The research division of investment bank TD Cowen predicts that the regulatory situation in the U.S. for crypto could do a 180 during the incoming Trump administration—though it’s hardly assured, according to a note published on Monday.
Given that a Republican-controlled Senate and a House will dominate the political landscape, albeit by a slim margin, the analysts predict President-Elect Trump will be able to leverage his “political capital” to push forward an agenda centered on economic reform, trade and lower taxes.
“We believe crypto enforcement will likely be placed on hold once Trump names a new SEC chair, which he can do on Jan. 20 regardless of whether Gary Gensler resigns his seat as an SEC commissioner,” the researchers wrote. “That doesn't mean it will be the Wild West for crypto without any SEC oversight. It is more than we expect a new chair to reassess existing cases and look for ways to provide more clarity on how crypto companies can comply with existing laws.”
On the campaign trail, Trump—once a self-declared bitcoin skeptic—courted the crypto vote. Many influential crypto founders, from exchange operators like Gemini’s Winklevoss brothers and Coinbase CEO Brian Armstrong to leading figures in DeFi like Aave-Chan Initiative’s Marc Zeller, supported the real estate mogul and former reality TV celebrity’s bid for reelection.
In addition to launching multiple NFT series and an Aave fork called World Liberty Financial, Trump made several crypto-related promises on the campaign trail. These include pardoning Silk Road founder Ross Ulbricht and firing crypto industry antagonist Gary Gensler, the chair of the U.S. Securities and Exchange Commission.
More importantly, the TD Cowen researchers see a greater chance Congress will be able to draft and pass crypto-focused legislation during Trump’s second term. In particular, congressional Republicans and “Team Trump” could decide how to bring stablecoins into the compliance regime.
Two paths are currently being discussed for regulating stablecoins: passing a tailored bill or folding the issue into wider crypto market structure legislation. In either case, legislation to impose liquidity requirements on issues and consumer protections “will open the door for banks to issue stable coins,” the researchers wrote.
While Rep. Maxine Waters has been working on a bipartisan bill with House Republicans for the last three years, the researchers doubt this will come to pass until later in 2025. Outgoing Democrat Sen. Sherrod Brown, R-Ohio, is unlikely to cut a deal given that “crypto spent so heavily to defeat him.”
A broader market structure bill would also determine which crypto assets are securities, falling under the SEC’s remit, and lay out the process by which “a token can shift from security to a commodity.”
That said, “crypto will not be an initial priority for Team Trump given the focus on extending the tax cuts and tackling tariffs and trade,” the researchers argued.
Another potential delay to the political process is the “legitimate concerns about AML/BSA compliance” and crypto’s supposed role in sanctions evasion, drug/human trafficking and terrorist financing. “The more the industry dismisses any government oversight, the harder it will be to cut a deal that can pass both chambers.”
“We continue to believe that this is a losing arguing for the crypto space that hurts the industry politically. We believe crypto market structure legislation would become more likely if there was a broad crypto sector embrace of AML/BSA compliance,” the researchers said, particularly calling out “so-called mixers and other technologies to hide where crypto has come from.”
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