Trump's victory in the US presidential election is expected to boost M&A deals in the cryptocurrency sector, thanks to the potential leadership change at the SEC and the creation of a more favorable legal environment.
Former President Donald Trump's return to the White House following the election on November 6 has created a wave of optimism in the cryptocurrency community. Throughout his campaign, Trump committed to firing the Chair of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, on his first day in office. This promise, along with Trump's pro-cryptocurrency stance, is expected to usher in a new phase for the industry, particularly in the area of mergers and acquisitions (M&A).
About 6 merger advisors and venture capitalists interviewed by Bloomberg believe that Trump will fulfill his commitment to fire Gensler, who is known for his strict enforcement approach over the years. This change, according to experts, will pave the way for a more favorable legal environment for cryptocurrency, boosting investment and business activities in the sector.
Expectations for a surge in M&A deals
Casper Johansen, head of the digital asset advisory division at The Spartan Group, commented: “With Trump in the White House, we expect 2025 to be a more vibrant year for trading activities.” This view is shared by many experts, as they predict a significant increase in the number and value of cryptocurrency M&A deals in the coming years.
Haseeb Qureshi, managing director of Dragonfly Capital, believes that Trump's victory and the leadership change at the SEC will help ease concerns about deals being blocked or business channels being declared illegal. This will facilitate cryptocurrency companies seeking to expand through M&A deals.
Some investment banks specializing in digital assets also predict that many CEOs will leverage acquisitions to accelerate growth plans during Trump's second presidential term.
Some cryptocurrency companies have signaled potential deal plans. FalconX and Tether, the world's largest stablecoin operator, are two notable names. In June, Tether announced a plan to invest $1 billion in transactions over the next 12 months. Additionally, Stripe Inc., a fintech company valued at about $70 billion, also announced plans to acquire the stablecoin startup Bridge for approximately $1.1 billion last month.
However, it is important to note that the legal environment in the U.S. is not the only factor affecting M&A activity in the cryptocurrency sector. The valuation gap between buyers and sellers is also a significant challenge. Most cryptocurrency companies raised capital during the growth period that ended in 2022, leading to valuations in previous funding rounds being much higher than the current market. If buyers and sellers cannot agree on pricing, deals will be difficult to close.
Although challenges remain, the overall outlook for the cryptocurrency M&A market under Trump’s presidency is seen as positive. Qureshi concluded: "Considering all factors, I expect the next four years to be much more favorable than the past four."