Written by: James Hunt
Translated by: Blockchain in Plain Language
As the results of the U.S. presidential election settle, what changes will the cryptocurrency industry face following Donald Trump's victory?
In this year's campaign, Trump demonstrated a new pro-cryptocurrency stance and for the first time made crypto policy an important issue, proposing a series of commitments. His commitments include firing SEC Chairman Gary Gensler on his 'first day in office', reducing the sentence of Silk Road founder Ross Ulbricht, establishing a presidential cryptocurrency advisory council, abolishing SAB 121, ending 'Operation Choke Point 2.0', making the U.S. a 'superpower' in Bitcoin mining, and establishing a national strategic Bitcoin reserve.
With the presidency, Senate, and House potentially under full Republican control, the cryptocurrency community's optimism about these commitments being quickly fulfilled is rising.
1. New SEC Chairman
During the Biden administration, the SEC played a key role in cryptocurrency regulation. Current chairman Gary Gensler advocates that most cryptocurrencies are securities and urges relevant agencies to register under existing regulations. The agency has also engaged in multiple legal battles with significant industry players like Coinbase, Binance, Kraken, and Robinhood, as well as DeFi, NFT, and stablecoin projects.
Although Gensler may choose to continue serving as an SEC commissioner under the Trump administration, reports suggest that he is likely to choose to resign.
Regarding who will succeed the chairman position, there is widespread speculation that Trump may appoint current Republican SEC Commissioner Hester Peirce, who is known as 'Crypto Mom' for her supportive stance in the cryptocurrency field. Peirce has long criticized the SEC's enforcement actions in the area and the practice of not approving spot cryptocurrency trading products before being sued. However, Peirce previously stated that she is not interested in serving as chairman, 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 analysis pointing out that former CFTC chairman Chris Giancarlo is a candidate being considered.
Jake Chervinsky, chief legal officer of Variant Fund, stated that the chances of Peirce becoming chairman are low, as she does not seem to want the position. He believes, 'Uyeda has a good chance of being appointed, but I expect Trump may prefer to appoint someone he selects himself.' He added, 'In fact, serving as chairman 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 until Trump officially takes office, and before the new leadership takes over federal agencies, crypto policy may change. Chervinsky warned that during this period, the current administration may be 'busy finalizing various rules and initiating enforcement actions.'
He stated, 'Trump's primary cryptocurrency 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-cryptocurrency regulation
Under Trump's leadership, advancing the (Bitcoin bill) has become one of the most anticipated policies, aiming to establish Bitcoin as a strategic reserve asset, planning for the U.S. government to hold up to 5% of Bitcoin's total supply (21 million coins). This bill is formally named the (2024 National Optimized Investment Promotion Innovation, Technology, and Competitiveness Act), abbreviated as (2024 Bitcoin Bill), proposed by Republican Senator Cynthia Lummis from Wyoming in July this year.
After the election results were announced, Donald Trump won the presidential election, the Republican Party regained control of the Senate, and is expected to continue holding power in the House. Lummis posted on X platform, stating, 'We will establish a strategic Bitcoin reserve.'
Analysts Peter Chung and Min Jung from Presto explained, 'If the Republican Party achieves full control of the presidency, Senate, and House, then the chances of many crypto-related bills passing in Congress, including Lummis's Bitcoin Strategic Reserve Act, will greatly increase.'
At the 2024 Bitcoin Conference held in Nashville this summer, Travis Kling, chief investment officer of Ikigai, stated that he believes this plan is almost unlikely to be realized. 'It sounds like an insurmountable gap, almost too optimistic to be believable. But with the strong victory of the Republican Party, the possibility of this plan has greatly increased. If it really happens, we will all win (WAGMI, meaning 'we all will succeed').'
CoinShares research director James Butterfill stated in a post on Wednesday that this initiative will elevate Bitcoin's status similar to gold, making it part of national reserves and marking a historic step towards legalization. He said, 'If the (Bitcoin bill) is implemented, it could greatly stimulate institutional and governmental interest in Bitcoin, accelerate its growth, and drive its value to new heights.'
According to analysts from research and brokerage firm Bernstein, Trump's victory has shifted the regulatory environment for cryptocurrencies from headwinds to tailwinds, with the Senate Banking Committee expected to become more pro-cryptocurrency. This means that other cryptocurrency legislation will progress more quickly, especially regarding stablecoin and market structure bills, benefiting U.S. trading platforms and stablecoin issuers like 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 ease restrictions on cryptocurrency access to the traditional banking system. Additionally, abolishing the controversial SEC announcement SAB 121 may pave the way for traditional banks to accept more cryptocurrency companies as clients and enable them to hold and custody Bitcoin themselves.
However, a constant factor post-election is the U.S. $36 trillion deficit, increasing by $1 trillion every 100 days. Hougan pointed out that according to Congressional Budget Office forecasts, this trend may continue or even worsen under Trump's policies. With the Fed possibly lowering interest rates, combined with an uncertain economic environment, Bitcoin will become a 'must-have' asset for investors.
3. Bitcoin mining incentives and releasing Ross Ulbricht (founder of the dark web market 'Silk Road')
Incentives for U.S. Bitcoin miners may further expand the dominance and consolidation trend of currently listed operators. This situation may affect the industry's diversification into AI data center hosting in a challenging environment after the halving.
Finally, one of Trump's most popular commitments among the cryptocurrency community and the broader public may be to release Ross Ulbricht after taking office. Ulbricht was sentenced to life in prison without the possibility of parole for creating and operating the dark web market 'Silk Road', which is closely related to Bitcoin's early history.
Early Bitcoin player Amir Taaki quickly reminded newly elected President Trump to fulfill his promise to reduce Ulbricht's sentence and urged for his immediate release. Taaki stated, 'I owe everything to Ross Ulbricht. Cryptocurrency changed my life. The growth of cryptocurrency is inseparable from his contributions. He made the ultimate sacrifice, and we all benefit from his work.'
4. Market Impact
CoinShares' Butterfill pointed out that Trump proposed to appoint billionaire supporter Elon Musk to lead a new 'Department of Government Efficiency' responsible for cutting about $2 trillion in federal spending, meaning that more accommodative monetary policies may be adopted in the future to balance this plan. 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 strong bullish reasons for the market, with anticipated upcoming interest rate cuts and global stimulus measures further boosting the economy and supporting Bitcoin's performance. Although Trump will not officially take office until January next year, we expect Bitcoin to maintain strength 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 pricing page, Bitcoin is currently trading at $74,967, having risen 1.7% in the last 24 hours and 77.4% year-to-date. In comparison, Ethereum is currently trading at $2,818, having risen 7.6% in the last 24 hours. However, Ethereum's year-to-date increase is only 23.7%, underperforming other crypto assets.
Bitget Research chief analyst Ryan Lee stated, 'With Trump being 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 ETFs may see net inflows, indicating that Wall Street institutions are optimistic about market prospects. The long-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.'
Bernstein analysts 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 also has similar target predictions.
