What comes next for the cryptocurrency sector now that the uncertainty around the U.S. presidential election contest has passed and Donald Trump has won?
During the current Biden administration, the SEC has been key in regulating cryptocurrencies. Gensler has argued that the majority of cryptocurrencies are securities and encouraged companies to register in accordance with current regulations. The organization has started a number of legal disputes against DeFi, NFT, and stablecoin projects, as well as with major industry participants including Coinbase, Binance, Kraken, and Robinhood.
Although sources have stated that Gensler is expected to resign, he may choose to remain at the SEC as a Commissioner under the Trump administration.
Involvement of SEC
Regarding the potential successor to the Chair, there have been rumors that Trump might name Republican SEC Commissioner Hester Peirce, also known as “Crypto Mom,” who has continuously criticized the regulator’s numerous enforcement actions in the industry and its refusal to approve spot cryptocurrency exchange-traded products until legal action was taken against the agency.
But since Peirce has previously stated that she would not be interested in the role, Mark Uyeda, the sole other Republican Commissioner and a proponent of cryptocurrency, is a strong contender. According to experts at trading and financial services company Presto, Trump may instead choose to appoint a new Commissioner, with candidates such as former CFTC Chair Chris Giancarlo being suggested.
Jake Chervinsky, Chief Legal Officer at Variant Fund, stated that Peirce’s chances of becoming Chair are slim because she doesn’t seem to want the position. “I think Uyeda has a good chance, but I think Trump might want to bring in someone fresh,” he stated.
To be honest, being chair is a very difficult, unappreciated, and depressing job. While some commissioners may feel they have served their time and are prepared to move on to more promising opportunities, others may desire it (Uyeda).
However, Chervinsky cautioned that the outgoing government may be “busy finalizing rules and filing enforcement actions” between now and Trump’s inauguration, which is two and a half months away, and that crypto policy may change as new leaders take over the federal agencies.
Ending Biden’s attempt to kill the crypto business through enforcement-based regulation must be Trump’s top priority in terms of crypto policy. This entails ending the DOJ’s Tornado Cash prosecution and the SEC’s baseless enforcement activities,” he stated.
Regulation that is favorable to cryptocurrency
Another of the most anticipated events under the Trump administration is the Advancing the Bitcoin BTC +0.89% Act, which would make bitcoin a strategic reserve asset and allow the US government to purchase up to 5% of its 21 million total supply.
In July, Republican Senator Cynthia Lummis of Wyoming introduced the “BITCOIN Act of 2024,” also known as the “Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act of 2024” draft bill.
“We are going to build a strategic bitcoin reserve,” Lummis wrote on X after the election results showed that Donald Trump had won the presidency, the Republicans had regained control of the Senate, and they were likely to keep control of the House.
Presto analysts Peter Chung and Min Jung clarified that “many crypto-related bills in Congress, including Lummis’ Bitcoin Strategic Reserve Bill, would stand a better chance of passing if the GOP achieves a trifecta.”
Bitcoin ACT
Such a move would situate bitcoin like gold, giving it a place in the national reserve and marking a historic step toward legitimacy, according to a Wednesday article by James Butterfill, Head of Research at CoinShares.
He claimed that if the Bitcoin Act were to be put into effect, it may spark significant institutional and governmental interest in the cryptocurrency, which might hasten its growth and raise its value to unprecedented levels.
In addition to forecasts of a more crypto-friendly Senate Banking Committee, analysts at research and brokerage firm Bernstein said that Trump’s victory has changed the regulatory landscape surrounding cryptocurrency from a negative to a tailwind more generally.
They said that this will help U.S. exchanges and stablecoin issuers like Circle and Paxos by accelerating the development of other crypto legislation, particularly those pertaining to stablecoin and market structure measures.
The end of “Operation Choke Point 2.0,” which limited cryptocurrency’s access to the traditional banking system, and the possible repeal of the contentious Securities and Exchange Commission bulletin, SAB 121, are two of Trump’s other policy promises that would allow traditional banks to accept more cryptocurrency firms as clients and allow them to own and hold bitcoin themselves, according to Bitwise CIO Matt Hougan.
Hougan pointed out that the $36 trillion U.S. deficit, which is increasing by $1 trillion every 100 days, is one aspect that hasn’t changed since the election. With probable Fed rate cuts and unpredictable economic conditions, the Congressional Budget Office anticipates that this tendency would continue under Trump’s policies, maybe even worse, making bitcoin a “must-have” asset for investors, he said.
