Author:James Hunt
Compiled by: Bai Hua Block Chain
With the results of the US presidential election finalized, what changes will the crypto currency industry face following Donald Trump's victory?
In this year's campaign, Trump displayed a brand-new pro-crypto currency stance, and for the first time made crypto policy an important issue, proposing a series of commitments. His promises include firing Securities and Exchange Commission (SEC) Chairman Gary Gensler on his "first day in office", commuting the sentence of Silk Road founder Ross Ulbricht, establishing a Presidential Crypto Currency Advisory Council, repealing SAB 121, ending "Operation Choke Point 2.0", making the US a Bitcoin mining "superpower", and establishing a national strategic Bitcoin reserve.
With the presidency, Senate, and House of Representatives likely to be fully controlled by the Republican Party, the optimistic sentiment in the crypto community about the ability to quickly fulfill these promises is on the rise.
1. New SEC Chairman
During the Biden administration, the Securities and Exchange Commission (SEC) played a key role in crypto currency regulation. Current Chairman Gary Gensler has argued that most crypto currencies are securities and has urged related agencies to register under existing regulations. The agency has also engaged in multiple legal battles with industry heavyweights like Coinbase, BN, Kraken, and Robinhood, as well as DeFi, Non-Fungible Token, and stablecoin projects.
Although Gensler may choose to continue serving as an SEC commissioner under the Trump administration, reports suggest he is likely to resign.
As for who will succeed the chairman position, the general speculation is that Trump may appoint current Republican SEC Commissioner Hester Peirce, who has been dubbed the "Crypto Mom" for her supportive stance in the crypto currency field. Peirce has long criticized the SEC's enforcement actions in this area and its practice of not approving spot crypto currency exchange-traded products before being sued. However, Peirce has previously stated that she is not interested in the chairman position, making the only other Republican commissioner, Mark Uyeda, a hot candidate, as he also has a friendly attitude towards crypto currencies. On the other hand, Trump may also nominate a new commissioner, with some analysts pointing to former CFTC Chairman Chris Giancarlo as a considered candidate.
Jake Chervinsky, Chief Legal Officer of Variant Fund, said the chances of Peirce becoming chairman are low, as she seems unwilling to take the position. He believes "Uyeda has a decent chance, but I expect Trump may lean more towards appointing his own pick." He added, "In reality, being chairman is an extremely difficult and thankless job. Some commissioners (like Uyeda) may be interested, but others may feel they've done their duty and want to pursue new opportunities."
However, with two and a half months before Trump officially takes office, crypto policy may undergo changes before the new leadership takes over federal agencies. Chervinsky warned that during this period, the current administration may be "busy finalizing various rules and initiating enforcement actions."
He stated, "Trump's top crypto policy task must be to end Biden's attempts to suppress the industry through enforcement. This means rescinding unreasonable SEC enforcement actions and the DOJ's prosecution of Tornado Cash."
2. Pro-Crypto Regulation
Under the Trump administration, the passage of the "Bitcoin Bill" is one of the most anticipated policies, which will establish Bitcoin as a strategic reserve asset, with the plan for the US government to hold up to 5% of the total Bitcoin supply (21 million BTC). The official name of this bill is the "Promoting Innovation, Technology, and Competitiveness Act of 2024", or the "2024 Bitcoin Bill", introduced in July by Republican Senator Cynthia Lummis of Wyoming.
After the election results were announced, Donald Trump won the presidential election, the Republicans regained control of the Senate, and are expected to continue controlling the House. Lummis posted on X platform, stating: "We will establish a strategic Bitcoin reserve."
Presto analysts Peter Chung and Min Jung explained, "If the Republicans achieve full control of the presidency, Senate, and House, the chances of many crypto-related bills, including Lummis' Bitcoin strategic reserve bill, passing through Congress will increase significantly."
At the 2024 Bitcoin Conference held in Nashville this summer, Ikigai's Chief Investment Officer Travis Kling stated that he believed this plan was almost impossible to achieve. "This sounds like an insurmountable chasm, almost unbelievably optimistic. But with the Republicans' strong victory, the possibility of this plan has increased significantly. If it is realized, then we have truly won (WAGMI, meaning 'We're All Gonna Make It')."
