On Dec. 15, Elizabeth Warren put two names on the high of a letter that indicators the place she thinks US crypto coverage is definitely written: Treasury Secretary Scott Bessent and Legal professional Common Pamela Bondi.
The ask is straightforward on paper however awkward in observe. Are their departments investigating what she calls “nationwide safety dangers” tied to decentralized exchanges, and if that’s the case, how far does that scrutiny go when the president’s enterprise orbit is a part of the story?
The hook she selected is PancakeSwap, a DeFi venue that, in Warren’s telling, sits on the uncomfortable intersection of “no account wanted” buying and selling and the type of cash that may find yourself on sanctions slides.
Within the letter, she pointed to reporting that PancakeSwap has been used to launder cybercrime proceeds tied to North Korea. She then turned the compliance argument right into a Washington combat, saying PancakeSwap has been “drumming up curiosity” in cash tied to the Trump household’s most important crypto firm, World Liberty Monetary (WLFI), and citing a Wall Avenue Journal report claiming that over 90% of trades in USD1 befell on PancakeSwap.
The cleanest technique to learn the letter is to disregard the rhetoric and have a look at the three questions on the finish. She requested Treasury and DOJ to explain nationwide safety dangers tied to DEXs (together with PancakeSwap) and spell out gaps in statutory and regulatory authority that might be closed.
She additionally desires lists of actions the companies will take to stop conflicts of curiosity and insulate enforcement and nationwide safety selections from crypto-related conflicts, explicitly together with “enterprise ties to the Trump household.” She set a response deadline of Jan. 12, 2026.
What Warren requested for and why PancakeSwap received named
Warren’s selection of goal issues as a result of it’s a proxy for an even bigger argument she’s made for years: if a service appears and behaves like a monetary venue, regulators shouldn’t settle for “however it’s decentralized” as a get-out-of-compliance card.
Her press launch makes that case bluntly, describing DEX exercise at scale and arguing that platforms like PancakeSwap and Uniswap can transfer enormous volumes with out requiring customers to register or present identification. In her view, that lets customers route round KYC expectations that apply elsewhere in finance.
She additionally anchors the pitch to an illicit-finance instance, pointing to North Korea-linked hackers and asserting that PancakeSwap was used to facilitate laundering tied to a significant theft, with a greenback determine hooked up.
You don’t have to purchase each implication in that framing to see why it’s efficient politics. The phrase PancakeSwap is sticky. It makes a sprawling argument about DeFi, sanctions, and AML really feel like a single addressable drawback, the way in which Enron and Lehman Brothers grew to become shorthand in prior crises.
It additionally lets her pose a query that Treasury and DOJ can’t reply comfortably in public. If they are saying they’re investigating, they danger disclosing delicate enforcement posture. If they are saying no, they hand her a quote she will be able to simply weaponize towards crypto.
Beneath the hood, the mechanics are messy in methods which can be simple to overlook. A decentralized alternate isn’t one firm in a single constructing. It’s a set of sensible contracts, liquidity swimming pools, routers, entrance ends, and pockets tooling that may be hosted, mirrored, geofenced, or forked.
Enforcement can hit identifiable chokepoints, like a hosted entrance finish or a developer entity, however you’ll be able to’t shut PancakeSwap down with a single swap like you’ll be able to freeze a checking account.
That’s the place Warren’s first two questions do actual work. She’s not simply asking whether or not they’re investigating. She’s asking for a catalog of dangers and for a map of authorized gaps, which is one other manner of claiming: if the present toolkit doesn’t attain DeFi cleanly, inform Congress what to rewrite.
It’s oversight as discovery, and it doubles as pre-writing the speaking factors for no matter legislative language comes subsequent.
The third query is the one which makes this letter greater than a DeFi compliance scold. Warren is asking the companies to elucidate how they’ll forestall political interference and conflicts tied to the Trump household’s enterprise pursuits.
That’s a requirement for course of ensures, the type that get invoked when the general public doesn’t belief the referee.
To be honest, there are severe counterpoints right here, and so they’re not trivial.
