August 12, 2025
5 min read
Aleks Gilbert
Donald Trump’s deregulatory push in the crypto space has achieved notable wins, but financial privacy remains a significant sticking point. Recent developments highlight the tension between privacy-focused crypto technologies and regulatory authorities. Last week, Tornado Cash developer Roman Storm was convicted of a federal crime, followed by the Samourai Wallet developers pleading guilty to similar charges. These cases underscore the government’s increasing scrutiny of privacy tools in decentralized finance (DeFi).
On the same day the Samourai Wallet developers conceded, Trump’s crypto policy team released a comprehensive 166-page report titled "Strengthening American Leadership in Digital Financial Technology." The report recommends expanding the scope of the Patriot Act to encompass crypto technologies, particularly labeling some tools as "primary money laundering concerns."
The report suggests that DeFi protocols should comply with the Bank Secrecy Act and anti-money laundering (AML) provisions, especially if governance tokens are concentrated among a small group of holders who can effectively control the protocol. This move signals a potential regulatory push to impose traditional financial compliance measures on decentralized platforms.
As one prosecutor in the Roman Storm case argued, "Isn’t anonymity just another word for concealment?" implying that privacy features could facilitate illicit activity. Conversely, defense attorneys and privacy advocates emphasize the importance of financial privacy for law-abiding citizens. One defense attorney questioned, "How would you feel if someone took your bank account and published it on the internet?"
The DeFi community widely believes that blockchain-based finance cannot achieve mainstream adoption without robust privacy protections. Ethereum co-founder Vitalik Buterin recently stated on the Bankless podcast that privacy should be a default feature in wallets rather than an optional add-on. The Ethereum Foundation is actively working on privacy enhancements and has pledged additional funding to support Roman Storm’s legal defense.
Similarly, Electric Coin Company CEO Josh Swihart urged U.S. senators to protect financial privacy in upcoming legislation, clarifying that privacy is not about hiding crime but shielding citizens from surveillance, data breaches, and unjust profiling. Swihart warned against treating all privacy-oriented digital assets as suspect, likening it to banning locks because criminals might hide behind closed doors.
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Post of the Week
Trump has promised a Strategic Bitcoin Reserve (SBR) stocked with crypto seized by U.S. law enforcement. A recent rumor suggests the first deposit may come from forfeited funds related to the Samourai Wallet case, highlighting the irony of regulatory actions intersecting with crypto asset management."The irony of the Samourai Wallet forfeiture funds being the first official deposit into the SBR captures the current moment in Bitcoin/crypto pretty well, IMO."
— Zack Shapiro (@zackbshapiro)
Aleks Gilbert is DL News’ New York-based DeFi correspondent. Source: Crypto privacy tests limits of Trump’s deregulatory push (Published August 12, 2025)