Author: James Hunt
Translation: Plain Language Blockchain
With the results of the U.S. presidential election settled, what changes will the cryptocurrency industry face following Donald Trump's victory?
During this year's campaign, Trump showcased a new pro-cryptocurrency stance and for the first time made crypto policy a significant topic, making a series of commitments. His commitments include firing SEC Chairman Gary Gensler on 'Day One' in office, commuting the sentence of Silk Road founder Ross Ulbricht, establishing a presidential cryptocurrency advisory council, repealing SAB 121, ending 'Operation Choke Point 2.0', making the U.S. a 'stronghold' for Bitcoin mining, and creating a national strategic Bitcoin reserve.
With the presidency, Senate, and House of Representatives likely under full Republican control, optimism within the cryptocurrency community about these commitments being quickly realized is rising.
1. New SEC Chairman
During the Biden administration, the Securities and Exchange Commission (SEC) played a key role in cryptocurrency regulation. Current Chairman Gary Gensler argues that most cryptocurrencies fall under the category of securities and urges relevant entities to register under existing regulations. The agency has also engaged in multiple legal battles with major industry players such as Coinbase, BN, Kraken, and Robinhood, as well as with DeFi, NFT, and stablecoin projects.
Although Gensler may choose to continue serving as an SEC commissioner in the Trump administration, reports suggest he is likely to resign.
Regarding who will succeed the chair position, there is widespread speculation that Trump may appoint current Republican SEC Commissioner Hester Peirce, known as 'Crypto Mom' for her supportive stance in the cryptocurrency sector. Peirce has long criticized the SEC's enforcement actions in the field and its refusal to approve spot cryptocurrency trading products before being sued. However, Peirce previously stated that she is not interested in the chair position, making the only other Republican commissioner Mark Uyeda a popular candidate, who also holds a friendly attitude towards cryptocurrencies. On the other hand, Trump may also nominate a new commissioner, with former CFTC Chairman Chris Giancarlo identified as a potential candidate.
Jake Chervinsky, Chief Legal Officer at Variant Fund, stated that the likelihood of Peirce becoming chair is low, as she seems to not want the position. He believes, 'Uyeda has a decent chance, but I expect Trump may prefer to appoint someone he chooses.' He added, 'In reality, serving as chair is a very difficult and thankless position. Some commissioners (like Uyeda) may be interested, but others may feel they have done their duty and wish to pursue new opportunities.'
However, there are still two and a half months before Trump officially takes office, and crypto policies may change before the new leadership takes over federal agencies. Chervinsky warned that during this period, the current administration may be 'busy finalizing rules and initiating enforcement actions.'
He stated, 'Trump's primary crypto policy task must be to end Biden's attempts to suppress the industry through enforcement. This means reversing the SEC's unreasonable enforcement actions and the Justice Department's prosecution of Tornado Cash.'
2. Pro-Crypto Regulation
Under Trump’s administration, advancing the (Bitcoin Bill) has become one of the most anticipated policies, aimed at establishing Bitcoin as a strategic reserve asset and planning for the U.S. government to hold up to 5% of Bitcoin's total supply (21 million coins). The formal name of this bill is the (2024 National Optimization Investment Promotion Innovation, Technology and Competitiveness Act), abbreviated as the (2024 Bitcoin Bill), proposed by Wyoming Republican Senator Cynthia Lummis in July this year.
After the election results were announced, Donald Trump won the presidential election, the Republicans regained control of the Senate, and are expected to maintain control of the House of Representatives. Lummis commented on the X platform, stating, 'We will establish a strategic Bitcoin reserve.'
Analysts Peter Chung and Min Jung from Presto explained, 'If the Republicans achieve full control over the presidency, Senate, and House of Representatives, the chances for many crypto-related bills, including Lummis's Bitcoin Strategic Reserve Act, passing through Congress will significantly increase.'
During the 2024 Bitcoin Conference held in Nashville this summer, Ikigai's Chief Investment Officer Travis Kling remarked that he believes this plan is unlikely to be realized. 'It sounds like an insurmountable chasm, almost too optimistic to be credible. But with the Republicans' strong victory, the likelihood of this plan has significantly increased. If it is truly realized, then we are all going to win (WAGMI, meaning 'We're All Gonna Make It').'