In an article published on Wednesday, CoinShares Research Head James Butterfill said this move would make Bitcoin's status similar to gold, making it a part of national reserves, and mark a historic step towards legitimization. He stated, "If the Bitcoin Bill is implemented, it could greatly stimulate institutional and government interest in Bitcoin, accelerate its growth, and drive its value to new highs."
According to analysts at research and brokerage firm Bernstein, Trump's victory has turned the regulatory environment for crypto currencies from headwind to tailwind, and the Senate Banking Committee is expected to be more crypto-friendly. This means other crypto legislation will progress faster, especially in areas like stablecoins and market structure bills, which will benefit US trading platforms and stablecoin issuers like Circle and Paxos.
Bitwise Chief Investment Officer Matt Hougan pointed out that among Trump's other policy commitments, the end of "Operation Choke Point 2.0" will ease the restrictions on crypto currencies' access to the traditional banking system. Additionally, the repeal of the controversial SEC bulletin SAB 121 may pave the way for traditional banks to onboard more crypto companies as clients and allow them to hold and custody Bitcoin on their own.
However, an unchanging factor after the election is the US's $36 trillion deficit, growing by $1 trillion every 100 days. Hougan noted that according to Congressional Budget Office projections, this trend may continue or even worsen under Trump's policies. With the Federal Reserve potentially cutting interest rates and an uncertain economic environment, Bitcoin will become a "must-have" asset for investors.
3. Bitcoin Mining Incentives and Releasing Ross Ulbricht
Incentive measures for US Bitcoin miners may further expand the current dominance and consolidation trend of publicly listed domestic operators. This could impact the industry's diversification into the AI data center hosting sector amid the challenging post-halving environment.
Finally, one of Trump's most popular promises in the crypto community and beyond may be the commutation of Ross Ulbricht's sentence after taking office. Ulbricht was sentenced to life in prison without parole for creating and operating the Dark Web marketplace Silk Road, which was closely tied to Bitcoin's early history.
Early Bitcoin player Amir Taaki quickly reminded the President-elect Trump on Wednesday to fulfill his promise and commute Ulbricht's sentence, urging for his immediate release. Taaki stated, "I owe everything to Ross Ulbricht. Crypto changed my life. Crypto wouldn't be where it is without his contributions. He made the ultimate sacrifice, and we all benefit from his work."
4. Market Impact
CoinShares' Butterfill pointed out that Trump's proposal to appoint billionaire supporter Elon Musk to lead a new "Government Efficiency Department" to cut about $2 trillion in federal spending suggests that a more accommodative monetary policy may be adopted in the future to balance this plan. He stated that historically, accommodative monetary policy and fiscal conservatism have been beneficial for Bitcoin, enhancing its appeal as a hedge against currency devaluation and inflation, attracting investors seeking to avoid traditional economic risks.
BRN analyst Valentin Fournier said: "Trump's election provides a strong bullish case for the market, with the expected upcoming rate cuts and global stimulus measures expected to further boost the economy and support Bitcoin's performance. Although Trump will not officially take office until January 2023, we expect Bitcoin to remain strong by the end of the year." He also mentioned: "Ethereum has risen 20% in the past three days, slightly narrowing the gap with Bitcoin in the face of its previous poor performance. However, we believe this rally is temporary, and Bitcoin is likely to continue to outperform in the coming weeks."
According to The Block's price page, Bitcoin is currently trading at $74,967, up 1.7% in the past 24 hours and 77.4% year-to-date. In comparison, Ethereum is currently trading at $2,818, up 7.6% in the past 24 hours. However, Ethereum's year-to-date gain of 23.7% has underperformed other cryptocurrencies.
Bitget Research's chief analyst Ryan Lee said: "With Trump's re-election as president, the initial market reaction may be that off-exchange capital is entering the market out of fear, driving Bitcoin prices to new highs. In the coming days, a net inflow into BTC ETFs may be seen, indicating that Wall Street institutions are optimistic about the market outlook. The long-short ratio in the futures market is below 1, indicating that institutional investors in the crypto market are taking long positions through futures. The market is currently in a consensus bullish phase."
Analysts at Bernstein reiterated their forecast on Wednesday, expecting Bitcoin to approach $90,000 by the end of this year and reach a bull market target of $200,000 by 2025. Bitwise's Hougan also has similar price targets.
