On December 15, Elizabeth Warren put two names at the top of one letter that indicates where she thinks US crypto policy is actually written: Treasury Secretary Scott Bessent and Attorney General Pamela Bondi.
The question is simple on paper, but difficult in practice. Are their departments investigating what she calls “national security risks” related to decentralized exchanges, and if so, how far does that investigation go if the president’s business world is part of the story?
The angle she’s chosen is PancakeSwap, a DeFi venue that, according to Warren’s account, sits at the awkward intersection of “no account needed” trading and the kind of money that can end up on sanctions.
In the letter, she pointed out that PancakeSwap has been used to launder cybercrime proceeds linked to North Korea. She then turned the compliance argument into a fight in Washington, saying PancakeSwap has “generated interest” in coins tied to the Trump family’s main crypto company, World Liberty Financial (WLFI).
The cleanest way to read the letter is to ignore the rhetoric and look at the three questions at the end. She asked the Treasury Department and the Justice Department to describe the national security risks associated with DEXs (including PancakeSwap) and identify gaps in legal and regulatory authority that could be closed.
She also wants lists of actions the agencies will take to prevent conflicts of interest and insulate enforcement and national security decisions from crypto-related conflicts, explicitly including “business ties to the Trump family.” She set a response deadline of January 12, 2026.
What Warren asked for and why PancakeSwap was mentioned
Warren’s choice of target matters because it’s indicative of a larger argument she’s been making for years: If a service looks and acts like a financial venue, regulators shouldn’t accept “but it’s decentralized” as a get-out card.
Her press release puts that bluntly, describing DEX activity on a large scale and stating that platforms like PancakeSwap and Uniswap can move massive volumes without requiring users to register or identify themselves. According to her, this allows users to circumvent the KYC expectations that apply elsewhere in the financial sector.
She also anchors the pitch to an example of illicit financing, referencing North Korea-linked hackers and claiming that PancakeSwap was used to facilitate money laundering in connection with a major theft, which had a dollar amount tied to it.
You don’t have to believe every implication in that framework to see why it’s effective politics. The word PancakeSwap is sticky. It makes an extended discussion about DeFi, sanctions and AML feel like a single issue that can be addressed, as Enron and Lehman Brothers became shorthand in previous crises.
It also lets her ask a question that the Treasury Department and Justice Department cannot easily answer publicly. If they say they are investigating, they risk exposing a sensitive enforcement posture. If they say no, they hand her a quote that she can easily weaponize against crypto.
Under the hood, the mechanics are messy in ways that are easy to miss. A decentralized exchange is not one company in one building. It is a set of smart contracts, liquidity pools, routers, front ends and wallet tools that can be hosted, mirrored, geofenced or forked.
Enforcement can hit identifiable bottlenecks, like a hosted front end or a developer entity, but you can’t shut down PancakeSwap with a single switch like you can freeze a bank account.
That’s where Warren’s first two questions do some real work. She doesn’t just ask if they’re doing research. She calls for a catalog of risks and a map of legal loopholes, which is another way of saying: if the current toolkit doesn’t cleanly reach DeFi, tell Congress what to rewrite.
It’s surveillance as discovery, and it also functions as prewriting the talking points for whatever legislative language comes next.
The third question makes this letter more than a DeFi compliance scold. Warren is asking the agencies to explain how they will prevent political interference and conflict related to the Trump family’s business interests.
That is a requirement for process guarantees, the kind that are invoked when the public does not trust the referee.
To be fair, there are serious counterpoints here, and they’re not trivial.
First, DeFi is unusually transparent compared to traditional financial flows: flows are public and advanced analytics can quickly trace patterns. Second, a lot of DEX activity is regular trading by normal users, market makers and arbitrageurs. Third, the industry has experimented with compliance tools around protocols, including wallet screening, sanctions controls and front-end controls.
Whether you think that’s enough is a policy judgment, but it’s not right to treat DeFi as a lawless void with no way to police anything.
The deeper tension is that DeFi makes it easier for bad actors to move value without creating accounts, while also making it easier for everyone else to monitor flows in real time. Warren leans hard on the first half, and her critics lean hard on the second.
Both halves are true enough to keep this fight going.
How a stalled bill could turn Warren’s oversight post into policy
The timing of the letter is the plot twist. Congress is “considering crypto market structure legislation,” Warren writes, and that sentence does a lot of the heavy lifting.
In July, the House past a Market Structure Act that would build a federal framework for crypto and expand the CFTC’s regulatory role, which the industry has been wanting for years.
Still a vote in the House of Representatives does not dissolve the Senate, and market structure legislation is still stuck there, even as broader attitudes toward crypto have softened in other parts of the government.
This is why Warren’s pressure-as-process approach matters. When legislation drags on, letters become leverage because they create a record, force responses, and shape the narrative lawmakers use to justify a yes vote, a no vote, or a demand for exceptions.
You can see the continuity when you look back a month. On November 17, Warren and Jack Reed wrote to Bessent and Bondi about World Liberty Financial and its governance token $WLFI.
They cited reports that token sales reached buyers connected to sanctioned or illegal actors, and explicitly linked that issue to conversations about market structure in Congress. The letter spends pages on the governance angle, arguing that token ownership can translate into influence, and repeatedly returns to conflict questions related to the Trump family’s financial interest in the project.
Read together: The November WLFI letter and the December PancakeSwap letter make a bipartisan argument that’s hard to ignore if you’re a senator trying to use “responsible innovation” language without seeming naive.
Part one says: A Trump-linked crypto company could create a national security risk through who buys and who gains influence over governance. Part two says: The trading platform that can concentrate liquidity for a Trump-linked coin is also the kind of DeFi rail that illicit actors can use.
That doesn’t prove wrongdoing, and it doesn’t prove that the Trump family is getting special treatment. What it does is increase the political costs of writing a market structure law that makes light of DeFi or pushes conflict safeguards to ‘later’.
When you negotiate the Senate text, Warren essentially tells you that “later” will appear as a headline, and she preloads the headline.
There is also a pragmatic reading if you assume that no one is acting in bad faith here. Even crypto-friendly lawmakers can look at DeFi and admit a fundamental problem: the US has a patchwork of AML expectations, and DEXs don’t fit neatly into the categories built for banks, brokers and money transmitters.
Warren is forcing the agencies to say in plain English whether their authority is sufficient, and if not, what they want Congress to give them. That’s a legitimate supervisory role, even if you find her tone tiresome.
The balanced conclusion is that Warren’s campaign could produce two very different outcomes depending on how Congress and the agencies respond. One path is a tailored set of obligations that target interfaces, promoters and identifiable intermediaries, while recognizing that code is not a customer and that a liquidity pool cannot file a SAR.
The other path is broad, vague language that treats decentralization itself as suspect, which would push activity abroad, encourage shadow fronts, and make it harder for U.S. users to interact with the most liquid markets under U.S. legal protection.
Either way, the letter is a tactic that treats politics as infrastructure. When the Senate fails to get a bill across the finish line, the record becomes the battlefield and Warren tries to stake out the ground in advance.
