With crypto legislation stalled in the Senate, Senator Elizabeth Warren is turning to oversight letters to shape the next phase of U.S. crypto policy.
On Dec. 15, Warren sent her letter to Treasury Secretary Scott Bessent and Attorney General Pamela Bondi asking whether their agencies are investigating what she described as national security risks tied to decentralized exchanges.
The letter sets a Jan. 12, 2026 response deadline and explicitly raises concerns about conflicts of interest involving business ties to the Trump family.
Why PancakeSwap is the pressure point
Warren anchored the letter around PancakeSwap, one of the largest decentralized exchanges by volume. She cited reporting that the platform has been used to launder funds linked to North Korean cybercrime and pointed to a Wall Street Journal report indicating that more than 90 percent of trading volume in USD1, a token tied to Trump-linked World Liberty Financial, occurred on PancakeSwap.
The choice of PancakeSwap is deliberate.
For Warren, it represents a broader argument she has made for years: if a platform functions like a financial venue, regulators should not accept decentralization as a blanket exemption from compliance expectations.
Oversight as leverage, not legislation
Warren asks how agencies plan to prevent conflicts of interest and insulate enforcement decisions from political pressure, including situations involving “business ties to the Trump family.”
That framing forces regulators into an uncomfortable bind. Acknowledging active investigations risks disclosing sensitive enforcement posture. Denying scrutiny hands Warren a ready-made argument that federal oversight is failing to keep pace with crypto’s risks.
This is oversight used as discovery.
By asking agencies to catalogue risks and legal blind spots, Warren is effectively asking them to draft the outline for future legislation if current authority falls short.
The reality of DeFi enforcement
A decentralized exchange is not a single company or server. It consists of smart contracts, liquidity pools, routing code, wallets, and front-end interfaces that can be hosted, mirrored, restricted, or replaced.
Regulators can target identifiable choke points, such as hosted interfaces or development entities, but they cannot shut down a protocol the way they can freeze a bank account. That structural reality is central to the policy tension Warren is highlighting.
Critics of her approach argue that DeFi offers a level of transparency traditional finance lacks, with on-chain activity visible to anyone using blockchain analytics. They also point out that most DEX activity involves ordinary trading, market making, and arbitrage, and that compliance tooling at the interface level has expanded in recent years.
Warren leans heavily on the illicit finance risk. Her opponents emphasize auditability and proportionality. Both claims are grounded enough to keep the debate unresolved.
A two-letter strategy tied to stalled legislation
The PancakeSwap letter follows a similar move in November, when Warren and Senator Jack Reed pressed the same agencies over World Liberty Financial and its governance token, WLFI. That earlier letter raised concerns about who purchased tokens and whether governance rights could translate into influence, again tying the issue to potential conflicts involving the Trump family.
Read together, the letters form a coordinated strategy. One targets the token and governance structure. The other targets the trading venue where liquidity concentrates. Neither alleges proven wrongdoing, but both raise the political cost of passing a crypto market-structure bill that gives DeFi broad carve-outs or defers conflict safeguards.
This matters because market-structure legislation remains stalled in the Senate despite passing the House earlier this year. With formal lawmaking blocked, letters like Warren’s help define the record lawmakers will rely on when negotiations resume.
Gunel Ismayilova
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