Produced by | OKG Research
Authors | Hedy Bi, Jason Jiang
Even before Trump officially takes office, the crypto market has already started to celebrate early, responding to policy news. This morning, due to Trump's official nomination of Paul Atkins as SEC chair, Bitcoin broke through $100,000. Since Trump's election victory, Bitcoin has risen from $68,000 on November 5 to $100,000, achieving a 47% return in just one month. In this article, the author will analyze in depth how policy changes shape market dynamics from the perspective of U.S. crypto policy and the potential tracks for future development in the new landscape.
A 'tough and blunt' crypto regulation is shifting towards a more open and friendly approach.
During the campaign, Trump made ten crypto-friendly commitments to the crypto market, including establishing a strategic Bitcoin reserve. The nominated SEC chair Paul Atkins is also known for his friendly attitude towards cryptocurrencies, advocating for reduced regulation to support market innovation. Trump mentioned today that Paul understands the importance of crypto assets and other innovations in making America greater than ever and believes in the commitment to a strong, innovative capital market. Paul has also criticized the SEC's hefty fines for harming shareholder interests, advocating for flexible regulatory strategies, and serving as co-chair of the Token Alliance. Trump's move, utilizing Paul's prior experience in promoting crypto, aims to shift the SEC's previous punitive approach towards the crypto industry, bringing the concept of 'financial freedom' into U.S. financial regulatory institutions.
Additionally, other members of Trump's team have provided strong support for the regulatory special on crypto finance: over 60% of nominated cabinet members have publicly stated that they own Bitcoin or support the development of crypto finance, or indirectly support the growth of crypto assets.
In addition to Trump's commitments in the crypto market and the previously proposed (Financial Innovation and Technology Act of the 21st Century) (FIT 21 Act), the recent Tornado Cash incident also marks a shift towards a more open and friendly direction in U.S. crypto regulation. At the end of November, the U.S. Fifth Circuit Court of Appeals ruled that the sanctions imposed by the Treasury on Tornado Cash's immutable smart contracts were illegal, stating that these smart contracts do not meet the legal definition of 'property.' This ruling provides important support for the legitimacy of smart contracts, allowing developers and users to use these protocols without facing direct conflicts with traditional legal frameworks, promoting finance towards a more inclusive and friendly direction, which directly benefits the flourishing of decentralized finance (DeFi).
Both industrial and financial capital under 'America First' need more freedom.
Financial freedom not only opens up greater development space for the crypto market but also indicates that a profound market integration is brewing as crypto assets connect with traditional financial assets (TradFi). With the development of the digital society and driven by future technologies like artificial intelligence (AI), the way value is created is accelerating its transformation. Former Alibaba strategist Zeng Ming pointed out that general artificial intelligence (AGI) will become a core technological breakthrough in productivity, closely tied to crypto assets, giving rise to a large number of new digital assets.
Blockchain, as a value network technology connecting the digital society and the real society, will play a key role in this transformation. Driven by the 'America First' policy, Trump proposed an AI version of the 'Manhattan Project,' intending to elevate AI technology to a national strategic level and vigorously promote the industrialization process.
In addition to the future digital society driven mainly by AI cannot avoid crypto assets, Standard Chartered has also stated that almost any real asset in the real world can be tokenized, and it is expected that by 2034, the global demand for tokenized assets will reach $30 trillion. Whether it's the future development needs of the digital society for crypto assets or the asset circulation needs of the real society for tokenization, the integration of crypto assets with traditional financial assets holds market potential far exceeding the 'Great Merger Era' of the 1930s and the 'Internet Merger Era' of 2000, with the former generating $600 billion in industry consolidation and the latter further pushing the market size to $30 trillion.
The integration process is now unstoppable. Whether it's the promotion of crypto asset ETFs or the emerging track represented by RWA (real-world assets), the application of stablecoins alone has already created a market value of over $200 billion. With the continuous penetration of crypto technology, the entire financial market's 'cryptoization' process has begun, poised to reshape the global financial landscape and give rise to a new, more open, and integrated capital ecosystem.
