Experts weigh in
In just a few weeks, Donald Trump will be about to be inaugurated as the 47th president of the United States. At first glance, after his victory in the November election, all seems well in the cryptocurrency industry, but is it?
The 2024 US presidential election is widely seen as a pivotal moment for the crypto industry. Economists believe that part of the reason Trump won his ticket back to the Oval Office was his “vocal” pro-crypto stance. Well, honestly, he had the support of over 290 crypto-friendly lawmakers in Congress; he was unlikely to lose.
Trump has promised to position the US as the global hub for cryptocurrencies, so the sector is poised for a potential renaissance.
According to Chris Perkins, dent Coinfund, the election signaled a turning point for the cryptocurrency market, which has long suffered from regulatory uncertainty.
In an article published by the Financial Times, Perkins argues that this shift provides the United States with an opportunity to enhance its leadership in emerging technologies such as blockchain, artificial intelligence, and decentralized finance (DeFi).
However, the community cautioned that optimism hinges on whether post-election enthusiasm translates into thoughtful and implementable policies.
Out with the old, in with the new?
Under the Biden administration, cryptocurrencies have faced what many have called “regulation by enforcement,” with agencies expanding decades-old laws to oversee the nascent industry.
JUST IN: 🇺🇸 Donald Trump says he will "end Joe Biden's war on crypto, and ensure that the future of crypto and the future of#Bitcoinis made in America, with much of it done right here in Florida." pic.twitter.com/qstVuzbOAI
— DΛVID (DavidShares) June 15, 2024
Critics insist that this approach has blurred regulatory boundaries, wasted resources, and imposed significant costs on American companies, estimated at more than $400 million. Biden, with the backing of the US financial authorities, appears to have failed to prevent high-profile fraud cases. One indelible case is the fall of FTX, a memory that society will probably never forget.
Going forward, policymakers and regulators are urged to focus on fostering innovation while protecting consumers.
Perkins stresses that one of the industry’s imperatives is to distinguish between technology and its applications. Blockchain and crypto advocates liken the current situation to the early days of the internet: While websites and apps are not inherently illegal, their misuse can be addressed by law enforcement.
dent Coinfund highlighted a case that reflects this approach. In a recent ruling, Judge Catherine Polk Failla rejected attempts to hold the cryptocurrency exchange liable for how its technology was used, drawing a parallel with payment platforms like Venmo.
Unanswered Questions About Cryptocurrency Market Under Trump
As reported by Cryptopolitan, Cardano expressed his concerns about the lack of a clear roadmap for the crypto industry from Donald Trump. Despite Trump’s more progressive stance on crypto, Hoskinson said he has yet to outline concrete policies for the future of the sector in the United States.
Hoskinson warned that Trump's involvement in cryptocurrencies could create a more complex regulatory environment, pointing to the intense partisan divide surrounding the former dent's actions.
“Everything Trump does is hated by the left with such passion,” he said, adding that the move could take a partisan issue and make it a partisan one, potentially alienating support for the crypto industry.
He also criticized the current political discourse, saying: “I don’t see this level of quality and sophistication in the discourse.”
The reclusive Ethereum co-founder also questioned whether Trump would be able to assemble a team capable of supporting the cryptocurrency industry, pointing to the dent's past history of high employee turnover.
Hoskinson's skepticism grew after Trump announced a new decentralized finance (DeFi) platform, World Liberty Financial, which he backs alongside his sons Donald Trump Jr. and Eric Trump, as well as real estate developer Steve Witkoff.
Vitalik Buterin is cautious about Trump
Back in July, Ethereum creator Vitalik Buterin commented on the trend of supporting political candidates based solely on their stance on cryptocurrencies.
In a post, Buterin warned against the practice of endorsing “pro-crypto” candidates, arguing that it could create an environment where politicians only need to endorse cryptocurrencies to gain support without addressing the broader values that drive the industry.
“There is a growing trend within the crypto space to become more politically active,” Buterin continued. “In this post, I argue against this trend, and in particular, I argue that making decisions in this way carries significant risks that conflict with the values that brought you into crypto in the first place.”
Trump might be good at cryptocurrency
Donald Trump is an unpredictable businessman: the epitome of controversy. On the one hand, Democrats argue that he will use the Oval Office to make the rich richer. On the other, Trump says he won’t take a cent from his official salary.
His first campaign was largely against cryptocurrencies, but now his son is telling the world, “My father will be the most pro-crypto president America has ever had.”
Trump’s proposals for the industry include scrapping existing regulations and introducing bold ideas like creating a national Bitcoin reserve, where the government would store the cryptocurrency.
Some analysts are skeptical of Trump's stance on cryptocurrencies, arguing that he may be driven by self-interest.
Virginia Kanter, senior ethics counsel at the nonpartisan group Citizens for Responsibility and Ethics in Washington, stressed the importance of how cryptocurrencies are regulated in the coming years.
“One of the biggest issues that will be decided over the next two years is how cryptocurrencies are regulated,” Kanter said. “Well, he’s now an active player in the cryptocurrency market. How it’s regulated [could] impact his personal wealth, and what kind of position he’ll take.”
JUST IN: Donald Trump has invested $5,417,000 in these 6 cryptocurrencies: pic.twitter.com/loggTKZPFR
— Andrew Lockenuth | TheFinanceNewsletter.com (@FluentInFinance) November 25, 2024
Nick Bhatia, founder of BitcoinLayer, a Bitcoin advocacy firm, said that dismissing Trump’s pro-crypto stance as being driven solely by personal gain ignores its political dimensions. “I don’t see these moves as motivated by self-interest,” Bhatia said. “I see them as representing voters.”
He also raised a potential conflict of interest, noting that Trump's support for cryptocurrencies could directly benefit his business ventures. "I think there's a potential conflict of interest because his pro-crypto stance would benefit his company," he added.
Furthermore, Robinhood CEO Vlad Tenev told CNBC that the SEC’s “regulation through enforcement” approach under Chairman Gary Gensler has pushed a lot of crypto innovation out of the gate.
Tenev suggested that the Trump administration could usher in a “more forward-looking policy,” backed by Paul Atkins, the new SEC chairman who the community expects will embrace cryptocurrencies.
One thing we all know is that Trump wants to do what’s best for America. If cryptocurrencies align with that sentiment, it should come as no surprise that the president is following through on his promises.
