The Year the United States Blinked—Toward Crypto

One year is a vanishingly small slice of market history, but the past twelve months delivered enough policy motion to compress what would normally be a decade of trial and error. The headline changes are real. President Trump signed the Guidelines for Exchange-Negotiated Investment in United States—shorthanded everywhere as the GENIUS Act—which created clear guardrails for crypto exchange-traded products, including a taxable, disclosed path to staking within ETPs under a defined safe harbor. That single sentence changed product teams’ roadmaps across Wall Street. It didn’t turn everything into legal tender; it did tell issuers and custodians exactly how to operate without guessing what the IRS or SEC would say after the fact. ([Reuters][1])

At nearly the same time, the White House issued an executive order directing Treasury and other agencies to design (not yet fund) a Strategic Bitcoin Reserve framework and associated reporting. The order elevated Bitcoin from a category that Washington alternately ignored and scolded into one that—at least on paper—sits in the same sentence as strategic petroleum and rare earths. Implementation will be slow, contested, and dependent on appropriations, but the signal is unmistakable. ([Reuters][1])

Layered on top of these structural moves were pardons with outsized narrative power. First came the controversial release of Ross Ulbricht, the Silk Road founder, a decision pitched by the White House as correcting excessive sentencing and cheered in some libertarian circles. ([AP News][2]) Weeks later, the President pardoned Changpeng ‘CZ’ Zhao, Binance’s founder, after he had already served time related to Bank Secrecy Act violations. Whatever one’s view, the pardon told entrepreneurs and venture money that this administration wants to welcome crypto back into polite financial society. ([AP News][3])

What Actually Changed in the Plumbing

It is tempting to file the year under “optics,” but that undersells the workmanlike consequences of GENIUS and the executive order. The statute did three things that matter for capital formation:

1. Defined staking within ETPs with custody, liquidity, and disclosure requirements. This took staking from a compliance Rorschach test into a known quantity for accountants, auditors, and boards. ([Reuters][1])

2. Codified risk-management standards for crypto ETP sponsors (reserve assets, independent oversight, redemption timetables), which reduces the tail risk of product halts and gives the SEC a narrower field over which to supervise instead of improvise.

3. Clarified tax treatment of staking rewards in registered products, eliminating the biggest “what will the IRS say next April?” fear for mainstream allocators. ([Reuters][1])

Meanwhile, the Strategic Bitcoin Reserve order did not move a single satoshi to a federal wallet. But it set the bureaucracy in motion: which agency would custody hypothetical reserves, how rebalance rules might look, whether only spot purchases qualify, and how any holdings would be disclosed to markets. Even if Congress balks at appropriations, the scoping process itself forces interagency coordination and normalizes the idea that Bitcoin belongs in federal policy toolkits. ([Reuters][1])

Pardons as Policy: Why They Mattered to Markets

Pardons do not rewrite statutes. Yet they recalibrate perceived legal risk, and perception is the oxygen of market structure. The Ulbricht decision removed a symbol of state hostility toward crypto cultures (libertarian privacy, cypherpunk experimentation), while the CZ pardon—rightly criticized by many as lenient—signaled the administration’s willingness to turn the page on the punitive optics of the last cycle and elevate “compliance going forward” over retribution. For U.S. banks, regional broker-dealers, and pensions, that matters: committees that feared headline risk can now cite the President’s stance and the GENIUS statute to justify pilot allocations and partnerships. ([AP News][2])

What Did Not Change

Even amid the fanfare, three stubborn realities remain:

• Congress still holds the purse and the pen. Executive orders and Treasury guidance can’t appropriate money for a reserve, nor can they pre-empt future court rulings. Implementation timelines for the reserve, any stablecoin framework, or ETP staking rules will stretch into quarters, not days.

• Agency friction persists. The CFTC, SEC, Treasury, OCC, and the Fed do not act as a single organism. Friendly signals from the White House can be dampened by divergent risk appetites and pending enforcement cases.

• State regimes matter. Even if federal rules soften, New York’s and other states’ licensing regimes will continue to shape U.S. liquidity—pushing some activity offshore, pulling compliant players onshore.

How Policy Translated into Prices and Behavior

Correlating daily price prints with policy headlines invites spurious precision. But behaviorally, three channels transmitted the policy pivot into markets:

1. ETF Product Expansion. GENIUS provided a road map for sponsors to launch or enhance ETPs (especially Ethereum and Solana products with compliant staking yields). That changed the purchase calculus for pensions and RIAs who need yield or cash-flow optics to justify a line item. Each incremental basis point of permitted staking yield narrows the gap with corporate credit and broadens the buyer base. ([Reuters][1])

2. Bank Participation. Regional banks that flirted with tokenized deposits and private-chain experiments now have political cover to continue. In parallel, large banks pressed ahead with deposit tokens and settlement networks, deepening the bridge between fiat rails and crypto collateral—and accelerating intraday liquidity for market makers.

3. Volatility Premium Compression. When legal overhang falls, variance sellers step back in. Options markets began to price lower left-tail risk around regulatory shock, tightening skews and making structured products easier to issue.

Winners and Losers of Year One

Winners. Custodians (because ETP and custody standards were clarified), staking-capable chains (thanks to the ETP safe harbor), market makers (more banking partners, faster fiat rails), and compliant stablecoin issuers (because clearer separation between onshore, audited products and offshore shadows attracts treasurers). Losers. Non-compliant venues that built a business on regulatory gray; privacy coins facing stricter AML expectations; and any firm hoping the White House would neuter supervision entirely—the statute professionalizes crypto; it does not deregulate it.

