Bitcoin will become a key factor in politics after the recent election victory of Donald Trump and the Republican Party — and investors who do not own cryptocurrencies can no longer ignore it, according to the New York Digital Investment Group (NYDIG).
"While some investors have allocated to Bitcoin, the most prevalent allocation is still nothing. Now there is no reason not to," said Greg Cipolaro, NYDIG's global research director, in a note on November 11, emphasizing:
"Now it has become an undeniable political requirement."
"Not owning this asset will become a liability in the future," he added. "Investors who have been able to dismiss or ignore this asset for various reasons will continue to do so at their own financial detriment."
Bitcoin (BTC) has risen 84% this year and continues to reach new highs near $82K, driven by Trump's victory in the U.S. presidential election.
Bitcoin reached a historic high of $81,943 on November 11 on the Coinbase exchange. Source: TradingView
The Republican Party, which has supported bills that the digital currency industry has backed, will also hold a majority in the Senate and appears to be on track to maintain a majority in the House after gaining a few seats from the Democrats.
Cipolaro said the current cryptocurrency space sees itself as having "a seat at the table at the highest levels of government" and could lead to digital currency and Blockchain technology being "more accepted into the mainstream financial system."
"It is expected that by 2025 there will be new leadership in most major agencies and departments, ultimately likely to truly enable laws and regulations supportive of digital currency," he added.
Trump has promised to fire Securities and Exchange Commission (SEC) Chairman Gary Gensler "on day one," and his team is said to be considering Robinhood Markets' general counsel as a top candidate for the job.
The SEC has brought numerous lawsuits against cryptocurrency companies under Gensler, which Cipolaro speculates will mostly be withdrawn.
"The change in leadership after the election could bring in a more flexible management philosophy," he said. "This could lead the SEC to seek settlements with these companies, allowing them to operate within a clearer legal framework or, in some cases, completely dismiss certain lawsuits, especially if they are seen as not serving the best public interest."
He added that the SEC may also choose to forego any potential enforcement actions signaled through Wells notices to Robinhood, Crypto.com, ConsenSys, Uniswap, and Immutable.
Cipolaro said it is likely that newly appointed leaders "are expected to shift towards a more crypto-supportive direction" for the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and a new Attorney General.
The new regulators may have a more favorable view towards banks working with cryptocurrencies, Cipolaro said, "potentially supporting banks in providing custody services for digital assets including Stablecoin."
