Crypto Regulation: The Controversial Impact of Trump’s Ninth Circuit Judicial Pick

The digital asset world is abuzz with news that could significantly reshape the legal landscape for blockchain and cryptocurrency firms. US President Donald Trump has nominated Eric Tung, a corporate lawyer with a notable history of representing crypto companies, to a pivotal position on the US Circuit Court for the Ninth Circuit. This appointment, if confirmed, carries considerable weight for future crypto regulation and legal precedents, particularly for the many tech and crypto businesses based in Silicon Valley.

Who is Eric Tung and What’s His Crypto Background?

Eric Tung’s nomination to the Ninth Circuit, which spans a vast jurisdiction including California, Arizona, and Nevada, has drawn immediate attention due to his extensive professional experience with digital currency entities. A partner at the law firm Jones Day since 2019, Tung has represented a variety of blockchain and crypto-related clients. His past work reveals a clear engagement with the complex legal challenges facing the industry.

Key aspects of Tung’s crypto-related legal career include:

• Blockchain Association Representation: He notably represented the advocacy group Blockchain Association in a case filed by Tornado Cash users against the US Treasury Department. This highlights his involvement in cases challenging government actions against decentralized finance (DeFi) protocols.
• BitMEX Exchange Lawsuit: Tung also represented an investor in a lawsuit against HDR Global Trading Limited, the parent company of the BitMEX exchange. This experience provides insight into his work on cases involving major cryptocurrency exchanges and their legal entanglements.
• Stablecoin and Smart Contract Advocacy: Watchdog organization Accountable.US has pointed to Tung’s past counsel for a stablecoin provider, where he argued that standalone sales of stablecoins should not be classified as securities. He also represented the Blockchain Association in a brief that opposed regulation of immutable smart contracts. These positions suggest a stance favoring less stringent oversight for certain digital assets and technologies.
• Liability for Crypto Tools: In another instance, while representing an investment firm backing crypto companies, Tung argued for looser liability standards on a specific crypto tool. This indicates a general inclination towards reducing regulatory burdens on crypto innovation.

These examples illustrate a consistent pattern of legal work aimed at navigating and, at times, challenging existing regulatory frameworks for digital assets. Should he be confirmed, his judicial interpretations could significantly influence how courts approach novel issues in the crypto space.

Why Does the Ninth Circuit Matter for Ninth Circuit Crypto Cases?

The US Circuit Court for the Ninth Circuit is one of the most influential federal appellate courts in the United States, especially for technology companies. Its jurisdiction covers many states that are home to major tech hubs, including Silicon Valley, making it a frequent venue for cases involving innovation, intellectual property, and, increasingly, digital assets. Any federal judge overseeing appeals in this circuit can have a profound impact on how civil and criminal cases are handled, setting precedents for future disputes.

The Ninth Circuit has already been a battleground for significant Ninth Circuit crypto cases:

• Binance.US Class-Action Lawsuit: In 2024, a panel of three judges in the circuit partially reversed a class-action lawsuit alleging that Binance.US had manipulated the price of Hex (HEX). This case demonstrates the court’s role in addressing market manipulation claims within the crypto ecosystem.
• Nvidia Shareholder Case: Nvidia, a prominent semiconductor company based in California, faced a 2018 case brought by some of its shareholders over undisclosed sales to crypto miners. This highlighted the court’s involvement in issues where traditional corporate law intersects with the burgeoning crypto mining industry.

Given this history, the appointment of a judge with deep experience in crypto law to the Ninth Circuit is particularly noteworthy. Future appeals involving everything from token classifications to decentralized autonomous organization (DAO) liability could land on his docket, with his interpretations potentially shaping the legal landscape for years to come.

What Are the Concerns Regarding This Judicial Nominee Crypto Stance?

The nomination of Eric Tung has not been without controversy. Watchdog organization Accountable.US has voiced strong concerns, suggesting that Tung’s past legal work indicates a potential for him to support a deregulatory push within the digital asset sector, aligning with the broader Trump administration’s agenda for crypto.

