Author: James Hunt
Translation: Plain Language Blockchain
With the U.S. presidential election results settled, what changes can we expect in the cryptocurrency industry following Donald Trump's victory?
During this year's campaign, Trump showcased a brand new pro-cryptocurrency stance and for the first time made cryptocurrency policy an important topic, making a series of commitments. His promises 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 committee, repealing SAB 121, ending 'Operation Choke Point 2.0', transforming the U.S. into a 'superpower' in Bitcoin mining, and establishing a national strategic Bitcoin reserve.
With the presidency, Senate, and House of Representatives potentially fully controlled by the Republican Party, optimism in the cryptocurrency community is rising regarding the swift realization of these commitments.
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 advocates that most cryptocurrencies fall under securities and urges relevant agencies to register according to existing regulations. The agency also engaged in multiple legal battles with major industry players such as Coinbase, BN, 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 he is likely to opt for resignation.
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' due to her supportive attitude in the cryptocurrency space. Peirce has long criticized the SEC's enforcement actions in the field and its failure to approve physical cryptocurrency trading products before being sued. However, Peirce previously indicated she is not interested in the chairman position, making another Republican commissioner, Mark Uyeda, a popular candidate who is also friendly to cryptocurrencies. On the other hand, Trump may also nominate a new commissioner; some analyses suggest that former CFTC chairman Chris Giancarlo is a candidate under consideration.
Jake Chervinsky, Chief Legal Officer of Variant Fund, stated that the chances of Peirce becoming chairman are low, as she seems not to want the position. He believes, "The probability of Uyeda taking office is not small, but I expect Trump may prefer to appoint someone he selects himself." He added, "In fact, being 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, with two and a half months before Trump officially takes office, cryptocurrency policy may shift before the new leadership takes over federal agencies. Chervinsky warned that during this period, the current administration may be 'busy finalizing various 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 lawsuit against Tornado Cash."
2. Pro-crypto regulation
Under Trump’s administration, advancing the (Bitcoin Bill) became one of the most anticipated policies, establishing Bitcoin as a strategic reserve asset, with plans for the U.S. government to hold up to 5% of the total Bitcoin supply (21 million coins). The formal name of this bill is the (2024 National Optimization Investment Promotion Innovation, Technology, and Competitiveness Act), referred to as the (2024 Bitcoin Bill), proposed by Wyoming Republican Senator Cynthia Lummis in July of this year.
Following the announcement of the election results, Donald Trump won the presidential election, the Republican Party regained control of the Senate, and is expected to maintain control of the House of Representatives. Lummis posted on the X platform, saying, "We will establish a strategic Bitcoin reserve."
Analysts Peter Chung and Min Jung at Presto explained, "If the Republican Party achieves full control of the presidency, Senate, and House of Representatives, then many crypto-related bills, including Lummis's Bitcoin Strategic Reserve Bill, will have a much greater chance of passing in Congress."
At the 2024 Bitcoin Conference held in Nashville this summer, Travis Kling, Chief Investment Officer at Ikigai, stated that he believes this plan is almost unlikely to be realized. "It sounds like an insurmountable gap, almost too optimistic to be credible. But with the strong victory of the Republican Party, the likelihood of this plan has significantly increased. If it does happen, then we really will win together (WAGMI, meaning 'we are all going to make it')."
James Butterfill, research director at CoinShares, stated on Wednesday that this initiative would elevate Bitcoin's status akin to gold, making it part of national reserves, marking a historic step towards legalization. He remarked, "If the (Bitcoin Bill) is implemented, it could significantly stimulate institutional and governmental interest in Bitcoin, accelerate its growth, and push its value to new highs."
According to analysts at research and brokerage firm Bernstein, Trump's victory shifted the regulatory environment for cryptocurrencies from headwinds to tailwinds, and the Senate Banking Committee is expected to become more pro-cryptocurrency. This means other crypto legislation will progress faster, particularly regarding stablecoin and market structure bills, which will benefit U.S. trading platforms and stablecoin issuers like Circle and Paxos.
Matt Hougan, Chief Investment Officer at Bitwise, pointed out that among Trump's other policy commitments, ending 'Operation Choke Point 2.0' would relax restrictions on cryptocurrency access to the traditional banking system. Furthermore, the repeal of the controversial SEC announcement SAB 121 could pave the way for traditional banks to accept more crypto companies as clients and enable them to hold and custody Bitcoin themselves.
However, one constant factor post-election is the $36 trillion deficit in the U.S., increasing by $1 trillion every 100 days. Hougan noted that, according to predictions from the Congressional Budget Office, this trend may continue or even worsen under Trump's policies. With the Fed likely to cut rates and the uncertain economic environment, Bitcoin will become an 'essential' asset for investors.
3. Incentives for Bitcoin mining and the release of Ross Ulbricht (founder of the dark web market 'Silk Road')
Incentives for U.S. Bitcoin miners may further expand the current dominance of domestic listed operators and the trend of consolidation. This situation may impact the industry's diversification into AI data center hosting amid the challenging environment post-halving.
Finally, one of Trump's most popular commitments among the crypto community and even the wider public may be to release Ross Ulbricht after taking office. Ulbricht was sentenced to life in prison without 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 elected President Trump on Wednesday to fulfill his promise to reduce Ulbricht's sentence and urged for his immediate release. Taaki said, "I owe everything to Ross Ulbricht. Cryptocurrency changed my life. The growth of cryptocurrency is thanks to his contributions. He made the ultimate sacrifice, and we all benefit from his work."
4. Market Impact
Butterfill from CoinShares pointed out that Trump's proposal to appoint billionaire supporter Elon Musk to lead a new 'Department of Government Efficiency' aimed at cutting about $2 trillion in federal spending suggests that a more accommodative monetary policy may be adopted in the future to balance this plan. He noted that historically, loose monetary policy 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 expected upcoming interest rate cuts and global stimulus measures further boosting the economy and supporting Bitcoin's performance. Although Trump won't officially take office until January, we expect Bitcoin to remain strong by the end of the year." He also mentioned, "Ethereum rose 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, up 1.7% in the past 24 hours and up 77.4% year-to-date. In comparison, Ethereum is currently trading at $2,818, up 7.6% in the past 24 hours. However, Ethereum's year-to-date increase is only 23.7%, underperforming other crypto assets.
Ryan Lee, Chief Analyst at Bitget Research, stated, "As Trump is re-elected president, the market's initial reaction may be that off-exchange funds enter out of fear, pushing Bitcoin prices to new highs. In the coming days, BTC ETFs may see net inflows, indicating that Wall Street institutions hold an optimistic view of the market outlook. The long-short ratio in the futures market is below 1, suggesting that institutional investors in the crypto market are taking long positions through futures. The current market is in a phase of consensus bullishness."
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 also has similar target predictions.
