. “As we explained to the SEC, any case against Robinhood Crypto would have failed. We appreciate the formal closing of this investigation, and we are happy to see a return to the rule of law and commitment to fairness at the SEC,” Gallagher explained. Recent financial disclosures from Robinhood show that crypto trading has been a major driver of revenue. The company reported transaction-based revenue of approximately $672 million in the fourth quarter, with about $336 million coming from crypto transactions. This staggering 700% increase in crypto revenue alongside a 38% increase in Robinhood shares since the start of the year is one of many indicators of investors’ enthusiasm, primarily stoked by a perceived accommodating regulatory environment. Similarly, Coinbase, another industry heavyweight, experienced a reprieve from its marathon legal bout with the SEC. The SEC had previously approved Coinbase’s business model in 2021, however, in 2023, it accused the exchange of operating as an unregistered securities exchange. After almost two years in court, it announced that it was dropping its lawsuit against Coinbase on February 21, 2025, pending final approval from the commissioner. Paul Grewal, Chief Legal Officer of Coinbase said that the SEC is finally righting a major wrong and that the case should have never been filed, maintaining that the company has always operated within legal boundaries. He suggested that the crackdown was politically motivated, saying what we are all thinking: “What changed over those two years was the political leadership at the SEC.” Of course, the resolutions of the cases against Robinhood and Coinbase relieve immediate legal concerns, they are also tangible evidence of the broader narrative change in crypto industry regulation. By choosing not to pursue the case further, the SEC under the Trump administration sent a message: innovation should not be killed by vague or overly aggressive regulatory practices. The market responded positively to the news of these developments, with Coinbase’s shares rising by 4.9% in premarket trading, and Robinhood seeing close to a 3.3% rise. The AI industry is a blueprint for self-regulation In July 2023, the White House coordinated an initiative with OpenAI, Google, and Meta, to institute standards that include watermarking AI-generated content to enhance transparency and safety in AI applications and improvements like investment in research on AI safety. The International Organization for Standardization (ISO) introduced the global AI management standard, ISO/IEC 42001 In October 2024. Speaking about the standard developed in a process involving multiple stakeholders, Susan Taylor-Martin, Chief Executive of the British Standards Institution (BSI), said that “although the regulatory landscape is evolving” this standard provides a reliable framework for managing AI’s risks and opportunities, enabling innovation while maintaining governance. Without the guardrails limiting their European counterparts, American AI firms have become far and away the most valuable within the space—the brief DeepSeek disruption notwithstanding. Similarly, the crypto industry could benefit from self-regulation, by creating Self-Regulatory Organizations (SRO), which create and enforce guidelines for members. Self-regulation isn’t a new concept in crypto; a few countries have crypto SROs like Japan and South Korea. Japan has the Japan Virtual and Crypto Assets Exchange Association and Korea has South Korea’s Digital Asset Exchange Alliance. The Winklevoss Twins, founders of Gemini Exchange even proposed a Virtual Commodity Association in 2019. With the Trump administration’s more relaxed stance, the crypto industry can follow the AI industry’s blueprint and develop internal compliance measures and best practices that prioritize transparency, security, and consumer protection. Just as the AI industry collaborated with the government to shape policies that balance innovation with public interest, the crypto industry can also work with regulators to develop a logical framework that protects customers and protects digital asset innovation. For now, a regulatory vacuum The ease of regulatory clampdown on crypto organizations seems optimistic, however, it potentially leaves a vacuum in bad actor policing. A hands-off approach removes the shackles around companies’ ankles, a sudden and unchecked relaxing of regulatory oversight could expose investors and customers to risks. Case in point, just a few hours after news broke that the SEC had dropped Coinbase’s case, Ben Zhou, CEO of Bybit confirmed that his exchange suffered a $1.4 billion hack. The Bybit incident, the largest heist in crypto history, is an immediate reminder of how self-regulation could go wrong. How many companies can be trusted to ensure adequate security measures across platforms? It’s worth mentioning that the Trump administration still plans to regulate crypto with albeit with sensible guidelines. Part of those efforts is the SEC’s acting chairman, Mark T. Uyeda, commissioning a task force to develop a clear and comprehensive regulatory framework for crypto assets US President, Donald Trump also issued the “Strengthening American Leadership in Digital Financial Technology” executive order on January 23, 2025. While we can already see the benefits of a relaxed regulatory environment in surging revenues and stock prices, the long-term viability of this model hinges on how well the industry can self-police and collaborate with the powers that be. Whatever happens, the next few months will be critical. Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More
