The IRS lost two key directors working on crypto initiatives, Seth Wilks and Raj Mukherjee, on Friday after they accepted deferred resignation offers directed by the Department of Government Efficiency.

Wilks and Mukherjee, who both went to the IRS from the crypto industry, are technically still employees with the IRS for the next few months but they are on paid administrative leave as of Friday afternoon, two people familiar with the situation told CoinDesk. President Donald Trump’s administration, through DOGE, offered deferred resignations to a wide array of federal employees earlier this year.

Wilks, who was previously a vice president at TaxBit, and Mukherjee, who was previously ConsenSys and Binance.US’ head of tax, both joined the IRS Digital Asset Initiative in February 2024, and were tasked with helping the IRS build a better approach to crypto taxation, including leading the agency’s efforts to build reporting, compliance and enforcement programs for crypto and coordinating with the industry. They worked on an updated 1099-DA tax form shared last summer to aid U.S. persons with filing taxes tied to digital asset transactions.

The pair also oversaw parts of the agency’s efforts to draft tax rules for the crypto industry.

The IRS finalized one such rule, imposing certain data collection requirements on decentralized finance (DeFi) brokers, in the waning days of the former Joe Biden administration. This rule was overturned by Congress earlier this year under the Congressional Review Act in a joint resolution signed by Trump.

Wilks was the IRS’ executive director of digital asset strategy and development, while Mukherjee was the executive director of the digital assets office.

Both people who spoke to CoinDesk noted that the two officials had accepted voluntary buyouts but that these deferred resignations came ahead of expected cuts to IRS staff.

More than 20,000 IRS employees signed up for the deferred resignation program, the New York Times reported last month, with these employees being put on administrative leave through September.

In February, the Department of Government Efficiency (DOGE) began soliciting public input pertaining to the U.S. Securities and Exchange Commission (SEC) — a move suggesting reform at the agency is imminent.

Since then, the SEC, in line with President Trump, has taken a far less adversarial stance towards the cryptocurrency industry, as evidenced by the appointment of crypto-friendly personnel and the abandonment of numerous lawsuits and investigations into crypto companies. But DOGE has the potential to implement further change, and interest in the SEC signals growing pressure towards regulators to reassess their approach to digital assets.

In response to the request for public input, Paul Grewal, Chief Legal Officer at Coinbase — one of the companies no longer facing a lawsuit from the SEC — proposed a policy requiring the SEC to reimburse legal costs for companies that successfully challenge enforcement efforts. The motivation for his suggestion is obvious, but the impact of DOGE on crypto will likely be a bit broader.

As Joel Khalili summarized in Wired, the SEC’s recent retreat from lawsuits represents “an early signal of the agency’s intent to work arm in arm with the industry to come up with a set of rules to govern crypto transactions and products.”

As things currently stand, the SEC’s lack of proactive guidance makes it difficult for businesses to plan long-term compliance strategies, and their enforcement actions often come after years of operation, leaving companies and their investors exposed to unforeseen legal risks. Going forward, this will likely change.

Clear Compliance Over Reactive Enforcement

Relying on enforcement instead of proactive guidance has forced companies like Coinbase, Ripple, and Celsius to spend millions in litigation to clarify their regulatory standing. But in one case against Debt Box, the SEC admitted to inaccuracies in its statements, leading a court to order the SEC to cover the company’s legal expenses — a preview of Coinbase’s suggestion. The ruling cast doubt on the agency’s credibility and highlighted concerns over its enforcement practices.

In the future, expect to see regulatory agencies – including the SEC – under increased pressure to align with the U.S. Treasury’s approach, which prioritizes clear compliance pathways over reactive enforcement. The Treasury’s digital asset guidelines are far more structured and address key areas like tax reporting, compliance and AML measures. Standardized definitions of what constitutes a security in the crypto space are essential for helping companies structure their products appropriately from the outset.

A Balancing Act

In addition to taking notes from the Treasury, the SEC can also look to the IRS for inspiration. A “safe harbor” provision for early-stage projects could encourage innovation while ensuring compliance over time, similar to proposals previously discussed by SEC Commissioner Hester Peirce. The IRS already embraced this approach, issuing temporary transitional relief for crypto taxpayers in January 2025.