How the three critical crypto 'commitments' will influence the market outlook
Whether announcing the establishment of a strategic Bitcoin reserve or nominating a crypto-friendly SEC chair, Trump's election seems to usher in the friendliest regulatory environment for the crypto industry in history, thus opening up a recent upward channel for Bitcoin. However, in the medium to long term, the real driving force behind the sustained advancement of the crypto industry is clearly not the price of Bitcoin, but whether Trump can fulfill those verbal commitments to crypto and provide a larger space for the crypto market from a legislative level. If Trump can leverage his high status within the party, along with the Republican Party's sweeping victories in both houses of Congress, to actively push key legislation represented by the following three acts, it may bring a new situation to the crypto industry.
The FIT 21 Act will be prioritized, and DeFi innovation will 'return' to the U.S.
The FIT 21 Act may be one of the prioritized acts Trump pushes after taking office. This act, hailed as 'the most important' crypto legislation to date, not only clearly defines when cryptocurrencies are considered commodities or securities but will also end the 'tug-of-war' between the SEC and CFTC in crypto regulation. The U.S. House of Representatives previously passed this act by an overwhelming majority and submitted it to the Senate, but the latter has not taken decisive action. However, with Trump's ascension, the market generally expects the progress of this act to accelerate.
After the FIT 21 Act passes, compliant trading platforms and crypto-listed companies will emerge more frequently, and clear attribute standards will enrich the tradable tokens, providing new opportunities for spot ETFs and other crypto financial products. One of the reasons Ethereum ETF applications previously struggled to pass was due to vague qualitative definitions; the SEC long believed that Ethereum after transitioning to the PoS mechanism resembled a security. It wasn't until the SEC and Wall Street found a 'balance point' — clarifying that Ethereum ETFs without staking are not securities — that progress could continue. After the act passes, cryptocurrencies clearly categorized as 'digital goods' will be easier to push for spot ETFs and related financial products, and we may see more varieties of crypto asset spot ETFs next year, like SoL, XRP, HBAR, LTC, etc.
Several institutions have submitted Solana ETF applications.
The FIT 21 Act will also promote innovation in decentralized applications, particularly in the DeFi space. The FIT 21 Act clearly states that tokens deemed decentralized and functional will be considered digital goods and not subject to SEC regulation. Moreover, as long as the degree of centralization meets requirements, a certain exemption period can be granted, encouraging more DeFi projects to evolve towards greater decentralization. The act also requires the SEC and CFTC to study the development of DeFi, assess its impact on traditional financial markets, and potential regulatory strategies. Coupled with the exemption period, this will attract more DeFi projects to 'return.'
Additionally, driven by friendly policies and expectations of rate cuts, more traditional funds will flow into DeFi seeking higher yields, thereby triggering further innovation in DeFi. A clear trend is that DeFi will continue to expand collateral assets, bringing more off-chain liquidity on-chain. This will promote deep integration between DeFi and RWA, allowing tokenized assets like U.S. Treasuries and real estate to be used for collateral or lending, enriching the composability and imaginative space of on-chain finance, and spreading DeFi's influence off-chain. The RWA track will also bring more considerable returns through integration with DeFi, accelerating bidirectional expansion between on-chain and off-chain.
The value of DeFi in the Bitcoin ecosystem cannot be overlooked. As Bitcoin penetrates off-chain through ETFs, it also shows more possibilities in the on-chain ecosystem. Considering that the Bitcoin market is primarily composed of long-term holders, combined with the fact that spot ETFs keep market liquidity at a lower level, this could give rise to new opportunities in Bitcoin lending. With the SEC likely to allow Ethereum spot ETFs to be staked, staking projects in the DeFi ecosystem may receive widespread attention.
