Weekly Crypto Regulation Roundup: Samourai's Legal Woes, Mamdani's Mayoral Win, and Lummis' Bitcoin Initiatives

The past week in crypto regulation has been eventful, featuring significant courtroom battles, shifts in political leadership, and ongoing discussions about Bitcoin’s role in government policy. Notable stories include the Samourai Wallet founders facing serious legal challenges, Zohran Mamdani’s election win potentially leading to stricter rules in New York City, and Senator Cynthia Lummis advocating for the establishment of a U.S. Bitcoin Reserve.

Key Takeaways

Founders of Samourai Wallet may face prison due to accusations of facilitating money laundering.
Zohran Mamdani's victory as NYC Mayor could lead to enhanced crypto regulations focusing on consumer protections and environmental concerns.
Senator Cynthia Lummis suggests the creation of a Strategic Bitcoin Reserve to address national debt.
Coinbase faces fines for compliance issues in Europe, while warning about regulatory overreach in the U.S.
Trump's initiative to expand crypto on the Solana blockchain signals ongoing interest in decentralized finance amidst regulatory challenges.

Samourai Wallet Founders Face Legal Challenges

U.S. prosecutors are pushing for maximum sentences of five years in prison for Samourai Wallet co-founders Keonne Rodriguez and William Lonergan Hill. They are accused of operating an unlicensed money-transmitting business and enabling large-scale money laundering.

Authorities claim that the founders "repeatedly solicited and encouraged criminals" to use Samourai’s crypto-mixing features to hide illegal proceeds. This case marks a pivotal point in the government's increasing scrutiny of privacy tools, leading to concern among developers and advocates of open-source software who fear repercussions merely for creating technologies intended to enhance privacy.

The Department of Justice is increasingly linking privacy-focused services with financial crime, demonstrating a broadened enforcement approach that now extends to developers of code, not just centralized exchanges.

Mamdani's Mayoral Win Could Lead to Stricter Crypto Regulations

In New York City, Zohran Mamdani's recent mayoral victory might transform the regulations surrounding cryptocurrency within the city. Known for advocating consumer protections following the downturns of FTX and Terra, Mamdani is also in favor of a moratorium on proof-of-work mining that utilizes on-site energy generation. Additionally, he has proposed a crypto transaction tax that could generate over $158 million annually.

Mamdani's win—accurately predicted by Polymarket traders with a remarkable 92% confidence—suggests that investors anticipate a more vigilant regulatory approach. As the crypto sector continues to gain prominence in New York’s economy, Mamdani’s perspective indicates a preference for prioritizing environmental and consumer interests over unfettered innovation.

Meanwhile, the FMLS25 conference in London provided a platform for industry leaders to discuss how traditional finance (TradFi) and digital assets can coexist under tighter global regulations, perfectly reflecting New York's evolving regulatory landscape.

Lummis Revives Discussion on a U.S. Bitcoin Reserve

In Washington, Senator Cynthia Lummis has sparked renewed discussion about establishing a Strategic Bitcoin Reserve aimed at alleviating the growing U.S. national debt.

Lummis described this proposal as "the only solution" to managing the country’s financial burdens, asserting that Bitcoin's potential for long-term value appreciation could enhance the national balance sheet. She has praised former President Trump’s openness to this concept and noted that the Treasury and White House are considering structural alternatives beyond traditional gold revaluation.

Although still in the theoretical stage, such a development would signify a monumental shift, integrating Bitcoin into the U.S. sovereign financial framework for the first time.

Coinbase Faces Regulatory Challenges in Europe and the U.S.

This week, Coinbase has been in the news for regulatory issues on two fronts. In Europe, its Irish subsidiary, Coinbase Europe Limited, received a €21.5 million ($24.7 million) fine from the Central Bank of Ireland for "critical compliance failures" within its anti-money laundering systems.

Reports suggest that between 2021 and 2022, approximately 31% of customer transactions—totaling over $200 billion—were not screened due to coding errors, as stated by the Irish Independent.

Across the Atlantic, Coinbase has also urged the U.S. Treasury Department to be cautious of potential regulatory overreach with the implementation of the GENIUS Act. The exchange warned that excessive regulatory measures could hinder innovation and push talent outside the U.S.

The company has recommended that developers, validators, and open-source protocols should be exempt from regulatory classification and had proposed recognizing payment stablecoins as cash equivalents for simplified taxation and accounting processes.

Coinbase's dual challenges illustrate its precarious position as a bridge between compliance requirements and innovative pursuits—an ongoing theme within the crypto industry’s regulatory landscape.

Trump's Expansion into Solana and Post-Election Developments

In the midst of political volatility, former President Donald Trump’s crypto initiative, World Liberty Financial (WLFI), has announced plans to expand onto the Solana blockchain through partnerships with Bonk and Raydium. This initiative aims to integrate WLFI’s USD1 stablecoin into Solana’s decentralized finance (DeFi) ecosystem, highlighting the administration's continuing pivot towards blockchain-based finance.

A post on social media platform X referred to this initiative as part of a larger mission to “rebuild Solana,” with USD1 intended to serve as a foundational settlement layer for traders and creators. These partnerships reflect a renewed ambition within the U.S. to assert its technological leadership in decentralized finance amid increasing regulatory scrutiny.

Following the elections, Trump stated that the Democratic victories resulted from his absence on the ballot, contrasting starkly with the growing momentum of his digital asset initiatives in Washington and beyond.

Looking Ahead

The past week has highlighted the significant intersection of crypto regulation with mainstream political and economic discussions—from New York City’s proactive approach to Washington’s Bitcoin aspirations and the regulatory crackdowns occurring in Europe.

As policymakers, developers, and institutions continue to intersect, the critical question moving forward will be: Can the decentralized principles of crypto endure the realities imposed by governmental authority and financial regulations?