The Democrats are "encircling" Trump's encryption new policy.

With voices of opposition rising, will the new encryption policy be "difficult to produce"?

Written by: Bright, Foresight News

On May 1, 2025, Elizabeth Warren, a senior Democratic Senator on the U.S. Senate Banking Committee, along with five colleagues, sent a joint letter to Treasury Secretary Janet Yellen, harshly stating that the Trump administration's plan to incorporate encryption assets into the national strategic reserves "could pose a systemic threat to the stability of the U.S. financial system."

This 12-page letter not only lists risks such as cryptocurrency price fluctuations and regulatory arbitrage but also publicly questions for the first time the利益输送 between the Trump family and the cryptocurrency industry. World Liberty Financial (WLFI), a cryptocurrency company controlled by the Trump family, has recently been revealed to have reached a $2 billion investment agreement with MGX, a venture capital firm supported by the Abu Dhabi government, while the shareholder list disclosed on the WLFI official website shows that the Trump family members hold a striking 42% stake.

This is not the first time the Democratic Party has targeted Trump's encryption policy. As early as April 29, Maxine Waters, the chief Democratic member of the House Financial Services Committee, successfully obstructed a joint hearing on the Republican-led "Cryptocurrency Market Structure Act" on the grounds of "conflict of interest." In her letter to Committee Chairman Hill, she stated plainly: "When the Trump family earns hundreds of millions of dollars by issuing meme coins (TRUMP) and investing in DeFi projects, any attempt to loosen regulations will become a tool for money laundering."

The "Gene Warfare" of the Two Parties' encryption Policies

Democratic Party: From "Financial Security" to "Political Settlement"

Elizabeth Warren, as a "encryption hawk" within the Democratic Party, has a position that dates back to 2017. At that time, she led the drafting of the "Cryptocurrency Bill" which aimed to bring 90% of encryption assets under securities regulation, requiring exchanges to register with the SEC and disclose user information. This proposal was further escalated in a 2025 joint letter, where she suggested that the scale of cryptocurrency reserves should be limited to 0.5% of federal assets, and mandated that reserve assets must be held in compliant stablecoin forms like USDC.

Democratic leader of the House Financial Services Committee, Stephanie Murphy, focused on the topic of "national security." At the congressional hearing on April 30, she presented FBI investigation data: money laundering transactions through encryption in 2024 increased by 370% year-on-year, with 62% involving Russian oligarchs and Middle Eastern terrorist organizations. "When the Trump family conducts encryption transactions with Middle Eastern sovereign funds, we must be vigilant about whether this constitutes a new geopolitical risk," Murphy emphasized.

As the core infrastructure of the crypto ecosystem, stablecoins have become the focus of the recent game between the two parties. The Republican-led GENIUS Act sought to establish a federal regulatory framework for stablecoin issuance, but the Democrats abruptly switched on May 4, with nine Democratic senators joining forces to oppose the existing version, calling for stronger anti-money laundering and foreign issuer scrutiny. As a direct result of this shift, the probability of passing the bill in the Senate plummeted to 37%.

Republicans: From "Innovation Freedom" to "Strategic Layout"

In stark contrast to the Democratic Party, the Trump administration is systematically advancing the "strategization" of encryption assets. An executive order signed on January 24 established a digital asset task force led by AI and encryption commissioner, "crypto czar" David Sacks, which is required to submit a report within 180 days that includes a framework for stablecoin regulation, national encryption reserve standards, and other content. On March 6, Trump took it a step further by signing an executive order announcing that the federal government would include 200,000 Bitcoin (approximately $18 billion) in the national strategic reserve and explore incorporating assets such as XRP and SOL into the reserve system.

This policy shift is underpinned by the Republican Party's deep layout regarding "digital dollar hegemony." An analysis by the strategic consulting firm Rhodium Group points out that Trump's new encryption policy seeks to transfer the settlement function of the dollar from the traditional banking system to the blockchain through the "stablecoin + on-chain assets" model, thereby circumventing the impact of geopolitical friction on the dollar's position.

Trump's encryption policy trends directly influence market sentiment. On March 2, when the White House announced the exploration of the possibility of encryption asset reserves, the price of Bitcoin surged 12% within 24 hours, breaking through the $95,000 mark. However, this optimistic sentiment did not last; after the Democratic joint letter was exposed on April 29, the price of Bitcoin plummeted 8% in a single day, with a market value evaporating by over $200 billion. On-chain data shows that WLFI sold a total of 128,000 ETH (approximately $350 million) from March 1 to April 30, coinciding with the peak of market selling pressure.

Turbulent "Encryption Empire"

As the operator of the family encryption business, Eric Trump has deeply tied his personal wealth to the encryption industry. In addition to serving as an ambassador for World Liberty Financial, he also acts as an advisor for Japanese encryption giant Metaplanet and American Bitcoin, a U.S. Bitcoin mining company, with a total annual salary exceeding 20 million dollars.

This conflict of interest has sparked strong dissatisfaction among Democrats, with Warren stating in a joint letter: "When Eric Trump promotes the Dubai encryption tower at the Token2049 summit, he is essentially leveraging the political capital of the presidential family for financial gain." The American center-left watchdog organization Accountable.US referred to the Trump coin ranking plan as "the most blatant presidential corruption fundraising scheme in American history," believing it will open the door for wealthy donors to easily access the U.S. president and allow the Trump family to pocket more.

According to OpenSecrets data, the cryptocurrency industry donated over $120 million to federal political candidates in 2024, with 78% flowing to the Republican Party. Leading companies like Coinbase have donated $35 million to Trump's campaign team through PAC (Political Action Committee) in exchange for policy support. This "money politics" has heightened the vigilance of the Democratic Party, with Congressman Brad Sherman presenting evidence at the hearing: investors in WLFI include the Saudi sovereign wealth fund and Russian oligarchs, and these funds may be laundered through cryptocurrency transactions.

The tech giants of Silicon Valley and the "old money" on Wall Street are showing a split in this game. BlackRock CEO Larry Fink openly supports Trump's encryption reserve plan, calling "Bitcoin digital gold against fiscal deficits." Meanwhile, renowned economist and famous gold bull Peter Schiff insists, "U.S. stock index futures and the dollar are both experiencing sell-offs. However, gold and Bitcoin show completely opposite trends again. Gold behaves like a safe-haven asset, rising about 1%. In contrast, Bitcoin's trading performance resembles that of a risk asset, falling about 2%. Clearly, Bitcoin is not digital gold."

Currently, there are three key bills before the U.S. Congress: the Republican-led "encryption Market Structure Act," the Democratic "encryption Consumer Protection Act," and the bipartisan compromise "Stablecoin Regulatory Framework." Analysts point out that if Trump fails to push at least one bill through by November 2025, the encryption industry will face the risk of a "regulatory vacuum."

May 6 is the deadline for the White House's order to establish a strategic Bitcoin reserve and a U.S. digital asset reserve, requiring the Treasury Secretary to submit an assessment report within 60 days. Can the Trump administration submit this "homework" on time?