Article reprinted from: Mankin Blockchain
The voting for the 2024 U.S. elections has concluded, and the Trump camp, which is well-received by the cryptocurrency industry, announced its victory. This election can be seen as a collective 'team-building' event for the cryptocurrency industry, with strong support from top Web3 projects and companies, as well as retail 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 Mankin found that his relationship with the cryptocurrency 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 since this friend has proposed numerous beneficial policies for the cryptocurrency industry.
However, while commitments are nice, they also need to be implemented. So, let's take stock of the key favorable policies proposed by our crypto president and whether these policies have started to advance.
Build a bitcoin powerhouse
At the Bitcoin conference in Nashville, Tennessee, in June 2024, Trump threw a bombshell to the global cryptocurrency industry: he promised that if elected, he would promote the United States to become the absolute leader in the global bitcoin space through a series of policies. This plan is aimed at establishing a national strategic bitcoin reserve and creating a bitcoin mining powerhouse to solidify America's technological high ground in the global digital economy.
Trump plans to use bitcoins confiscated by federal law enforcement as initial reserve assets and establish annual procurement targets through legislation to gradually expand the country's bitcoin holdings. This move not only elevates bitcoin from 'speculative asset' to 'sovereign reserve asset' but may also trigger a global chain reaction in policy, encouraging 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 to support the goal of making the United States a powerhouse in bitcoin mining 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 reduce their operating costs. Additionally, the U.S. will fund the research and development of efficient mining hardware to reduce reliance on overseas supply chains. Through these measures, Trump hopes to combine bitcoin mining with the green energy revolution and set sustainability standards 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 consolidate the United States' dominant position in the bitcoin network. Meanwhile, innovations in green mining technology will help the industry address environmental criticisms, setting ecological benchmarks for the global mining industry. However, the centralization of hash power may raise concerns about the decentralized nature of bitcoin, which is also an issue that needs attention in future policy implementation.
Currently, these plans have already shown early signs. In August, Senator Cynthia Lummis submitted the (Bitcoin Strategic Reserve Act) to Congress, proposing to purchase 200,000 bitcoins annually, accumulating to a total of 1 million bitcoins within five years. In November, the Pennsylvania House 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 pilot projects for energy subsidy programs targeting mining companies, collaborating with several companies to utilize wind and solar energy for mining. At the same time, Trump's team is also promoting federal legislation, attempting to provide legal protection and financial support for the development of green mining technologies through the (Bitcoin Energy and Technology Innovation Act).
Support the further development of stablecoins
Trump promised that after being elected, he would formulate more relaxed policies to support the development of stablecoins, aiming to expand the use of stablecoins from their current limited application to a broader payment and settlement field, while accelerating the deep integration of traditional finance and cryptocurrency through compliance enhancement. He further stated that he would not promote the issuance of Central Bank Digital Currency (CBDC) 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 from three directions:
First, he proposed to establish a clearer regulatory framework for stablecoin issuers, reducing the ambiguity and restrictions of existing laws.
Second, he plans to allow stablecoin issuers direct access to the Federal Reserve payment system, shortening settlement times and lowering transaction costs.
Finally, he specifically mentioned hoping to optimize international trade payments through stablecoin technology, opening up new pathways for the international status of the U.S. dollar.
In recent years, other regions around the world have also been actively promoting the development of stablecoins. The MiCA regulations passed by the European Union in 2023 set strict capital requirements and transparency standards for stablecoin issuance, which, while ensuring the safety of user funds, also raised 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, which could become an important payment tool in the Asian market due to its official endorsement.
In contrast, Trump's policy path places greater emphasis on flexibility and market orientation, further maintaining the dominant position of private cryptocurrencies in payments and cross-border settlements by supporting private stablecoins as an alternative to CBDC models. He opposes the issuance of CBDCs by the Federal Reserve, reserving space for the development of private stablecoins, and allowing market forces to continue to play a leading role in the digitalization of finance.
Currently, this policy has shown preliminary signs. In August, the U.S. Treasury, in conjunction with several stablecoin issuers, launched the 'Payment Stablecoin Regulatory Standards Initiative,' intending to establish 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 that they may pose competitive pressure on existing payment networks.
