The next four years are expected to be "extremely favorable" for the digital asset sector, but the key is well-considered legislation.
After the presidential election on November 5, market observers told Cointelegraph that Trump's second term could drive the growth of the crypto industry - not only in the US, but also in overseas markets.
This new administration increases the likelihood of legislation on the structure of the digital asset market, and is likely to introduce a stablecoin payment bill. The Republicans will control the Senate and are likely to gain a majority in the House of Representatives. Trump will undoubtedly appoint a crypto-friendly Securities and Exchange Commission (SEC) chair, perhaps on the "first day" of the new administration. Gary Gensler, the thorn in the crypto industry's side, currently holds a key position at the SEC.
"I believe that Donald Trump's second term in the White House is a pivotal moment for the crypto industry, not just for the US, but globally," said Boris Bohrer-Bilowitzki, CEO of the Concordium layer-1 blockchain based in the UK and Europe, adding: "I expect him to ensure that bureaucratic policies do not hinder the progress of US crypto and digital asset companies by taking a more relaxed stance on crypto regulation."
Chiente Hsu, co-founder of ALEXGO (a Bitcoin bridging protocol), said in a statement to Cointelegraph, "The next 4 to 6 years are likely to be extremely favorable for the digital asset industry. We can expect the growth of crypto-focused ETFs and derivatives, and also a potential reduction in regulatory lawsuits against the crypto industry."
However, there are still potential downsides, even though the president-elect has promised to make the US the "global crypto capital".
Timothy Massad, former chairman of the US Commodity Futures Trading Commission (CFTC) and current research fellow at Harvard University's Kennedy School of Government, asked in an interview with Cointelegraph, "Will the second Trump administration develop rules and policies that encourage technological development, leading to useful innovation?"
Alternatively, will the new administration enact rules that only drive up token prices, allowing founders to profit while leaving uninformed retail investors holding the bag - similar to the second ICO bubble?
Massad pointed out that the president-elect is not very interested in policy details, while others speculate that he may change his views on crypto.
Will Trump, as promised, fire SEC chair Gary Gensler on the first day of the new administration? This may be difficult to achieve. The SEC is an independent government agency, and its board members have five-year terms, and the president can only remove them for inefficiency, neglect of duty, or misconduct.
Massad said that the immediate steps Trump could take would be to elevate an existing commissioner who is supportive of crypto to the SEC chair position, with Hester Pierce or Mark Uyeda as the two possible candidates.
Ohio is the "bigger story"
This election not only brought a new president, but also saw the Senate shift from Democratic to Republican control. Among the Democratic losers was Ohio Senator Sherrod Brown, who was defeated by businessman Bernie Moreno.
Aaron Klein, a senior fellow in economic studies at the Brookings Institution, told Cointelegraph that in assessing the impact of November 5 on the crypto industry, "the bigger story is the Ohio Senate election."
Brown was a crypto skeptic and a powerful leader of the Senate Banking Committee. Many saw him as a major obstacle to market structure reform, and his defeat represents a "huge boost" for crypto-friendly legislation, Klein said, provided lawmakers can reach consensus on the details.
Of course, even if Brown had won the election, he would no longer be the chairman of the Senate Banking Committee, but would instead become the "opposition" figure in the minority party. However, Klein suggested that the Senate Banking Committee is more consensus-seeking (i.e., bipartisan) than other Senate committees, so he may still have some influence.
Achieving digital asset market structure legislation would be an accomplishment. This would provide regulatory clarity and could potentially reduce volatility in the crypto market, Hsu added:
"We may see state and corporate pension funds, as well as similar institutional investors, increase their allocation to digital assets."
"The incoming President Trump has the ability to save the US crypto industry, which is desperately in need of reform," said Jesper Johansen, CEO and founder of Northstake A/S based in Denmark. From a regulatory perspective, too many issues remain unresolved. For example, Johansen asked, are staked Ether tokens a commodity or a security?
"Asset managers need to know how to safely incorporate staking into their Ethereum ETFs to meet the total return demand for Ether," he added.
However, there are no political guarantees. "The challenge may come from crypto-skeptical conservative Republican politicians who see it as a threat to traditional financial institutions," Bohrer-Bilowitzki said.
What about stablecoin legislation?
Even before the election, the chances of advancing stablecoin legislation were increasing. Compared to other crypto assets, lawmakers find the concept of stablecoins more understandable: what they need to do is relatively clear, and stablecoins are also seen as supporting the status of the US dollar, Massad said.
In contrast, Bitcoin is sometimes viewed as a competitor to the dollar. Additionally, it remains unclear whether lawmakers will reach consensus on the details of crypto legislation, even if they agree in principle on the need for market structure rules.
Is the US really important?
In the global future of crypto/blockchain, is the US really that important? In Chainalysis' recent crypto adoption survey, the US was just one of 151 countries.
"The US is still the most important influence in crypto trading," said Carol Alexander, professor of finance at the University of Sussex in the UK. This can be seen from the trading time patterns of crypto, similar to the stock market, with peak trading volumes in the first few hours of New York trading time, even on Binance, she said.
Alexander expects the prices of Bitcoin, Ether, and some other major Altcoins to rise further, at least until early next year. "This bull market will drive adoption, especially by retail investors and institutions."
However, she is concerned that the new administration may be less focused on protecting small investors than the previous one. "This growth will be built on failed regulation - huge hidden risks will be obscured, with the SEC no longer taking civil action against unregulated exchanges," Alexander said.
Others are more optimistic. Bobby Ong, co-founder and COO of CoinGecko, told Cointelegraph, "Trump's victory is very positive for the crypto industry, as he expressed many pro-crypto sentiments during the campaign." "Many US crypto companies have also been lobbying Trump, so this should bode well for the crypto industry in the coming years."
Bohrer-Bilowitzki even suggested that Trump may view crypto as a geopolitical issue, explaining:
"Don't forget Trump's view of US adversaries like China: he undoubtedly wants to outpace China's crypto companies by making the US a leader in this industry."
Many Democrats and others believe that a second Trump administration will lead the country into unknown, dangerous territory. Historian Jon Meachem warned in a November 5 New York Times op-ed that this could be an "invitation" to chaos.
"There is still much uncertainty about the policies Trump will pursue," Massad said. But whatever happens, the rule of law must be respected, which is crucial for every industry, including the crypto industry, he concluded.