Accountable.US highlighted several key points in their critique:

• Advocacy Against Regulation: The organization stated that Tung has ‘built his career representing crypto firms seeking to avoid government regulation.’ This suggests a judicial philosophy that might lean towards less government intervention in the digital asset market.
• Alignment with Administration’s Agenda: The concerns are amplified by the context of the Trump administration’s wider efforts to reshape leadership at key financial agencies overseeing digital assets, such as the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). A judge with a deregulatory inclination could complement these efforts from the judicial branch.

For those invested in robust consumer protection and market stability, a judicial nominee crypto stance that favors deregulation could be seen as a significant risk. Conversely, industry players who advocate for less government oversight might view this appointment as a positive step towards fostering innovation without undue burdens.

How Does This Appointment Fit into Broader US Crypto Policy and Blockchain Advocacy?

Eric Tung’s nomination is more than just an individual judicial appointment; it reflects a broader shift in US crypto policy and the ongoing debate surrounding digital asset governance. The Trump administration has signaled a more crypto-friendly approach compared to previous administrations, and judicial appointments are a critical component of implementing such a policy direction.

The legal battles that Tung has been involved in, particularly representing the Blockchain Association, underscore the importance of blockchain advocacy in shaping regulatory outcomes. Advocacy groups play a crucial role in lobbying for favorable legislation and challenging unfavorable rules in court. A judge who understands the nuances of blockchain technology and the arguments for its unique treatment under the law could significantly impact future court rulings that define the boundaries of crypto innovation.

The Senate’s role in confirming Tung is now paramount. His nomination has been referred to the Committee on the Judiciary, and it remains uncertain when the full chamber will vote. The legislative focus on passing digital asset-related bills in both the House and Senate further underscores the heightened attention on crypto policy in Washington.

What Are the Potential Implications for the Crypto Industry?

Should Eric Tung be confirmed, his presence on the Ninth Circuit could lead to several potential outcomes for the crypto industry:

• Favorable Interpretations: Judges with a deep understanding of blockchain technology and a history of representing crypto firms might be more inclined to interpret existing laws in ways that are more favorable to the industry, potentially reducing regulatory burdens or dismissing certain enforcement actions.
• Precedent Setting: Decisions from the Ninth Circuit often set precedents for other federal courts. A pro-crypto ruling could influence how similar cases are handled nationwide, providing more clarity and potentially fostering innovation.
• Reduced Litigation Risk: For companies operating in the Ninth Circuit, a judge with a perceived industry-friendly stance could translate into a lower perceived risk of adverse rulings in future litigation.
• Continued Regulatory Debate: Regardless of judicial appointments, the fundamental debate over how to regulate digital assets will persist. However, judicial decisions can significantly steer the direction of this debate, influencing legislative efforts and agency actions.

The crypto community and legal observers will be closely watching the confirmation process. The outcome could provide a clearer picture of the judicial branch’s stance on digital assets and its role in shaping the future of finance and technology.

Conclusion: A Critical Juncture for Crypto Law

The nomination of Eric Tung to the Ninth Circuit marks a critical moment for the legal future of the cryptocurrency and blockchain industries. His extensive background representing crypto firms and his involvement in key legal arguments against certain regulatory classifications suggest a potential shift towards a more industry-friendly judicial interpretation of digital asset laws. While this could be seen as a boon for innovation and growth within the sector, it also raises important questions about consumer protection and market stability from watchdog organizations.

As the Senate’s Committee on the Judiciary reviews his nomination, the implications for future crypto regulation, particularly concerning Ninth Circuit crypto cases, are substantial. The outcome of this confirmation process will undoubtedly play a significant role in defining the boundaries of digital asset operations in the United States for years to come. Staying informed about these developments is crucial for anyone involved in or impacted by the evolving world of cryptocurrency.