Dismiss the current SEC chairman
During the 2024 presidential campaign, Trump repeatedly expressed his dissatisfaction with the current SEC chairman Gary Gensler and promised that if elected, he would dismiss Gensler on his first day in office. He criticized Gensler's regulatory policies toward the cryptocurrency industry as being too stringent, claiming that such an enforcement attitude stifles the potential for innovation in U.S. 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 multiple cryptocurrency exchanges and projects, classifying crypto assets as securities and thus imposing stringent regulations. Although this policy attempts to protect investors, it has also sparked significant dissatisfaction within the cryptocurrency industry, which views excessive regulation as the main obstacle to innovation. If Trump fulfills this commitment to dismiss Gensler and appoint a leader more friendly to the cryptocurrency industry, it will bring about a significant policy shift, beneficial for boosting industry confidence, attracting more capital into the U.S. market, and providing a more favorable operating environment for cryptocurrency companies, promoting rapid industry development.
However, this plan faces legal and political challenges. Under current laws, the SEC, as an independent agency, cannot have its chairman directly removed by the president unless there is clear legal basis, such as misconduct or illegal actions. However, there is historical precedent showing that many leaders of independent agencies choose to resign voluntarily 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. He also mentioned working 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 make temporary appointments while the Senate is in recess, effective until the end of the next Senate session.
Abolish SAB121
Trump explicitly promised during the 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 harsh, especially for cryptocurrency asset custody platforms and exchanges, and have become a heavy financial burden. According to SAB 121, companies are required to treat the cryptocurrency assets they hold for customers as a liability and to list an equivalent asset on the balance sheet to reflect the company's responsibility to protect customer crypto assets. Although this regulation is intended to improve transparency, it has significantly inflated companies' balance sheets, directly restricting their capital operation space and affecting their development and expansion capabilities.
Trump stated that this policy not only burdens companies with unnecessary costs but also severely restricts the competitiveness of U.S. companies in the cryptocurrency 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 business expansion, thereby promoting the overall development of the industry.
Previously, some Republican lawmakers had already proposed specific actions for the reform of SAB 121. In September of this year, House Financial Services Committee Chairman Patrick McHenry and Senator Cynthia Lummis led 42 Republican lawmakers in a joint letter to SEC Chairman Gary Gensler, demanding the repeal of SAB 121. Although 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, ongoing pressure within Congress indicates a strong desire for reform of cryptocurrency accounting rules, and further legislative or policy adjustments may occur in the future.
End '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 companies. He believes this implicit policy has not gone through a transparent legislative process and restricts cryptocurrency companies' access to 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 viewed by the cryptocurrency industry as an implicit crackdown by regulators, with its core method being to pressure banks to reduce or interrupt services to cryptocurrency companies. This approach not only puts many cryptocurrency companies in financial difficulty but also directly affects the competitiveness of the United States in the global crypto 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 trust in the U.S. financial system.
Currently, although there is no specific plan for repeal, Trump's statements have already garnered widespread support from the cryptocurrency industry. Many practitioners believe that if this policy can be genuinely implemented, it will greatly improve the survival environment of cryptocurrency companies, especially regarding banking channels and capital flow, eliminating unfair treatment of the industry.
Summary by attorney Mankin
Trump's victory undoubtedly injected a shot of adrenaline into the cryptocurrency industry in the United States and globally. 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 the pain points of the industry, attempting to fundamentally change the regulatory environment of the U.S. cryptocurrency industry. However, while these policy commitments are exciting, the path and operability of their implementation remain full of uncertainties. After all, the success of these policies depends on the complex legislative and administrative systems in the United States.
However, these proposals also provide certain references for global cryptocurrency regulation, such as how to balance innovation and risk, and the pathways for stablecoins and cross-border payments. In the context of global economic integration, U.S. policy choices will inevitably have spillover effects on other countries. Particularly, the opposition between the development of stablecoins and CBDCs may become a key area of future international financial competition. 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 cryptocurrency policies, especially the potential leading role of U.S. policies in industry rule-making. 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 enterprises and legal service agencies will need to face the transformation of the global cryptocurrency economy with a more open perspective, providing support for Chinese enterprises to seize emerging markets.
