The 2024 U.S. presidential election has concluded, and the Trump camp, which is well-received by the crypto industry, announced victory. This election can be considered a collective "team-building" exercise for the crypto industry, with strong support from top Web3 projects and companies, down to retail investors betting heavily on various prediction platforms, all indicating that Trump and his team have been embraced by the crypto industry.
However, upon reviewing his first term, Attorney Mankiw found that his relationship with the crypto industry was the complete opposite of now. From opposition to support, what caused such a dramatic change? The reason is simple: the enemy of my enemy is my friend, especially when this friend proposes many beneficial policies for the crypto industry.
However, while promises are nice, they also need to be implemented. So, let's take stock of what key favorable policies our crypto president has proposed and whether these policies have begun to advance.
Build a Bitcoin powerhouse
At the Bitcoin conference in Nashville, Tennessee, in June 2024, Trump dropped a bombshell on the global cryptocurrency industry: he promised that if elected, he would implement a series of policies to make the United States the absolute leader in the global Bitcoin space. This plan involves establishing a national strategic Bitcoin reserve and building a Bitcoin mining powerhouse, aiming to establish the U.S. as a technological high point in the global digital economy.
Trump plans to use the Bitcoins confiscated by federal law enforcement agencies as initial reserve assets, setting annual procurement targets through legislation to gradually expand the country's Bitcoin holdings. This move will not only elevate Bitcoin from a "speculative asset" to a "sovereign reserve asset" but may also trigger a global chain reaction in policies, prompting other countries to follow suit. Meanwhile, the direct ownership of Bitcoin by the U.S. will significantly enhance its legitimacy and liquidity, providing strong support for the internationalization of digital assets.
At the same time, Trump has set the goal of making the U.S. a Bitcoin mining powerhouse through policy support and technological innovation. He plans to cut energy taxes for mining companies and provide tax incentives and special subsidies for companies using renewable energy to reduce their operating costs. The U.S. will also fund the research and development of efficient mining hardware to reduce dependence on overseas supply chains. Through these measures, Trump hopes to combine Bitcoin mining with the green energy revolution and establish a sustainable development standard for the global mining industry.
The potential impacts of this series of policies are profound and complex. The establishment of a national-level Bitcoin reserve will significantly enhance Bitcoin's status in the global financial system, while an increase in hash rate share will further solidify the U.S.'s dominant position in the Bitcoin network. At the same time, innovations in green mining technology will help the industry address environmental criticisms and set environmental benchmarks for the global mining industry. However, the centralization of hash rate may raise concerns about Bitcoin's decentralized attributes, which is also a point that needs to be focused on in future policy execution.
Currently, these plans have shown initial signs. In August, Senator Cynthia Lummis submitted the "Bitcoin Strategic Reserve Act" to Congress, proposing to purchase 200,000 bitcoins annually, accumulating to 1 million bitcoins over five years. In November, the Pennsylvania House introduced the "Pennsylvania Bitcoin Strategic Reserve Act," allowing the state's treasury to allocate 10% of its approximately $7 billion state funds to Bitcoin. Additionally, Texas has taken the lead in piloting energy subsidy programs for mining companies, collaborating with several companies to utilize wind and solar energy for mining. At the same time, Trump's team is pushing for federal legislation to provide legal guarantees and financial support for the development of green mining technologies through the "Bitcoin Energy and Technology Innovation Act."
Support further development of stablecoins
Trump promised that once elected, he would formulate more lenient policies to support the development of stablecoins, aiming to move stablecoins from current localized applications to broader payment and settlement fields while accelerating the deep integration of traditional finance and cryptocurrencies through compliance enhancement. He further stated that he would not promote a central bank digital currency (CBDC) issued by the Federal Reserve, believing that CBDCs could threaten the innovative spirit of private cryptocurrencies and would expand the government's control over the financial system.
Trump's stablecoin policy will unfold from three directions:
First, he proposed to establish a clearer regulatory framework for stablecoin issuers, reducing the ambiguity and restrictions of current laws.
Secondly, he plans to allow stablecoin issuers to access the Federal Reserve payment system directly, shortening settlement times and reducing transaction costs.
Finally, he specifically expressed a desire to optimize international trade payments through stablecoin technology, opening up new paths for the international status of the U.S. dollar.
In recent years, other regions internationally have also been actively promoting the development of stablecoins. The EU's MiCA regulation, passed in 2023, sets strict capital requirements and transparency standards for stablecoin issuance, which, while safeguarding user funds, also raises the compliance threshold for the industry. Meanwhile, Hong Kong is exploring the launch of an official stablecoin to optimize cross-border payments and trade settlements, and this officially backed stablecoin could become an important payment tool in the Asian market.
In contrast, Trump's policy path places greater emphasis on flexibility and market orientation, supporting private stablecoins as an alternative to the CBDC model, further maintaining the dominance of private cryptocurrencies in payments and cross-border settlements. He opposes the Federal Reserve's issuance of CBDCs, preserving space for the development of private stablecoins and allowing market forces to continue playing a leading role in financial digitization.
Currently, the policy has shown initial signs. In August, the U.S. Treasury, in conjunction with several stablecoin issuers, launched the "Payment Stablecoin Regulatory Standards Initiative," aiming to establish an international stablecoin payment framework within five years. Additionally, the Federal Reserve is conducting tests with multiple fintech companies to explore how stablecoins can reduce transaction friction in cross-border payments. However, some traditional banks still express doubts about the rapid development of stablecoins, believing they may pose competitive pressure on existing payment networks.
