Crypto regulation likened to “floor is lava” as Trump faces backlash
At a recent Securities and Exchange Commission (SEC) roundtable, Commissioner Hester Peirce compared the experience of US financial firms navigating cryptocurrency regulations to playing a game of “the floor is lava” – but in the dark, writes Cointelegraph.
Speaking at the “Know Your Custodian” event on April 25, Peirce said firms trying to engage with crypto-related activities face unclear guidelines, forcing them to avoid direct interaction with digital assets to steer clear of potential regulatory breaches.
“A D.C. version of this game is our regulatory approach to cryptocurrency assets, and cryptocurrency asset custody in particular,” Peirce said. “SEC-registrants have had to hop from one poorly illuminated regulatory space to the next, all while ensuring that they never touch any cryptocurrency asset.”
Peirce explained that investment advisers often find it difficult to determine which cryptocurrency assets qualify as securities, which entities count as qualified custodians, and whether participating in activities like staking or voting could trigger violations.
“The twist in the regulatory version is that it is largely played in the dark: burning legal lava and no lamps to illuminate the way,” she said.
Without a clear framework, brokers and alternative trading systems (ATS) would struggle to develop robust markets for digital assets, she added.
SEC Commissioner Mark Uyeda echoed similar concerns during the event, saying that registrants working with cryptocurrency assets should have access to custodial options that comply with legal standards. Uyeda suggested that allowing advisers to use “state-chartered limited-purpose trust companies” as qualified custodians could help fill the gap.
Newly appointed SEC Chair Paul Atkins emphasised the potential benefits of blockchain technology, highlighting its capacity to improve efficiency, transparency, risk management, and cost reduction. Atkins said he plans to work with Congress and the Trump administration to create a regulatory framework tailored specifically to cryptocurrency assets, signalling a shift from the agency’s previous stance.
“I look forward to engaging with market participants and working with colleagues in the President Trump administration and Congress to establish a rational fit-for-purpose framework for cryptocurrency assets,” Atkins said.
Senator Ossoff calls for Trump’s impeachment over memecoin controversy
Also in Washington, cryptocurrency-related activities are fueling political tensions. US Senator Jon Ossoff voiced support for launching impeachment proceedings against President Donald Trump, citing concerns over a private dinner offered to top holders of the “Official Trump” memecoin.
Speaking at a town hall event in Georgia on April 25, Ossoff criticised the president’s participation in what he described as selling access to political influence with cryptocurrency.
“[…] the sitting president of the United States is selling access for what are effectively payments directly to him. There is no question that that rises to the level of an impeachable offense,” Ossoff said, according to NBC News.
The Senator said that impeachment would be difficult under the current political balance, where Republicans control both chambers of Congress. However, he indicated that the issue could resurface if Democrats regain the majority in the 2026 midterm elections.
The controversy stems from an announcement on April 23, when the Trump memecoin project revealed plans for an exclusive dinner at Trump’s golf club in Washington, DC, inviting the top 220 TRUMP token holders. The event prompted a spike in the memecoin’s price, with CoinMarketCap reporting gains of over 50% following the news.
According to the Official Trump project’s website, applicants should undergo background checks and meet eligibility requirements, like avoiding Know Your Customer (KYC) watchlists. Amid speculation that participants would have needed to hold up to $300,000 in TRUMP tokens to qualify, the memecoin team clarified that the cutoff would be based on a public leaderboard, not raw token balances, and that locked or non-participating wallets would not count.
Legal experts have raised concerns about possible conflicts of interest linked to the president’s cryptocurrency ventures, including the TRUMP memecoin and the World Liberty Financial decentralised finance (DeFi) project. Some argue that any policy decisions affecting the digital asset industry could overlap with the president’s personal financial interests.
“In just a couple of days of him taking office, he’s signed a number of executive orders that are significantly going to affect the way that our cryptocurrency and digital assets industry works,” said Charlyn Ho of law firm Rikka earlier this year. “So if he has a personal pecuniary benefit arising from his own policies, that’s a conflict of interest.”
(Photo by Unsplash)
See also: Cryptocurrency in South Korea faces new rules after political upheaval
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