Paradigm, the crypto investment firm, has more than half of its $850 million 2024 fund to invest in companies in the space, managing partner Alana Palmedo tells Axios Pro's Lucinda Shen.

• Lucinda sat down with Palmedo late last week to speak about what she's watching in Washington, developments in debanking, and why she's keeping an eye on prediction markets.

This conversation has been edited for this newsletter's audience and clarity.

Paradigm has been highly active in D.C. What are you asking for in the market structure bill?

• "I think the thing that is important is protecting developer rights and free speech. We think it's important to protect decentralized finance. So, for instance, if you put out open-source code, are you liable for the code that you put out, if based on how other people are choosing to use the code?
• If they are held liable [for how it's being applied], they might not be as incentivized or interested in putting things out in an open source manner. And we think access to open source and continuing to have a community develop and share what they're building is at the heart of innovation.
• We also want to make sure that anything that comes out of that is ultimately going to be able to serve us for many decades, and not something that's point in time.
• We'll be vocal there as some of the drafts come out in the next three, four weeks."

Crypto companies and firms including Paradigm have been vocal about debanking, saying major banks have refused the industry access under Biden. What's happening now?

• "On the commercial banking side, I think, yes, banks are open for business again, and that's actually fantastic. For a long time, it had been harder for crypto companies to get access to traditional banking rails. Imagine you're a founder and you can't get access to something fairly basic to make payroll each month."

We're in a whole new world for crypto. What are you spending your time on, aside from stablecoins and payments?

• "Prediction markets is one — if you're an analyst at a hedge fund and you want to take a position on a given company [MAU or EPS], it's ultimately reliant on how correlated your forecast is with the market.
• I think prediction markets are this new form of being able to have more precise expressions of the position or for investment or forecast that you want to make, and that's also going to trickle down and apply to things that are non financial as well, like the weather, which has been really popular, or sports, or mayoral races."

Go deeper

If you need smart, quick intel on fintech dealmaking for your job, get Axios Pro Deals.

The SEC has named a new enforcement chief, Judge Margaret Ryan.

Why it matters: The main way that crypto companies have interacted with the SEC in an official capacity has been through its enforcement division.

• It's the group that brings cases against companies and projects that it deems out of compliance with SEC rules.

Flashback: Before the agency's shift under the second Trump administration, crypto firms were often taken to court by the SEC for failure to register.

• In fact, most of the crypto firms that succeeded in registering with the agency did so under consent decrees that came out of enforcement actions, which also ended up shuttering the company.

The latest: New SEC leadership has focused more on combating crypto-related misconduct to protect investors, while it and Congress work on new requirements and a smoother path to registration.

Background: Ryan completed her term on the United States Court of Appeals for the Armed Forces.

• She was nominated to the court under President George W. Bush in 2006.
• She worked at two different law firms and clerked for U.S. Supreme Court Justice Clarence Thomas.

The federal government is seeking feedback on key updates to its policy toward the crypto industry.

Why it matters: These initiatives build on the White House's Digital Assets Market report.

The latest: The Commodity Futures Trading Commission just wrapped one comment period and opened another, while Treasury opened one that will run through October.

• The CFTC received 20 comments on how to tap its existing authority to implement spot crypto-asset contract trading on the futures exchanges it oversees. That is, the trading of contracts linked to crypto's current price, rather than options on future prices.
• Now it's looking for feedback on all the other recommendations directed at the commission in the president's working group report.
• Treasury, meanwhile, is looking for comment on how to curb illicit finance in stablecoins, following the signing of the GENIUS Act.

Flashback: The industry spent the entire prior administration asking for rules to be updated, but nothing changed.

• This administration is moving fast.

💸 Polymarket, the world's largest predictions market, has received an investment from Donald Trump Jr.'s venture capital fund. (Axios)

♊️ The Winklevoss Twins put $21 million into a new crypto super PAC that will focus on conservative, pro-crypto candidates. (Politico)

🤖 OpenAI and a16z are launching an AI PAC that appears to be modeled on the crypto PAC, Fairshake. (WSJ)

🔬 Analysis: A fair amount of Fairshake's success in 2024 looks like it might have been drafting off AIPAC. (Semafor)

The Department of Justice appeared in Wyoming last week to provide some clarity about when it will and when it won't prosecute developers contributing to cryptocurrency projects.

Why it matters: The conviction of Roman Storm, one of the developers behind Tornado Cash, the early privacy protocol on Ethereum, has had something of a chilling effect on U.S. code engineers.

What the DOJ said: "Our view is that merely writing code, without ill intent, is not a crime. Innovating new ways for the economy to store and transmit value and create wealth, without ill intent, is not a crime," Acting Assistant Attorney General Matthew R. Galeotti said Thursday at the American Innovation Project summit in Jackson.

• "The department should not leave innovators guessing as to what could lead to criminal prosecution."

Yes, but: Galeotti said that the department will continue to pursue those who intentionally execute theft and fraud.

• "These are complex questions of law and fact, and the Criminal Division will continue to rigorously evaluate each case," he said.

Friction point: CoinCenter's executive director, Peter Van Valkenburgh, went to social media to raise some outstanding questions for his organization, which focuses on the freedom to publish code and transact in the digital asset space.

• He said that the speech is confusing in light of the administration's pursuit of the case against Storm.
• "There is no intent element to getting First Amendment protection for the mere publication of speech," Van Valkenburgh said.

Zoom in: Galleotti noted several prosecutions that the department has recently conducted in the crypto space, including against a Ponzi scheme, a money laundering group operating out of LA and civil forfeiture against a pool of assets linked to fraud and other crimes.

The bottom line: "These principles should provide solace to good actors and should be cold comfort for bad actors," Galeotti said.

• Worthy of your time: Brogan Law's newsletter explains why the prosecutor's reassurance isn't reassuring, especially if a crisis like FTX hits again and the people want blood.