Dismiss current SEC chairman
During the 2024 presidential campaign, Trump repeatedly expressed his dissatisfaction with the current chairman of the Securities and Exchange Commission (SEC), Gary Gensler, and promised that if elected, he would dismiss Gensler on his first day in office. He criticized Gensler's regulatory policies on the crypto industry as too harsh, stating that such an enforcement attitude stifles the potential for innovation in crypto technology in the U.S. and damages the country's global competitiveness.
For a long time, the SEC, led by Gary Gensler, has taken severe legal actions against many cryptocurrency exchanges and projects, classifying crypto assets as securities and imposing strict regulations. Although this policy aims to protect investors, it has also provoked great dissatisfaction within the crypto industry, which believes that excessive regulation has become a major obstacle to innovation. If Trump fulfills this promise and dismisses Gensler, appointing a leader more friendly to the crypto industry, it would bring a significant policy shift, beneficial for building industry confidence, attracting more capital into the U.S. market, and providing a more favorable operating environment for crypto companies, promoting rapid industry development.
However, this plan faces legal and political challenges. Under current law, the SEC, as an independent agency, cannot have its chairman removed by the president directly unless there is a clear legal basis, such as misconduct or illegal behavior. However, historical precedents show that many leaders of independent agencies choose to resign proactively when a new president takes office.
Additionally, Trump hinted in a tweet on November 10 that he might bypass the traditional Senate confirmation process for the next SEC chairman through a recess appointment, directly appointing someone. He also mentioned that he would work with potential Senate majority leaders to promote recess appointments to "immediately" fill the vacancies of important positions. According to the U.S. Constitution, a recess appointment allows the president to make temporary appointments during Senate recess, effective until the end of the next Senate session.
Abolish SAB121
Trump explicitly promised during his campaign that if elected, he would abolish the accounting announcement SAB 121 issued by the SEC in 2022. The requirements of this announcement are widely regarded as overly stringent, especially for crypto asset custody platforms and exchanges, which have become a heavy financial burden. According to SAB 121, companies must treat the cryptocurrency assets held for customers as a liability and simultaneously list an amount of assets equal to it on their balance sheets to reflect the company's responsibility for protecting customer cryptocurrency assets. Although this regulation aims to improve transparency, it has actually led to a significant inflation of companies' balance sheets, directly limiting their capital operation space and affecting their development and expansion capabilities.
Trump stated that this policy not only imposes unnecessary costs on companies but also severely restricts the competitiveness of American companies in the crypto field. If SAB 121 is abolished, the financial pressure on companies will be greatly alleviated, especially for custody platforms and exchanges, which will have more flexible capital for technological research and development and business expansion, thereby promoting the development of the entire industry.
Previously, members of the Republican Party had already proposed specific actions regarding the reform of SAB 121. In September of this year, led by House Financial Services Committee Chairman Patrick McHenry and Senator Cynthia Lummis, 42 Republican members jointly wrote to SEC Chairman Gary Gensler, calling for the abolition of SAB 121. Although both chambers of Congress previously passed a bill to overturn SAB 121, this bill was vetoed by President Biden in May 2024, causing the reform process to stall.
As of now, the SEC has not officially responded to these lawmakers' requests, and SAB 121 remains in effect. However, the continued pressure within Congress shows a strong willingness for reforming cryptocurrency accounting rules, and further legislative or policy adjustments may occur in the future.
End Operation Choke Point 2.0
Trump made it clear during his campaign that if elected, he would immediately terminate the regulatory action known as "Operation Choke Point 2.0," ensuring that the banking system can provide a fair service environment for crypto companies. He believes this implicit policy has not gone through a transparent legislative process and restricts the ability of cryptocurrency companies to access the traditional banking system, making it one of the main reasons hindering the development of the U.S. crypto industry.
"Operation Choke Point 2.0" is widely viewed by the crypto industry as an implicit crackdown by regulatory agencies, with its core tactic being to pressure banks to reduce or suspend services to cryptocurrency companies. This approach not only trapped many crypto enterprises in financial difficulties but also directly affected the competitiveness of the U.S. in the global crypto economy. Therefore, Trump's promise to terminate "Operation Choke Point 2.0" will not only create a fairer financial environment for the crypto industry but also restore market trust in the U.S. financial system.
Currently, although there is no definitive plan for abolition, Trump's statements have already garnered widespread support from the crypto industry. Many practitioners believe that if this policy can be truly implemented, it will significantly improve the living environment for crypto companies, especially in terms of banking channels and capital flow, eliminating unfair treatment of the industry.
Summary by Attorney Mankiw
Trump's victory undoubtedly injects a shot of adrenaline into the U.S. and global crypto industry. Whether it is establishing a national strategic Bitcoin reserve, supporting the development of stablecoins, or abolishing the SEC's SAB 121 policy, these commitments directly address industry pain points and aim to fundamentally change the regulatory environment for the U.S. crypto industry. However, while these policy commitments are exciting, the pathways for their implementation and operability remain full of uncertainties. After all, whether these policies can be smoothly advanced still depends on the complex legislative and administrative system in the U.S.
However, these proposals also provide certain references for regulating the global crypto industry, such as how to balance innovation and risk, and the paths for stablecoins and cross-border payments. Against the backdrop of global economic integration, U.S. policy choices will inevitably have spillover effects on other countries. In particular, the opposition between stablecoin development and CBDCs is likely to become a key area of international financial competition in the future. Countries may need to rethink the balance between international settlement and financial sovereignty.
For China, these changes are both challenges and opportunities. We need to continuously monitor the dynamics of international crypto policies, especially the potential leading role of U.S. policies in the formulation of industry rules. At the same time, we should actively explore regulatory paths that align with international standards, striving to find a balance between compliance and innovation in the crypto industry. In the future, both enterprises and legal service institutions will need to adopt a more open perspective to face the changes in the global crypto economy, providing support for Chinese enterprises to seize emerging markets.
