With the advent of the Trump administration, the crypto industry seems to be seeing a glimmer of hope.
Author: Pzai, Foresight News
According to a report in the New York Post, yesterday Polymarket CEO Shayne Coplan was subjected to an FBI investigation, and his phone and other electronic devices were confiscated. He did not reveal the reason for this raid, but sources suspect it is political retaliation, as Polymarket accurately predicted that Trump would easily defeat Vice President Kamala Harris, contrary to traditional opinion polls.
As Coplan voiced his accusations against the current administration, Musk also echoed his agreement on Twitter, and Coplan's reply with an "eagle symbol" brought new speculative opportunities to the market, and the eponymous Meme also became hot, with a market capitalization reaching as high as $40 million.
Since Trump took office, the crypto industry's expectations for regulation have been greatly relaxed, but in the remaining months, the Biden administration seems to want to tighten the regulatory grip on crypto one last time within its reach.
Polymarket Shines Brightly
In the report, sources also speculate that the government may use reports from liberal media to accuse Polymarket of manipulating the market and manipulating polls to support Trump.
As for the real situation, we can compare the gap between poll predictions and actual results. Galaxy Digital compiled the predictions of the election markets a few days before the vote, and the final result calculated by electoral votes was 58% to 42%. Overall, the Trump victory rate predicted by the prediction markets was all above 55%, much closer to the actual situation than the average poll prediction of around 50%. As a polling media, the centralized results themselves have an ideological bias, and the gap between the two also proves this point.
Left: Distribution of US election market predictions on November 5 Source: Galaxy Digital Right: Actual results of the 2024 US election
And in this fully competitive market, some have also profited handsomely. For example, French trader Théo made a large bet on Trump winning a second term on the crypto prediction market Polymarket, and according to the platform's data, he made $85 million from this bet. And Polymarket's overall market trading volume reached $3.5 billion. But its operations in the US have not been smooth sailing, as in 2022 Polymarket was forced to suspend trading in the US and pay a $1.4 million fine to settle charges with the US Commodity Futures Trading Commission (CFTC) that it failed to register with the agency.
Nevertheless, Polymarket itself has stated that "we have proven that prediction markets are wiser than opinion polls, the media, and experts."
The Present and Future of the Struggle
As one of the byproducts of political struggle, the donkey-elephant dispute in the US has naturally extended to the crypto industry, with the clearly divided camps being the pro-crypto Republican camp led by Musk and Trump, and the "strict crypto regulation" camp represented by the US Securities and Exchange Commission (SEC), which has conveyed its attitude through various lawsuits and fines, but the SEC has not always been popular.
After the SEC's lawsuits against ConsenSys and Ripple, an appeals court ruled that the SEC's rejection of Grayscale's spot Bitcoin ETF application was "arbitrary and capricious". And after dropping charges against Ripple's co-founders, the SEC has also come under close public scrutiny. And in a previous interview with Foresight News, crypto-friendly SEC Commissioner Hester M. Peirce also stated: "Good regulation allows innovators to focus on building (build) under clear rules, rather than constantly trying to understand the rules they are following." (Further reading: Dialogue with the "Crypto Mom" of the US SEC: Behind the $3 billion in fines over 10 years, is the lack of regulatory progress in the US)
Under the Biden administration, Gary Gensler has already issued Wells notices (pre-formal charges notices) to crypto gaming projects like Immutable, Non-Fungible Token platforms like OpenSea, and stock and crypto trading platforms like Robinhood, and in the remaining few months, Gensler will not have enough time to file any new lawsuits or regulations, and the subsequent SEC chair can choose to revoke these decisions.
And in the next four years after the election results are settled, under the banner of the Trump administration's efforts to elevate the status of Bitcoin and "ensure America's crypto status", the crypto-friendly SEC chair appointed by the president is more likely to adopt a hands-off approach, legislate on the core functions of the crypto market to increase the transparency of the crypto industry regulation, while also increasing the leniency towards the crypto market, allowing appropriate development of ecosystem projects and their use cases.