The IRS historically relied on voluntary disclosure programs to bring taxpayers into compliance rather than imposing punitive actions upfront. A similar model should be applied to crypto regulation as well.

While some people assume regulation inherently hinders innovation, the opposite can be true. This is because clearly defined guardrails will entice more risk-averse entities to enter the ecosystem and help it grow. A light regulatory touch requires robust backend enforcement and can lead to unnecessary friction between regulators and businesses.

Altogether, better coordination between the SEC, Treasury, and IRS would help prevent regulatory conflicts and streamline compliance obligations for digital asset companies and stakeholders. The Treasury’s digital asset guidelines already offer a strong foundation for this type of cross-agency alignment. The current regulatory uncertainty and the SEC’s reactive enforcement approach stifles growth, while a clearer, more coordinated framework would benefit the entire ecosystem.

The Bottom Line

Between the DOGE’s request for input, the new administration’s broader commitment to digital asset reform, and Coinbase’s proposal, the stage is set for reforms aiming to make regulatory oversight more predictable. While we are in the early stages of the new administration, changes are already occurring at a staggering pace. It’s clear that DOGE’s influence on SEC policies will make an impact – especially with public discourse on these issues further strengthening the case for clearer guidelines rather than regulation by enforcement.

Of course, it’s worth noting that DOGE’s plans for the SEC will likely extend beyond crypto, just as efforts to regulate the industry extend beyond the SEC. Ultimately, it would be beneficial for the new administration, in conjunction with Congress, to create a legislative framework for the industry, so enterprises and individual taxpayers alike understand what constitutes a commodity, security, and digital asset. In other words, we must learn to walk before we run. In the meantime, the SEC should adopt a strategy that can foster growth while maintaining investor protections.

This week, bitcoin climbed steadily to reach nearly $100K, amid hopes for a China-U.S. trade and better macroeconomic conditions ahead.

Institutions like Mastercard and BlackRock made important digital asset announcements.

An historic stablecoin bill neared completion in the U.S. Congress. (A former prime-mover in the House said to expect a “wicked hot summer” of legislation.)

And the Trump Family continued to dominate the crypto news cycle, raising serious conflict-of-interest questions.

At CoinDesk, however, the biggest story concerned Movement, a once-hot startup that now seems deeply troubled.

Deputy managing editor Sam Kessler published an eye-opening scoop showing that Movement Labs may have been misled into signing a market-making agreement that granted a middleman control over 66 million MOVE tokens. That deal was said to have triggered a $38 million selloff, which dumped on retail investors who had faithfully bought in. The story was especially resonant as Movement is backed by World Liberty Financial, a company tied closely to the Trump Family.

Following the story Wednesday, Coinbase suspended listing MOVE, Nik De reported, and Binance banned the market-marker Web3Port. By Thursday evening Movement Labs had suspended flamboyant co-founder Rushi Manche (Sam Reynolds reported) amid ongoing investigations into the project’s “organizational governance.”

It was quite a fall from grace for a startup that had been hotter-than-Miami Beach a few weeks ago.

In other significant news, Sam Altman’s blockchain project, World announced plans to deploy 7,500 eye-scanning orbs in U.S. cities by the end of the year and add crypto-backed loans, prediction markets, and a Visa debit card for spending WLD tokens to its product offerings. Cheyenne Ligon and Margaux Nijkerk had that news.

Meanwhile, Ligon also reported on the trial of Avraham Eisenberg, who was convicted last year on charges of wire fraud, commodities fraud and commodities manipulation charges related to the $110 million hack of Mango Markets. The new conviction relates to Eisenberg possessing child sexual abuse material in 2024.

Earnings season brought mixed results for major exchanges and facilitators. Robinhood said it expected a Q1 pullback in crypto-related revenue (Helene Braun reported). Kraken said its revenue was up 29% in the same period (Francisco Rodrigues). Strategy reported a first-quarter loss of $4.2 billion on declining bitcoin prices. But it’s still planning to raise more than $50 billion for bitcoin-buying over the next 32 months (James Van Straten).

Where do we go from here? Market signals look promising, especially if tariff fears wane. But Movement may have some crisis management to look into.