With the voting in the 2024 U.S. presidential election now concluded, Trump's campaign, widely welcomed by the cryptocurrency industry, has announced victory. This election can be seen as a collective 'team building' for the cryptocurrency industry, with support from top Web3 projects and companies, as well as individual investors betting heavily on various prediction platforms, all signaling that Trump and his team have been accepted by the cryptocurrency industry.
However, looking back at his first term, attorney Mankiw found that his relationship with the cryptocurrency industry was completely opposite to the present. From opposition to support, what caused such a dramatic change? The reason is simple: the enemy of my enemy is my friend, and this friend has proposed many beneficial policies for the cryptocurrency industry.
However, while the promises are appealing, they also need to be implemented. So, let us review the key beneficial policies proposed by our 'crypto president' and whether these policies are starting to advance.
Building a strong Bitcoin nation
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 sector. This plan unfolds in two major directions: establishing a national strategic Bitcoin reserve and creating a strong Bitcoin mining nation, aiming to establish the United States' technological high ground in the global digital economy.
Trump plans to use Bitcoin confiscated by federal law enforcement as initial reserve assets and set annual procurement targets through legislation to gradually expand the national Bitcoin holdings. This move will not only elevate Bitcoin from 'speculative asset' status to that of a 'sovereign reserve asset' but may also trigger a global policy domino effect, prompting other countries to follow suit. At the same time, the U.S. directly holding Bitcoin will significantly enhance its legitimacy and liquidity, providing strong support for the internationalization of digital assets.
At the same time, Trump proposed the goal of making the U.S. a strong Bitcoin mining nation through policy support and technological innovation. He plans to cut energy taxes for mining companies and provide tax incentives and special subsidies for businesses using renewable energy to lower their operating costs. Additionally, the U.S. will fund the research and development of highly efficient mining hardware to reduce reliance on overseas supply chains. Through these measures, Trump hopes to combine Bitcoin mining with the green energy revolution, setting 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 Bitcoin reserve will significantly enhance Bitcoin's position in the global financial system, while the increase in hash rate share will further solidify the United States' 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 protection benchmarks for the global mining industry. However, the concentration of hash rate may raise concerns about the decentralized nature of Bitcoin, which is also an issue that needs to be addressed in future policy implementations.
Currently, these plans are beginning to take shape. In August, U.S. Senator Cynthia Lummis submitted the (Bitcoin Strategic Reserve Act) to Congress, proposing to purchase 200,000 Bitcoins annually and accumulate a total of 1 million over five years. In November, the Pennsylvania House of Representatives proposed 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 an energy subsidy program for mining companies, collaborating with several firms to use wind and solar energy for mining. Meanwhile, the Trump team is also pushing for federal legislation, attempting to provide legal guarantees and financial support for the development of green mining technologies through the (Bitcoin Energy and Technology Innovation Act).
Supporting the further development of stablecoins
Trump promised that if elected, he would implement more lenient policies to support the development of stablecoins, aiming to push stablecoins from current localized applications into broader payment and settlement areas while accelerating the deep integration of traditional finance and cryptocurrency through enhanced compliance. 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 expand government control over the financial system.
Trump's stablecoin policy will unfold in three directions:
First, he proposed to establish a clearer regulatory framework for stablecoin issuers, reducing the ambiguity and restrictions of current laws.
Second, he plans to allow stablecoin issuers to directly access the Federal Reserve's payment system, shortening settlement times and reducing transaction costs.
Finally, he specifically expressed a desire to optimize international trade payments through stablecoin technology, paving new paths for the international status of the U.S. dollar.
In recent years, other regions around the world have 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, ensuring user fund safety but also raising 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 endorsed 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, further maintaining the dominance of private cryptocurrencies in payments and cross-border settlements by supporting private stablecoins as alternatives to the CBDC model. He opposes the Federal Reserve issuing CBDCs, reserving space for the development of private stablecoins and allowing market forces to continue playing a leading role in financial digitization.
Currently, this policy has already shown initial signs. In August of this year, the U.S. Treasury, in conjunction with several stablecoin issuers, launched the 'Payment Stablecoin Regulatory Standards Program', aiming to develop an international stablecoin payment framework within five years. Additionally, the Federal Reserve is testing with several fintech companies to explore how stablecoins can reduce transaction friction in cross-border payments. However, some traditional banks still have doubts about the rapid development of stablecoins, believing they may pose competitive pressure on existing payment networks.
Firing the current SEC chairman
During the 2024 presidential campaign, Trump repeatedly expressed dissatisfaction with current SEC Chairman Gary Gensler and promised to fire Gensler on his first day in office if elected. He criticized Gensler's regulatory policies towards the cryptocurrency industry as overly harsh, claiming that such enforcement stifles America's potential for innovation in cryptocurrency technology and undermines the nation's global competitiveness.