U.S. stablecoin-related legislation back on the agenda
In 2023, the U.S. House Financial Services Committee passed the (Payment Stablecoin Clarity Act), but it was not approved by the House. In October of this year, U.S. crypto-friendly Senator Bill Hagerty submitted a similar draft again. Coupled with Trump's previous promise not to promote CBDCs issued by the Federal Reserve and the FIT 21 Act's definitions and emphasis on a licensing system for licensed payment stablecoins, stablecoin-related legislation may be back on the agenda after Trump takes office.
Stablecoin legislation will directly affect the issuance of dollar stablecoins and related payment institutions. Some small or algorithmic stablecoins may be forced to exit the market, while legitimate stablecoins (like USDC) will capture a larger market share. At the same time, as legislation clarifies compliance requirements, traditional payment service providers will accelerate the adoption of compliant stablecoins, enhancing their availability and usability in daily transactions. Related enterprises and users will also be more willing to accept stablecoins as a complement to the existing payment system, rather than solely for crypto trading use cases. The market share of stablecoins in cross-border remittances and settlements will also continue to rise, with user volume and settlement scale expected to continue to approach or even surpass institutions like Visa.
Additionally, whether earning returns directly through underlying assets (such as government bonds, money market funds, etc.) and distributing them to relevant participants or leveraging DeFi protocols to obtain on-chain returns, various yield products based on compliant stablecoins will continue to emerge and be favored by users. However, care should be taken to avoid making stablecoins exhibit characteristics of investment contracts when designing yield mechanisms.
The proposal to repeal SAB 21 is expected to restart, solving the crypto asset custody dilemma.
Whether it's the development of crypto financial products like spot ETFs, or the growth of RWA, stablecoins, and DeFi, all will boost the demand for crypto custody services. This will force a restart of the proposal to repeal SAB 121 (Staff Accounting Bulletin No. 121). SAB 121, issued by the SEC in 2022, requires companies to account for custodial crypto assets as liabilities, significantly increasing corporate leverage ratios, affecting financial health and credit assessments, and causing related companies to be unwilling to provide custody services.
During his campaign, Trump promised to abolish this announcement after being elected. The most direct benefit of repealing SAB 121 is the reduction of compliance burdens for crypto custodians, allowing banks and other regulated entities to more easily enter the crypto custody space, thereby attracting more institutional investors into the market. Due to the accounting treatment requirements of SAB 121, many banks and financial institutions have previously been relatively cautious about crypto financial products like spot ETFs; repealing it will reduce the complexity for financial institutions in managing these crypto assets. Stablecoin providers and payment-related businesses are also affected, especially those projects integrated with the traditional financial system. The repeal of SAB 121 could create a more lenient regulatory environment for these companies, aiding in the development of core functions like payments and settlements. The currently popular narrative around RWA will benefit from this, allowing more traditional custodians to manage tokenized assets more flexibly, thus attracting more financial institutions to participate.
Undeniably, every step of the crypto-friendly policies in the Trump 2.0 era is profoundly reshaping the boundaries of the crypto market. From regulation to accounting standards, every seemingly minor change carries far-reaching strategic significance. The nomination of Paul Atkins signals a relaxed crypto regulatory environment, and institutional reforms at the asset level cannot be overlooked. The new FASB regulations (ASU 2023-08), effective December 15, 2024, require companies to record the fair value of the crypto assets they hold in their financial statements. This means that changes in the value of assets like Bitcoin will directly reflect in their financial statements, significantly impacting the net income of companies. The implementation of this rule will encourage more companies to include mainstream crypto assets like Bitcoin on their balance sheets. Furthermore, Microsoft is set to hold a board meeting on December 10 to formally discuss whether to include Bitcoin in its corporate strategic reserves, providing a high-recognition industry signal for this trend.
As Bitcoin breaks through $100,000 today, OKX CEO Star stated on the X platform that this is 'the power of vision and technology.' The path of integration between tradition and innovation is bound to reshape the new order of the global capital market.
