Until recently, it was “green light galore” in the crypto markets since Trump’s election victory. Bitcoin momentarily breached the all-important $100.00 level, a nearly 500% recovery from the 2022 Crypto Winter lows, and crypto optimism has even reached Congress, where talks on a US National Bitcoin Reserve are gaining serious steam .
If stock market bull runs are marathons, crypto bull runs are breakneck sprints. But buyer beware: When cryptocurrency rises and FOMO takes hold, scammers seize the moment and turn hype into a gold mine for illegal activity.
Without a clear legislative framework yet in place, the risks are amplified. With former President Trump returning to office with a more pro-crypto Congress, regulatory changes feel imminent. But what risks do investors face if enforcement actions are not adequately funded?
The 2024 election results could mark a pivotal chapter in crypto history. Can the new Trump administration rise to the challenge of not only unlocking greater innovation in crypto, but also better protecting its users and investors?
Why enforcement and protection should still be a priority
Crypto bull runs are often accompanied by an increase in fraud and scams. In 2023 alone, a period of rising prices, the FBI’s Crypto Fraud Report showed that there were $5.6 billion in reported losses linked to crypto fraud and scams. A staggering 70% ($3.9 billion) of those losses stemmed from investment fraud.
While phishing scams are rampant in a digital world, the tenfold increase in Bitcoin ATM fraud losses from 2020 to midway through 2024 illustrates the problem in a tangible way. $65 million in just the first six months of 2024 was stolen via Bitcoin ATMs, with the average loss around $10,000, according to the Federal Trade Commission. Taken together, these numbers show the economic damage and reveal gaps that need to be addressed to protect consumers and deter bad actors – especially if crypto continues to gain traction and popularity.
The United Kingdom has shown how government policy can adapt directly to the rise in crypto-related crime. In 2024, regulatory updates were made to allow law enforcement to more effectively investigate, seize and recover illicit crypto assets. Key measures include allowing asset seizures without prior arrests, confiscating investigative-related items such as passwords, transferring assets to law enforcement-controlled wallets, destroying certain crypto-assets such as privacy coins when necessary, and enabling victims to reclaim their money.
The challenge is to strike a balance between the measures implemented in the UK while ensuring the privacy and sovereignty of crypto users.
To maintain its reputation as a global leader in financial regulation, the United States must establish a framework that fosters innovation while protecting market participants from bad actors and refocusing efforts on investigating criminal activity.
At the heart of the problem lies regulatory ambiguity, which has plagued the crypto industry for years. In 2024, despite spot Bitcoin and Ethereum ETFs gaining approval, enforcement measures against major crypto institutions intensified, something critics cite as an adversarial approach to oversight. This uncertainty stifles innovation and leaves companies struggling to navigate an inconsistent regulatory landscape.
For the incoming Trump administration, there is an obvious starting point for addressing high-level compliance issues: creating a clear division of responsibilities between agencies such as the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) to eliminate regulatory overlap or opaque rules. But that only partially solves the bigger problem.
Investor Protection Protects Crypto’s growth potential
Compliance frameworks are only as strong as those who investigate and enforce them. Effective compliance requires investment – not only from individual companies, but also from enforcement agencies. If no one is there to enforce the rules, bad actors have little to fear. Historically, regulatory agencies have lacked the specialized resources needed to oversee the rapidly evolving digital asset landscape, particularly at the state level. The Trump administration now has the opportunity to prioritize investments in specialized enforcement capabilities, equipping agencies with the tools, talent and technology to stay ahead of sophisticated bad actors.
For example, this could involve creating deeper channels of law enforcement cooperation and facilitating public-private partnerships to monitor and prevent illegal activities in the digital asset space. It could also significantly reduce the heavy-handed enforcement approach currently applied to the crypto industry.
By allocating funds to train staff and develop resources tailored to digital assets, agencies can better track, investigate and prosecute illegal activity. In addition, public and private investment in blockchain analytics tools can enable more efficient tracking of transactions, deter bad actors, and assist in asset recovery in the event of fraud.
This strengthened enforcement strategy would not only protect consumers, but also enhance the legitimacy and reputation of the US digital asset market on the global stage.
What Will Crypto Look Like Under a Pro-Crypto President and Congress? For me, the future is exceptionally bright. However, the way forward will require active dialogue, strategic investments and a commitment to cooperation between industry leaders and regulators. This moment has the potential to redefine the digital asset landscape in the US, setting a high standard for the world.
