The Impact of Trump's Return to Power on Cryptocurrencies: Analysis of the Growth and Regulatory Trends of U.S. Cryptocurrency Holders
Author: Beosin
Cover: Photo by Jigar Panchal on Unsplash
On November 6, Trump won the U.S. presidential election, and benefiting from his friendly attitude towards the crypto industry, BTC hit a new all-time high and approached the $90,000 mark. Trump's re-election has sparked market attention to financial policies, especially towards the cryptocurrency industry.
On November 13, according to The Verge, President-elect Donald Trump has appointed Elon Musk and Vivek Ramaswamy to lead the DOGE government efficiency department - to pave the way for his administration to "cut government bureaucracy, reduce over-regulation, cut wasteful spending, and restructure federal agencies".
According to a statement posted on Truth Social, the department will operate in some way "outside of government" and work with the White House and the Office of Management and Budget. The statement said that Musk and Ramaswamy must complete their work by July 4, 2026.
It can be seen that Trump's re-election as president and his active support for cryptocurrencies may become a key catalyst for the development of the U.S. crypto market, which could have a far-reaching impact on the global crypto market. This not only could change the policy environment for the crypto industry, but also help attract institutional capital and innovative talents, propelling the U.S. to a leading position in the global crypto economy.
Table of Contents
1. Continued Growth of US Crypto Holders
Over the past few years, the number of crypto holders in the US has grown significantly. According to market research data, in 2023, over 20% of US adults own some form of crypto assets, particularly mainstream coins like Bitcoin and Ethereum. This growth trend has been driven by multiple factors, including economic uncertainty, fiat currency inflation, and the gradual penetration of blockchain technology in the financial industry. The market optimism following Trump's election may further drive an increase in the number of holders in the short term.
Crypto holders include not only retail investors but also an increasing number of institutional investors. Banks, hedge funds, and pension funds have gradually entered the crypto asset management space, making the overall market participants more diverse. The entry of institutional investors has also played a positive role in stabilizing the market and improving liquidity, further driving the normalization of the crypto market.
According to data, in September, there were 220 million addresses that had interacted with the blockchain at least once, more than doubling since the end of 2023.
The surge in active addresses is mainly attributed to Solana, with around 100 million active addresses. This is followed by NEAR (31 million), Coinbase's popular L2 network Base (22 million), TRON (14 million), and Bitcoin (11 million). Among the Ethereum Virtual Machine (EVM) chains, the second most active chain after Base is Binance's BNB Chain (10 million), followed by Ethereum (6 million).
Meanwhile, in June 2024, the monthly active mobile wallet users reached a historic high of 29 million. While the US accounts for the largest share of monthly mobile wallet users at 12%, its share in the overall mobile wallet user base has been declining in recent years, as crypto adoption grows globally and more projects exclude the US through geofencing to seek regulatory compliance.
2. Regulatory Policy Changes Under the Trump Administration
In 2022, the collapse of the FTX exchange led the Biden administration to intensify its crackdown on cryptocurrencies, sparking discontent among crypto executives and investors. Since then, federal regulators have focused on combating fraud, taxing crypto investment gains, and attempting to classify more digital tokens as securities to strengthen regulation.
As a result, the US Securities and Exchange Commission (SEC) has emerged as the primary regulator, with its chair Gary Gensler in recent years bringing major lawsuits against large platforms like Coinbase, Ripple, and Binance, accusing them of violating investor protection rules. All companies have denied these allegations.
Before the election, many politicians anticipated that the momentum would increase with the passage of bipartisan crypto legislation. More and more policymakers and politicians have taken a positive stance towards crypto.
This year, the industry has also sparked other major policy initiatives. At the federal level, the House of Representatives passed the "21st Century Financial Innovation and Technology Act" (FIT21) with bipartisan support, with 208 Republicans and 71 Democrats voting in favor. The bill is now awaiting consideration and approval in the Senate, and could provide the much-needed regulatory clarity for crypto entrepreneurs.
Equally significant is that at the state level, Wyoming passed the "Decentralized Autonomous Organization (DAO) Act", which legally recognizes DAOs and allows blockchain networks to operate legally without compromising decentralization.
At the Bitcoin Conference in Nashville in 2024, Trump promised to establish an industry expert-led committee and implement crypto-friendly policies. He also pledged to make Bitcoin a "national strategic reserve" and fire SEC Chair Gary Gensler. These promises have once again sparked enthusiastic reactions following Trump's victory.
Cameron Winklevoss passionately wrote on social media: "Imagine what we could achieve in the next four years if the crypto industry no longer had to spend billions fighting the SEC, and could instead invest those resources into the future of money. Exciting times are ahead."
