Article source: Blockchain Simplified
Author: James Hunt
Translation: Blockchain Simplified
With the results of the U.S. presidential election settled, what changes will the cryptocurrency industry face after Donald Trump wins the election?
In this year's campaign, Trump showcased a new pro-cryptocurrency stance and for the first time made cryptocurrency policy an important issue, making a series of commitments. His commitments included firing SEC Chairman Gary Gensler on his 'first day in office,' commuting the sentence of Silk Road founder Ross Ulbricht, establishing a presidential cryptocurrency advisory committee, abolishing SAB 121, ending 'Operation Choke Point 2.0,' turning the U.S. into a 'powerhouse' for Bitcoin mining, and creating 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 about the rapid realization of these commitments is rising.
1. New SEC Chair
During the Biden administration, the Securities and Exchange Commission (SEC) played a key role in cryptocurrency regulation. Current Chairman Gary Gensler has argued that most cryptocurrencies are securities and urged relevant agencies to register under existing regulations. The agency has also engaged in multiple legal battles with major industry players such as Coinbase, Binance, Kraken, and Robinhood, as well as DeFi, NFT, and stablecoin projects.
Although Gensler may choose to continue serving as SEC Commissioner under the Trump administration, there are reports that he is very likely to choose to resign.
Regarding who will take over the chair position, there is widespread speculation that Trump may appoint current Republican SEC Commissioner Hester Peirce, known as 'Crypto Mom' for her supportive stance in the cryptocurrency space. Peirce has long criticized the SEC's enforcement actions in the sector and the agency's failure to approve spot cryptocurrency trading products before being sued. However, Peirce has previously stated that she is not interested in the chair position, making the only other Republican commissioner, Mark Uyeda, a popular candidate, who also has a friendly attitude towards cryptocurrencies. On the other hand, Trump could also nominate a new commissioner, and analysts point out that former CFTC Chairman Chris Giancarlo is a considered candidate.
Jake Chervinsky, chief legal officer of Variant Fund, stated that the chances of Peirce becoming chair are low as she seems not to want the position. He believes, 'Uyeda has a decent chance of taking office, but I expect Trump may be more inclined to appoint someone of his choosing.' He added, 'In reality, being chair is a very difficult and thankless job. Some commissioners (like Uyeda) may be interested, but others might feel they have done their duty and wish to pursue new opportunities.'
However, there are still two and a half months until Trump officially takes office, and before the new leadership takes over federal agencies, cryptocurrency policy may undergo some changes. Chervinsky warned that during this period, the current administration may be 'busy finalizing rules and initiating enforcement actions.'
He stated, 'Trump's primary cryptocurrency policy task must be to end Biden's attempts to suppress the industry through enforcement. This means rescinding the SEC's unreasonable enforcement actions and the Department of Justice's prosecution of Tornado Cash.'
2. Pro-Crypto Regulation
Under Trump's administration, advancing the (Bitcoin Bill) has become one of the most anticipated policies, aiming to establish Bitcoin as a strategic reserve asset, planning 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), abbreviated as the (2024 Bitcoin Bill), proposed by Wyoming Republican Senator Cynthia Lummis in July this year.
After the election results were announced, 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 from Presto explained, 'If the Republican Party achieves full control of the presidency, Senate, and House of Representatives, the chances of many crypto-related bills, including Lummis's Bitcoin Strategic Reserve Bill, passing in Congress will greatly increase.'
At the Bitcoin conference held in Nashville this summer, Travis Kling, Chief Investment Officer of 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 Republican Party's strong victory, the possibility of this plan has greatly increased. If it really happens, then we really win together (WAGMI, meaning 'We're All Gonna Make It').'
CoinShares research director James Butterfill wrote on Wednesday that this move will elevate Bitcoin's status to that of gold, making it part of national reserves and marking a historic step toward legalization. He stated, 'If the (Bitcoin Bill) is implemented, it could significantly stimulate institutional and governmental interest in Bitcoin, accelerate its growth, and drive its value to new highs.'
According to analysts at research and brokerage firm Bernstein, Trump's election has shifted the regulatory landscape for cryptocurrencies from headwinds to tailwinds, with the Senate Banking Committee also expected to be more pro-cryptocurrency. This means that other crypto legislation will progress faster, especially in terms of stablecoins and market structure bills, benefiting U.S. trading platforms and stablecoin issuers like Circle and Paxos.
Bitwise Chief Investment Officer Matt Hougan pointed out that among Trump's other policy commitments, the end of 'Operation Choke Point 2.0' will relax restrictions on cryptocurrency access to the traditional banking system. Additionally, abolishing 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 unchanging factor after the election is America's $36 trillion deficit, which increases by $1 trillion every 100 days. Hougan pointed out that according to the Congressional Budget Office's projections, this trend may continue or even worsen under Trump's policies. With the possibility of the Federal Reserve lowering interest rates, combined with an uncertain economic environment, Bitcoin will become an 'essential' asset for investors.
3. Bitcoin Mining Incentives and Release of Ross Ulbricht (founder of the dark web marketplace 'Silk Road')
Incentives for U.S. Bitcoin miners may further expand the dominant position and consolidation trend of currently listed domestic operators. This situation could affect the industry's diversification into AI data center hosting in the challenging environment post-halving.
Finally, one of Trump's most popular commitments among the crypto community and even broader audiences may be to release Ross Ulbricht after taking office. Ulbricht was sentenced to life in prison without the possibility of parole for creating and operating the dark web marketplace 'Silk Road,' which is closely tied to Bitcoin's early history.
Bitcoin early player Amir Taaki quickly reminded elected President Trump on Wednesday to fulfill his promise to commute 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 due in large part 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 proposed appointing billionaire supporter Elon Musk to lead a new 'Department of Government Efficiency,' responsible for cutting approximately $2 trillion in federal spending, which could mean a more accommodative monetary policy in the future to balance this plan. He stated that historically, accommodative monetary policy and fiscal conservatism have favored Bitcoin, enhancing its appeal as a hedge against currency depreciation 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 will not officially take office until January next year, we expect Bitcoin to remain strong before the end of the year.' He also mentioned, 'Ethereum has risen 20% in the past three days, slightly narrowing the gap with Bitcoin after poor performance previously. However, we believe this surge is temporary, and Bitcoin may continue to lead in the coming weeks.'
According to The Block's price 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 increase this year is only 23.7%, underperforming other crypto assets.
Bitget Research Chief Analyst Ryan Lee stated, 'With Trump being re-elected as president, the market's initial reaction may be for off-market funds to 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-to-short ratio in the futures market is below 1, indicating that institutional investors in the crypto market are taking long positions through futures. The market is currently in a broadly bullish phase.'
Analysts at Bernstein reiterated their forecast on Wednesday, expecting Bitcoin to approach $90,000 by the end of this year and to reach a bull market target of $200,000 by 2025. Bitwise's Hougan also has similar target predictions.