First, DeFi is unusually clear in contrast with conventional finance: flows are public, and complex analytics can hint patterns rapidly. Second, a variety of DEX exercise is plain-vanilla buying and selling by regular customers, market makers, and arbitrageurs. Third, the business has been experimenting with compliance tooling round protocols, together with pockets screening, sanctions checks, and front-end controls.
Whether or not you assume that’s sufficient is a coverage judgment, however it’s not correct to deal with DeFi as a lawless void with no capacity to observe something.
The deeper rigidity is that DeFi makes it simpler for dangerous actors to maneuver worth with out account creation, whereas additionally making it simpler for everybody else to audit flows in actual time. Warren leans arduous on the primary half, and her critics lean arduous on the second.
Each halves are true sufficient to maintain this combat going.
How a stalled invoice can flip Warren’s oversight mail into coverage
The timing of the letter is the plot twist. Congress is “contemplating crypto market construction laws,” Warren writes, and that phrase does a variety of heavy lifting.
In July, the Home handed a market-structure invoice that might construct a federal framework for crypto and broaden the CFTC’s oversight function, which the business has needed for years.
But a Home vote doesn’t resolve the Senate, and market-structure laws continues to be stalled there, even because the broader angle towards crypto has softened in different elements of presidency.
This is the reason Warren’s “pressure-as-process” strategy issues. When laws drags, letters grow to be leverage as a result of they create a document, drive responses, and form the narrative that lawmakers use to justify a sure vote, a no vote, or a requirement for carve-outs.
You may see the continuity by wanting one month again. On Nov. 17, Warren and Jack Reed wrote to Bessent and Bondi about World Liberty Monetary and its governance token $WLFI.
They cited stories that token gross sales reached consumers tied to sanctioned or illicit actors, and explicitly tied that subject to market-structure talks in Congress. The letter spends pages on the governance angle, arguing that token possession can translate into affect, and it repeatedly returns to battle questions tied to the Trump household’s monetary curiosity within the venture.
Learn collectively, the November WLFI letter and the December PancakeSwap letter kind a two-part argument that’s arduous to disregard should you’re a senator making an attempt to make use of “accountable innovation” language with out wanting naïve.
Half one says: a Trump-linked crypto enterprise might create a national-security danger by way of who buys in and who will get governance affect. Half two says: the buying and selling venue that will focus liquidity for a Trump-linked coin can be the type of DeFi rail that illicit actors can use.
That doesn’t show wrongdoing, and it doesn’t show the Trump household is receiving particular therapy. What it does is elevate the political value of writing a market-structure invoice that goes mild on DeFi or punts battle safeguards to “later.”
If you happen to’re negotiating Senate textual content, Warren is actually telling you that “later” will present up as a headline, and he or she’s pre-loading the headline.
There’s additionally a practical learn should you assume no person right here is performing in dangerous religion. Even crypto-friendly lawmakers can have a look at DeFi and admit a fundamental drawback: the US has a patchwork of AML expectations, and DEXs don’t match cleanly into classes constructed for banks, brokers, and cash transmitters.
Warren is pushing the companies to say, in plain English, whether or not their authority is sufficient, and if it’s not, what they’d need Congress handy them. That’s a reliable oversight perform, even should you discover her tone exhausting.
The balanced takeaway is that Warren’s marketing campaign can produce two very totally different outcomes, relying on how Congress and companies react. One path is a narrowly tailor-made set of obligations that concentrate on interfaces, promoters, and identifiable intermediaries, whereas acknowledging that code isn’t a buyer and a liquidity pool can’t file a SAR.
The opposite path is broad, imprecise language that treats decentralization itself as suspicious, which might push exercise offshore, encourage shadow entrance ends, and make it more durable for US customers to work together with essentially the most liquid markets below US authorized protections.
Both manner, the letter is a tactic that treats politics as infrastructure. When the Senate can’t get a invoice throughout the end line, the document turns into the battlefield, and Warren is making an attempt to write down the terrain upfront.
