A second Trump administration is likely to elevate the crypto sector — both in the United States and overseas — informed market observers told Cointelegraph in the aftermath of the Nov. 5 presidential election.
It raises the odds for digital asset market structure legislation, and will probably bring along a stablecoin payment act as well. Republicans will hold a majority in the Senate and probably the House of Representatives. Trump will undoubtedly appoint a crypto-friendly Securities and Exchange Commission chair, possibly on “day one” of the new administration. Gary Gensler, a bete noire of the crypto industry, now holds the critical SEC position.
“I believe that Donald Trump’s second White House win is a defining moment for the crypto industry not just in the US but globally,” Boris Bohrer-Bilowitzki, CEO at Concordium, a layer-1 blockchain with offices in the UK and Europe, told Cointelegraph, adding:
“I expect that he will do this by taking a lighter stance on the regulation of crypto, ensuring that bureaucratic policies do not slow down the progress of America’s crypto and digital assets companies.”
“The next 4 to 6 years could be highly favorable for the digital assets sector,” Chiente Hsu, co-founder of ALEXGO, a Bitcoin bridge, said in a statement made available to Cointelegraph. “We can anticipate growth in crypto-focused ETFs (exchange-traded funds) and derivatives, along with a likely decrease in regulatory lawsuits targeting the crypto industry.”
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Still, there are potential downsides, even as the president-elect pledges to make the United States the “crypto capital of the planet.”
Will a second Trump administration “create rules and policies that encourage technology in a way that leads to useful innovation?” asked Timothy Massad, former chairman of the US Commodity Futures Trading Commission and now a research fellow at the Kennedy School of Government at Harvard University, in an interview with Cointelegraph.
Or, on the contrary, will the new administration establish rules that only push up token prices in the way that enriches founders and leaves guileless retail investors holding the bag — a second initial coin offering bubble, as it were?
The president-elect isn’t much interested in policy details, noted Massad, while others speculated that he may even change his mind about crypto.
Will Trump fire SEC Chair Gary Gensler on the first day of his new administration, as he has vowed? That may be difficult. The SEC is an independent government agency whose board members serve for five years. They can only be removed by the president for inefficiency, neglect of duty or malfeasance in office.
What Trump could do immediately, Massad said, is elevate an already-serving crypto-friendly commissioner to the chair of the agency. Two possibilities would be Hester Pierce or Mark Uyeda.
Ohio is the ‘bigger story’
The election not only ushered in a new president, it also flipped the Senate from Democratic to Republican control. Among the Democratic losers was Ohio Senator Sherrod Brown, who lost to businessman Bernie Moreno.
Thank you, Ohio! pic.twitter.com/g6iZZkAMFW
— Bernie Moreno (@berniemoreno) November 6, 2024
When gauging the impact of Nov. 5 on crypto, “the bigger story is the Ohio Senate race,” Aaron Klein, Miriam K. Carliner chair and senior fellow in economic studies at the Brookings Institution, told Cointelegraph.
Brown was both a crypto skeptic and the powerful head of the Senate Banking Committee. Many say he was a major obstacle to market structure reform, and his defeat represents a “massive movement forward” for beneficial crypto legislation, Klein told Cointelegraph, assuming legislators can agree on the details.
Of course, Brown wouldn’t have been chairman of the Senate Banking Committee anymore even if he had survived Election Day. He would have been an “oppositional” figure while serving in the minority party. Still, the Senate Banking Committee seeks consensus (i.e., bipartisanship) more than other Senate committees, so he might have had influence, Klein suggested.
Digital asset market structure legislation would be an achievement were it to come. It would provide regulatory clarity and could lead to less volatility in crypto markets, noted Hsu, adding:
“We might see pension funds — both state and corporate — and similar institutional investors increase allocations to digital assets.”
“Incoming President Trump has the power to save crypto in the US, where urgent change is needed,” Jesper Johansen, CEO and founder of Denmark-based Northstake A/S, said in a statement. Too much has been too unsettled for too long from a regulatory standpoint. For example, Johansen asked, is staked Ether a commodity or a security?
“Asset managers need to know how to safely incorporate staking into their ETH ETFs to satisfy Ether’s total returns,” he added.
Still, nothing is assured politically. “The challenge may come from more conservative Republican politicians who are skeptical of crypto and see it as a threat to traditional financial institutions,” said Bohrer-Bilowitzki.
What about stablecoin legislation? The odds were improving for enabling stablecoin legislation even before the election. Stablecoins are easier for legislators to get their arms around than other crypto: It’s fairly clear what needs to be done, and stablecoins are also believed to be supportive of the US dollar, Massad said.
Bitcoin, by comparison, is sometimes seen as competing with the US dollar. And it’s far from clear that legislators will agree on the details of crypto legislation, even if they agree in principle on the need for market structure rules.
Does the US really matter?
Is the United States really so important when it comes to crypto/blockchain’s global future? The US is just one country among 151 countries ranked by Chainalysis in a recent crypto adoption survey.
2024 Global Adoption Index rankings. Source: Chainalysis
“The US continues to be by far the most important influence on crypto trading,” Carol Alexander, professor of finance at the UK’s University of Sussex, told Cointelegraph. This is seen in crypto’s time-of-day trading patterns, which are similar to traditional markets, like equities, with peak volumes reached during the first few hours of New York trading times, even on Binance, she said.
Alexander expects the price of Bitcoin, along with Ether and some other established altcoins, to rise even further now, at least until early next year. “This bull run will increase adoption by retail investors especially, but also institutions.”
Still, the new administration may be less interested than its predecessor in protecting small investors, which concerns her. “This growth will be on the back of failing regulations — huge hidden risks will be swept under the carpet as the SEC ceases to take civil actions against unregulated exchanges,” Alexander said.
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Others are more optimistic. “Trump’s win is very good for crypto as he has expressed many pro-crypto views during his campaign period,” Bobby Ong, co-founder and chief operating officer at CoinGecko, told Cointelegraph. “Many American crypto companies have also been lobbying for Donald Trump, so this should hopefully bode well for the crypto industry in the coming years.”
Bohrer-Bilowitzki even suggested that Trump may view crypto as a matter of geopolitical importance, explaining:
“Let’s also not forget Trump’s views of American adversaries like China: He will no doubt want to outflank Chinese crypto companies by making America the leader in this industry.”
Many Democrats, among others, view a second Trump administration as a jump into the perilous unknown. Historian Jon Meachem warned that it could be an “invitation to chaos” in a Nov. 5 New York Times opinion piece.
“There are a lot of uncertainties about the policies that Trump will pursue,” Massad said. But whatever happens, the rule of law has to be respected. That’s of critical importance for every business, and also for the crypto industry, he concluded.