Fact-Check & Clarifications

• Who was pardoned? The Silk Road founder is Ross Ulbricht, not “Ross O’Brien.” AP and other outlets reported his pardon earlier this year. ([AP News][2])

• Was CZ actually pardoned? Yes—AP reported President Trump granted a pardon to Binance founder Changpeng Zhao in October 2025 following his guilty plea and short prison term. ([AP News][3])

• Did the U.S. establish a Bitcoin reserve? Not funded—yet. Reuters reported an executive order to establish a framework and interagency process for a Strategic Bitcoin Reserve. It’s policy scaffolding, not a wallet with coins. ([Reuters][1])

• Did the GENIUS Act make crypto “everyday legal tender”? No. The law gives a compliant path for crypto ETPs (including staking); it does not declare Bitcoin or any token legal tender for debts public or private. Payments acceptance remains a matter of contract and, for taxes, jurisdiction-specific statutes. ([Reuters][1])

The Macro Backdrop: Why This Moment Landed

Policy shifts do not take root in a vacuum. They arrived as the U.S. wrestled with a rolling government shutdown, lumpy inflation prints, and risk-asset leadership concentrated in a handful of AI beneficiaries. In that context, Washington’s pivot toward crypto offered a rare dose of “new-growth optionality” without writing a blank check. For the White House, welcoming crypto serves several goals at once: projecting tech leadership, luring high-margin financial jobs back onshore, and signaling that capital markets remain open for business.

What the Next 6–12 Months Could Look Like

1) Base Case (55%): Implementation Grind, Gradual Uptake

Agencies publish proposed rules under GENIUS; ETF sponsors launch staking-enabled sleeves with modest caps; the reserve task force delivers an options memo that stops short of immediate purchases but outlines mechanics and disclosures; banks expand deposit-token pilots with clearing-bank partners. Prices respond positively but unevenly—less because of euphoria, more because new buyers can finally pass internal compliance gates. Key risks: court challenges that slow rulemaking and a partisan fight over the optics of “a government crypto reserve.” ([Reuters][1])

2) Bull Case (25%): Appropriations and a Flag-Plant

Congress quietly green-lights a small pilot appropriation for the reserve (think: a few billion dollars to test custody and reporting), turning a paper framework into a live program. ETF flows accelerate, particularly into products with permitted staking yields. Banks race to integrate tokenized settlement for high-value payments. The combination compresses crypto’s risk premium and invites international copycats.

3) Bear Case (20%): Litigation Freeze and Policy Whiplash

A coalition sues to stop staking in ETPs on administrative-law grounds; a court issues a preliminary injunction; Congress loads the reserve with riders that render it inert. The White House responds rhetorically, but capital delays deployment. On prices, the disappointment arrives not as a crash but as a grind—liquidity improves, but marginal buyers stand down.

Who Should Do What Now

• Asset Managers: Treat GENIUS as a durable floor. Build products that stand up to multi-year audits: independent pricing, segregation of duties, sober leverage. If you add staking, underwrite validator risk like you would a sub-advisor.

• Crypto Natives: Lean into compliance as a competitive moat. The new frontier is less “beat the cop, ship the code” and more “prove reserves, attest, survive discovery.” The payoff is access to pensions and insurance inflows that dwarf retail churn.

• Enterprises: If your treasury team wants stablecoin rails, ring-fence pilots with clear accounting policies and escrow arrangements. Avoid headline-risk partners; the policy tide is friendlier, but counterparty risk hasn’t disappeared.

• Traders: Expect episodic “policy-vol” spikes around milestones (rule drafts, court dates, appropriations). Those are opportunities for calendar spreads and relative-value trades between compliant ETPs and offshore perpetuals.

Why This Time Could Be Different—and Why It Might Not

Every cycle tells itself the same story: “This time is different.” Often it isn’t. What makes 2025–2026 plausibly different is not a single headline but institutional path dependence. Once BlackRock, Fidelity, and regional banks wire in compliant processes for staking ETPs, tokenized settlement, and audited custody, the exit cost rises. That does not immunize the sector from drawdowns. It does make it harder for a future administration—or an SEC chair with different instincts—to turn off the lights.

The counter-case is equally straightforward: the sector is now more politically exposed than ever. Pardons galvanize opponents; a Strategic Bitcoin Reserve invites populist backlash during any inflation scare; and a single high-profile failure in a staking ETP could set the narrative back years. In other words, crypto graduated from regulatory adolescence into political adulthood—with all the scrutiny that implies. ([AP News][2])

Market Read: What We’re Watching Each Week

• Rulemaking calendars at Treasury/SEC/OCC: proposed vs. final rules under GENIUS, especially staking caps and redemption timing. ([Reuters][1])

• Appropriations text for any pilot reserve funding: a single paragraph can change the global conversation. ([Reuters][1])

• ETF flows into staking-enabled products vs. plain-vanilla spot products (a cleaner gauge of institutional comfort than Twitter sentiment).

• Bank participation in tokenized deposits and on-chain settlement—measured not by press releases but by daily settlement volumes and client coverage.

• Court dockets that could stay or narrow rulemaking—administrative procedure challenges, state-federal pre-emption fights, and AML-focused suits.

Bottom Line

In twelve months, the U.S. went from “reluctant landlord” to “conditional partner” for crypto. The GENIUS Act puts rails under ETPs and staking; an executive order forces a sober conversation about a Strategic Bitcoin Reserve; and headline pardons—Ulbricht and CZ—reframed the White House’s posture from punitive to permissive, at least at the margin. The policy pivot does not eliminate risk; it changes its shape. For builders, the door is open but guarded. For allocators, the set-up is the best in years— if you underwrite litigation and election risk with the same rigor you bring to volatility and leverage.

The market has already adjusted its expectations; the lasting question is whether Washington will now do the dull, necessary work of turning headlines into predictable rules. If it does, the next cycle’s floor may be higher than anyone now dares to model.