For a long time, the SEC, led by Gary Gensler, has taken severe legal actions against several cryptocurrency exchanges and projects, classifying cryptocurrency assets as securities and thus subjecting them to strict regulation. Although this policy attempts to protect investors, it has also triggered great dissatisfaction in the cryptocurrency industry, which believes that excessive regulation has become a major obstacle to innovation. If Trump fulfills this promise to fire Gensler and appoint a more cryptocurrency-friendly leader, it will bring a significant policy shift, beneficial to improving industry confidence, attracting more capital into the U.S. market, and providing a more favorable operating environment for cryptocurrency enterprises, promoting rapid industry development.
However, this plan faces legal and political challenges. According to current laws, the SEC, as an independent agency, cannot have its chairman directly removed by the president unless there is clear legal grounds, such as misconduct or illegal behavior. However, there are historical precedents showing that many leaders of independent agencies choose to resign voluntarily when a new president takes office.
Moreover, in a tweet on November 10, Trump hinted that he might bypass the traditional Senate confirmation process by using a recess appointment to directly appoint the next SEC chairman. He also mentioned collaborating with potential Senate Majority Leaders to push for recess appointments to 'immediately' fill important vacancies. According to the U.S. Constitution, recess appointments allow the president to grant temporary appointments during Senate recess, effective until the next Senate session ends.
Repealing SAB121
Trump clearly promised during his campaign that if elected, he would repeal the SEC's accounting announcement SAB 121 issued in 2022. The requirements of this announcement are widely regarded as overly stringent, particularly for cryptocurrency custody platforms and exchanges, becoming a heavy financial burden. According to SAB 121, businesses must treat the cryptocurrency assets held for customers as a liability and simultaneously list a corresponding asset on the balance sheet to reflect the responsibility of protecting customer cryptocurrency assets. Although this regulation aims to improve transparency, it actually causes a significant inflation of the balance sheets of businesses, directly limiting their capital operation space and affecting their development and expansion capabilities.
Trump stated that this policy not only burdens businesses with unnecessary costs but also severely restricts the competitiveness of U.S. companies in the cryptocurrency field. If SAB 121 is repealed, the financial pressure on businesses will significantly ease, especially for custody platforms and exchanges, which will have more flexible capital for technology research and development and business expansion, thus promoting the development of the entire industry.
Previously, some Republican lawmakers had already proposed concrete actions for 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 lawmakers jointly wrote to SEC Chairman Gary Gensler, demanding the repeal of SAB 121. Although Congress had 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 ongoing pressure within Congress indicates a strong willingness for reform of cryptocurrency accounting rules, and there may be further legislative or policy adjustments in the future.
Ending 'Operation Choke Point 2.0'
Trump clearly stated 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 cryptocurrency enterprises. He believes that this implicit policy has not gone through a transparent legislative process and restricts the ability of cryptocurrency companies to access the traditional banking system, being one of the main reasons hindering the development of the U.S. cryptocurrency industry.
'Operation Choke Point 2.0' is widely seen by the cryptocurrency industry as a covert suppression by regulatory agencies, primarily using pressure on banks to reduce or interrupt services to cryptocurrency companies. This approach has not only left many crypto businesses in financial distress but has also directly affected the U.S.'s competitiveness in the global cryptocurrency economy. Therefore, Trump's promise to terminate 'Operation Choke Point 2.0' could create a fairer financial environment for the cryptocurrency industry and restore market confidence in the U.S. financial system.
Currently, although there is no concrete repeal plan, Trump's statements have already garnered widespread support from the cryptocurrency industry. Many practitioners believe that if this policy can be truly implemented, it will significantly improve the survival environment for cryptocurrency enterprises, especially in terms of banking channels and capital flow, eliminating unfair treatment towards the industry.
Summary by attorney Mankiw
Trump's victory undoubtedly injected a shot of adrenaline into the U.S. and even the global cryptocurrency industry. Whether establishing a national strategic Bitcoin reserve, supporting stablecoin development, or repealing the SEC's SAB 121 policy, these commitments directly address industry pain points and attempt to fundamentally change the regulatory environment of the U.S. cryptocurrency industry. However, while these policy commitments are exhilarating, their pathways and operability remain full of unknowns. 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 a reference for global cryptocurrency regulation, such as how to balance innovation and risk, as well as the paths for stablecoins and cross-border payments. In the context of global economic integration, the policy choices of the United States will inevitably have spillover effects on other countries. In particular, the opposition between stablecoin development and CBDCs could become a key area of international financial competition in the future. Countries may need to rethink the balance between international settlements and financial sovereignty.
For China, these changes are both a challenge and an opportunity. We need to continue monitoring the dynamics of international cryptocurrency policies, especially the potential leading role of U.S. policies in setting industry rules. At the same time, we should actively explore regulatory paths that align with international standards, promoting the cryptocurrency industry to find a balance between compliance and innovation. In the future, both businesses and legal service institutions will need to adopt a more open perspective to face the transformation of the global cryptocurrency economy, providing support for Chinese companies to seize emerging markets.