CoinShares Research Director James Butterfill wrote on Wednesday that this move will elevate Bitcoin's status to that of gold, making it part of national reserves and marking a historic step towards legalization. He stated, 'If the (Bitcoin Bill) is implemented, it could significantly stimulate institutional and government interest in Bitcoin, accelerate its growth, and drive its value to new highs.'
According to analysts from research and brokerage firm Bernstein, Trump's victory has shifted the regulatory environment for cryptocurrencies from a headwind to a tailwind, and the Senate Banking Committee is expected to be more pro-cryptocurrency. This means that other cryptocurrency legislation will progress more quickly, especially regarding stablecoins and market structure bills, which will benefit trading platforms and stablecoin issuers in the U.S., such as Circle and Paxos.
Bitwise Chief Investment Officer Matt Hougan pointed out that among Trump’s other policy commitments, the end of 'Operation Choke Point 2.0' will relax restrictions on cryptocurrency access to the traditional banking system. Additionally, the repeal of the controversial SEC announcement SAB 121 could pave the way for traditional banks to accept more crypto companies as clients and allow them to hold and custody Bitcoin themselves.
However, one constant factor post-election is the U.S. $36 trillion deficit, increasing by $1 trillion every 100 days. Hougan noted that according to the Congressional Budget Office's predictions, this trend could continue or even worsen under Trump's policies. With the Fed likely to cut rates and an uncertain economic environment, Bitcoin will become an 'essential' asset for investors.
3. Bitcoin Mining Incentives and the Release of Ross Ulbricht (founder of the dark web market 'Silk Road')
The incentives for U.S. Bitcoin miners may further expand the current dominance and consolidation trend of domestic listed operators. This situation could impact the industry's current diversification into AI data center hosting amid a challenging environment post-halving.
Finally, one of Trump's most popular promises among the crypto community and the broader public may be the release of Ross Ulbricht. Ulbricht was sentenced to life in prison without parole for creating and operating the dark web market 'Silk Road.' The site is closely tied to Bitcoin's early history.
Early Bitcoin player Amir Taaki quickly reminded elected President Trump on Wednesday to fulfill his promise to commute Ulbricht's sentence and urged for his release. Taaki stated, 'I owe everything to Ross Ulbricht. Cryptocurrency changed my life. The growth of cryptocurrency is largely due to his contributions. He made the ultimate sacrifice, and we all benefit from his work.'
4. Market Impact
CoinShares' Butterfill pointed out that Trump's proposal to appoint billionaire supporter Elon Musk to lead a new 'Department of Government Efficiency,' responsible for cutting about $2 trillion in federal spending, implies that a more accommodative monetary policy may be adopted to balance this plan in the future. He stated that historically, loose monetary policies and fiscal conservatism have favored Bitcoin, enhancing its appeal as a hedge against currency devaluation and inflation, attracting investors seeking to avoid traditional economic risks.
BRN analyst Valentin Fournier stated, 'Trump's election provides a strong bullish case for the market, as the anticipated rate cuts and global stimulus measures will further boost the economy and support Bitcoin's performance. Although Trump won't officially take office until January next year, we expect Bitcoin to remain strong before the end of the year.' He also mentioned, 'Ethereum has risen 20% in the past three days, slightly narrowing the gap with Bitcoin after previously underperforming. However, we believe this surge is temporary, and Bitcoin may continue to lead in the coming weeks.'
According to The Block's price page, the current trading price of Bitcoin is $74,967, which has increased by 1.7% in the past 24 hours and is up 77.4% year-to-date. In comparison, Ethereum's current trading price is $2,818, having risen by 7.6% in the past 24 hours. However, Ethereum's increase this year stands at 23.7%, underperforming compared to other crypto assets.
Bitget Research Chief Analyst Ryan Lee stated, 'With Trump re-elected as president, the initial market reaction may be that off-exchange funds enter the market out of fear, pushing Bitcoin prices to new highs. In the coming days, BTC ETF may see net inflows, indicating that Wall Street institutions are optimistic about the market outlook. The long-to-short ratio in the futures market is below 1, which means institutional investors in the crypto market are taking long positions through futures. The market is currently in a broadly bullish phase.'
Analysts at Bernstein reiterated their prediction on Wednesday, expecting Bitcoin to approach $90,000 by the end of this year and reach a bull market target of $200,000 by 2025. Bitwise's Hougan has similar predictive targets.