3. Anti-Money Laundering (AML) Remains Crucial in the Crypto Market
Anti-Money Laundering (AML) remains crucial in the crypto market. The decentralized and anonymous nature of cryptocurrencies provides criminals with convenient avenues for money laundering. As the number of market participants increases, especially with the entry of institutions, AML requirements become increasingly important. The Trump administration may potentially adopt stricter AML policies in the future to curb illicit activities.
In 2014, the FATF issued guidance on crypto AML, prompting policymakers in FATF member countries to take swift action. The US Financial Crimes Enforcement Network (FinCEN), the European Commission, and dozens of other regulators have incorporated most of FATF's crypto AML recommendations into law.
Then, the responsibility falls on cryptocurrency exchanges, stablecoin issuers, and some DeFi protocols and Non-Fungible Token (NFT) markets (depending on the specific situation), which FATF has defined as VASPs. In the future, VASP compliance officers must mandatorily conduct KYC checks and regularly monitor suspicious activities to prevent evil transactions that may be related to money laundering and terrorist financing.
In addition, VASPs must report suspicious activities to the relevant regulatory authorities and agencies responsible for analyzing fund flows and using various tools, including blockchain analysis, to trace illegal activities to real-world identifiers.
In recent years, the U.S. Department of the Treasury has introduced several policies to strengthen anti-money laundering regulations for cryptocurrencies. The Trump administration may continue this policy line, and it is expected that the AML compliance review requirements for cryptocurrency exchanges will be further strengthened. For example, cryptocurrency exchanges may need stricter identity verification measures and submit more detailed transaction records to ensure the compliance of all transactions. It is expected that under the push of this policy, cryptocurrency exchanges in the U.S. market will pay more attention to user identity verification, and projects that meet AML standards will gain market recognition.
Stricter AML policies may put some pressure on short-term market liquidity, but in the long run, this will help improve market transparency and credibility, paving the way for further institutional investment. As regulatory policies are further implemented, exchanges and projects that meet compliance requirements may gain greater competitive advantages in the market.
4. Potential Impact of Trump's Policies on the Future Market
If Trump is re-elected as president, his supportive attitude towards cryptocurrencies could have a profound impact on the future market. Here are some key potential impacts:
(1) Transformation of the regulatory environment
Trump has promised to fire the current SEC chairman, Gary Gensler, and replace him with a "crypto-friendly regulator." This change means that the regulatory environment for the U.S. cryptocurrency industry may become more relaxed and friendly. Currently, the U.S. cryptocurrency industry faces high compliance pressure, and if the regulatory policy becomes more open, it will help reduce corporate compliance costs, attract more cryptocurrency projects to develop in the U.S., and potentially drive more capital and talent into the U.S. cryptocurrency market, further enhancing the competitiveness of the U.S. cryptocurrency industry.
(2) Improved cryptocurrency investment sentiment
Trump's public support for Bitcoin and cryptocurrencies, expressing his desire for the U.S. to become a "Bitcoin superpower," is a great encouragement for investor sentiment. Investors and businesses are often more willing to invest in and innovate with crypto assets in a confident policy environment. Trump's attitude may bring a bullish sentiment, driving capital inflows into the crypto market and having a positive impact on the prices of mainstream crypto assets like Bitcoin, potentially even triggering a new bull market.
(3) Bitcoin mining and related industries returning to the U.S.
Trump's mention of the vision of "Bitcoin made in America" suggests that he may push for the Bitcoin mining industry to be relocated back to the U.S., further reducing the dependence on other countries, especially mining powerhouses like China. With more relaxed energy policies and tax incentives, the U.S. mining infrastructure could expand rapidly, making the U.S. one of the global leaders in Bitcoin computing power. As mining activities increase, upstream industries such as mining rigs and power infrastructure will benefit, driving employment and technological innovation growth.
(4) Accelerating the entry of traditional financial institutions into crypto
If Trump implements a crypto-friendly policy, banks, funds, and other traditional financial institutions may become more actively involved in the crypto market. The participation of traditional financial institutions will bring more liquidity, improve market maturity, and enhance the compliance and credibility of crypto assets. The influx of institutional investors can deepen the market, reduce volatility, and attract more mainstream users to participate in crypto investment and usage.
(5) Changing the global competitive landscape of the cryptocurrency industry
If Trump positions the crypto industry as part of his economic development strategy, the U.S. policy stance could influence the attitudes of other countries. If the U.S. becomes a "Bitcoin superpower," other countries may also be forced to accelerate their cryptocurrency policy formulation to avoid falling behind the global crypto economic landscape. This international competition will drive global policy reform, potentially further accelerating the overall development of the cryptocurrency and blockchain industry.
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Conclusion
The direction of the financial market under the leadership of Trump will directly impact the regulatory environment of the cryptocurrency market. As the number of cryptocurrency holders steadily increases, the market's demand for regulation and compliance is also growing. This article aims to analyze the potential impact of the Trump administration on the U.S. cryptocurrency market, particularly in terms of changes in regulatory intensity and anti-money laundering measures.
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