The 47th US president, Donald Trump, has taken a significant step towards transforming the United States into a crypto capital by implementing policies that favor the growth of the cryptocurrency sector. With Trump’s return to the White House, the value of cryptocurrencies has surged, reaching unprecedented levels. This new era could be a boon to the crypto market in the US if regulatory authorities can strike a balance between innovation and oversight.
What’s Changing
- Trump has appointed influential figures in the crypto sector to key positions in his administration, including Elon Musk.
- He has expressed support for a US strategic reserve of Bitcoins, which would solidify the United States’ status as a reserve asset within the American central bank, the Federal Reserve Bank.
- Trump has also shown support for the US Bitcoin mining industry, promising to develop more infrastructure to support the sector.
These developments have led to a significant increase in the value of many cryptocurrencies, with some recording increases of over 300% since the election. The current state of crypto in the US is characterized by growing adoption, with approximately 28% of American adults owning cryptocurrency, nearly double the number from just three years ago.
The Current State of Crypto in the US
- Institutional interest remains strong, with Kraken expanding into commission-free trading of over 11,000 US-listed stocks and ETFs.
- The total value locked in Bitcoin-based decentralized finance (DeFi) is expected to nearly double to over $100 billion this year.
The market has seen turbulence, however, with Bitcoin closing Q1 2025 at around $80,000, down 11.8% for the quarter, while Ethereum dropped 45.4%, ending near $1,800.
Trump’s Agenda
Trump has started by replacing the head of the US Securities and Exchange Commission (SEC), Gary Gensler, who was criticized for his repressive approach to cryptocurrencies. The president-elect has also signed a bill overturning a revised IRS rule that would have classified decentralized exchanges as brokers, subjecting them to stringent tax reporting requirements.
Furthermore, the Justice Department’s crypto enforcement unit has been disbanded, and the SEC has dropped high-profile lawsuits against major exchanges like Coinbase and Binance. An executive order has been created to study the establishment of a strategic Bitcoin reserve, positioning digital assets as national economic tools.
These moves reflect a broader strategy to foster a crypto-friendly environment, with the aim of encouraging innovation, stimulating investment, and enhancing financial inclusion.
Potential Benefits of Regulatory Easing
- Encouraging innovation: Clearer, more accommodating regulations may encourage crypto startups and established firms to operate within the US, reversing the trend of companies relocating to more crypto-friendly jurisdictions.
- Stimulating investment: Reduced regulatory burdens could lower compliance costs and attract both retail and institutional investors, potentially leading to increased market liquidity and capitalization.
- Enhancing financial inclusion: By legitimizing digital assets, regulatory relaxation could provide underserved populations with greater access to financial services through crypto platforms.
Critics, however, warn of significant risks, including conflict of interest, security concerns, and market volatility. The Trump family’s involvement in crypto ventures raises concerns about potential conflicts of interest, while loosening regulations may inadvertently facilitate illicit activities if adequate safeguards are not maintained.
Growth Without Compromising Integrity
The inherent volatility of cryptocurrencies requires increased vigilance and a thorough understanding of market mechanisms. Business leaders and executives must monitor developments in the crypto landscape, as these can influence various sectors, including finance, technology, and investments.
The election of Donald Trump has injected new momentum into the cryptocurrency market, leading to significant valuations for several cryptocurrencies. While this is positive, careful consideration is necessary to ensure that growth does not come at the expense of market integrity and consumer protection.
Cryptocurrency Companies Spend Millions on US Elections
Cryptocurrency companies have spent more than $134 million in the 2024 US election, seeking a favorable regulatory environment. This significant investment underscores the importance of the crypto sector in American politics and highlights the need for a balanced approach to regulation.
