Rep. Bryan Steil (R-Wisc.) is now the chair of the House subcommittee focused on cryptocurrency (AI, too).

Why it matters: After years of talk, it's this one — the 119th Congress — that will update financial rules with blockchain technology in mind.

• "The players on the field have shifted dramatically. That gives us an opportunity to offer legislation a little more forward-looking," Steil told Axios in an interview the week before the inauguration.
• "With President Trump coming to office we have an administration that embraces the benefits of crypto and digital assets."

Background: Steil took over the seat of former House Speaker Paul Ryan in 2018. In addition to the subcommittee, he serves as the chair of the Committee on House Administration, which oversees all the internal operations of the chamber.

• His predecessor on the subcommittee, Rep. French Hill (R.-Ark.), is now the chair of the full House Financial Services Committee.

Zoom in: "I've been focused, out of the gates, on what I think are possibly the two most important pieces, which I think are market structure and stablecoin legislation," Steil told Axios.

• He said he will judge measures by a two-point framework: preventing fraud and making sure the industry remains in the U.S.
• "What we don't want to do is put our heads in the sand and pretend as if this innovation and development is not going to occur anywhere."

Between the lines: Under most proposals, market structure refers to sorting out which digital assets should be regulated by the CFTC and which by the SEC.

• Stablecoins refers to how financial institutions in the U.S. can launch assets that are backed by U.S. dollars, or dollar-like assets. There are other kinds of more exotic stablecoins as well that lawmakers might deal with one way or another.

Zoom out: Steil brought us back to the early days of the internet, when Congress worked with a then-nascent tech industry to write rules that would allow it to grow in the USA.

• "Although I have many challenges with big tech, and I do," Steil said, "Most of those companies are domiciled in the United States, and that gives us significant global competitive advantages."
• "What we want to do is make sure that innovation and development is occurring here in the United States."

"We will bring legal clarity to digital assets, providing innovators with new tools to build decentralized financial products and services that empower people to help one another and ensure America remains a leader in this space."

The main platform for minting derivatives of the original cryptocurrency is hemorrhaging assets.

Why it matters: Wrapped bitcoin (WBTC) has been crucial infrastructure for decentralized finance, allowing holders of bitcoin to borrow against it to trade and transact on other chains, among other things.

• How it works: A trader's bitcoin gets locked up in a wallet on its native blockchain, and a corresponding bitcoin gets printed on a different blockchain, all executed by a smart contract.
• When WBTC users withdraw, their token on the second blockchain gets burned and their original bitcoin is returned to them.

Catch up quick: In August, BitGo, a leading crypto custodian and creator of WBTC, moved the product into a joint venture with Bit Global, in which BitGo would remain a minority shareholder. Bit Global has a relationship to the Justin Sun/Tron universe of crypto companies.

• Justin Sun probably has the highest correlation between crypto success and controversy in the industry. (You may know him most recently for eating a banana featured in his newly bought $6.2 million artwork).

By the numbers: Around 24,000 net bitcoin have left the platform (that's counting deposits) since the product changed hands, or about $2.5 billion worth, at current prices.

• WBTC on Ethereum has contracted by 15% to 129,318.42 WBTC, as of this writing.
• By far the lion's share of WBTC is minted on Ethereum, the second-largest blockchain.
• Bit Global has not replied to requests for comment about the withdrawals.

State of play: Traders haven't stopped using bitcoin derivatives.

• Since the success of WBTC, other products have come along to scratch the same itch.
• And as the exit from WBTC began, some other products perked up, such as the decentralized TBTC.

The most notable new product, however, has been coinbase wrapped bitcoin (CBBTC). It launched shortly after WBTC changed hands.

• There have been 23,138 CBBTC minted since it launched, nearly the same number that's left WBTC.

Friction point: Coinbase, the largest crypto exchange in the U.S., delisted WBTC after the deal.

• Bit Global sued.
• And Coinbase made clear in court filings that it dropped WBTC because Justin Sun's involvement made it uneasy about the product.

💭 Our thought bubble: As the chart above indicates ☝️, Coinbase was not alone.

The latest: Coinbase filed a motion Tuesday to dismiss the suit.

When Donald Trump's companies released a celebrity meme coin just ahead of the presidential inauguration, it set a new standard for instant hype in a cryptocurrency launch, based on fresh research from a blockchain tax startup.

Why it matters: The meme coin boom of 2024 was just given a nitro boost for the new year by the most powerful man in the world.

By the numbers: Based on a random sample of 1,391 CoinLedger users, from its base of hundreds of thousands of cryptocurrency holders, 7.47% traded the new president's Official Trump token by Sunday, just two days after it was released.

• And 1.9% of users traded the Melania Meme token on its first day of trading.
• For comparison, the Australian pop star Iggy Azalea had one of the biggest meme coin launches of 2024, with her token Mother Iggy, but only 0.7% of the crypto market interacted with it over the same time frame.

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🔬 Sen. Ted Cruz's Congressional Review Act legislation revoking the IRS' broker rule for digital assets has been introduced. (Senate and House)

💰 Binance co-founder Changpeng "CZ" Zhao, fresh out of prison and worth $70 billion, is turning the company's former VC arm into a family office. (Bloomberg)

📊 Fresh research from Chainalysis and Sensor Tower shows the Trump coin brought in many new buyers. (Axios)

The SEC, a day after the resignation of chair Gary Gensler, announced a crypto task force Tuesday charged with putting the agency on what it called a "sensible regulatory path."

Why it matters: The crypto industry has long sought updates to rules around securities that would consider the characteristics of blockchain technology.

• Instead, it was met with hostility.

The task force, launched by acting SEC chair Mark Uyeda, will be led by Commissioner Hester Peirce with veteran staff members also assigned to the effort.

• "Clarity regarding who must register, and practical solutions for those seeking to register, have been elusive. The result has been confusion about what is legal, which creates an environment hostile to innovation and conducive to fraud. The SEC can do better," the agency's statement said.

Zoom in: "We look forward to working hand-in-hand with the public to foster a regulatory environment that protects investors, facilitates capital formation, fosters market integrity, and supports innovation," Peirce said in the statement.

• She's earned the moniker "Crypto Mom" for challenging Gensler on agency actions against the industry, but we'll see if that holds up as she starts putting draft rules down on paper for feedback.

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