The cryptocurrency industry is anticipating a friendly Trump administration that will support digital assets, a belief that is already sending markets to new highs.
Bitcoin proponents, and the crypto industry at large, considered President Joe Biden’s administration to be adversarial to digital assets. Securities and Exchange Commission Chairman Gary Gensler in particular is seen as hostile, and his eventual departure and replacement is set to be a welcome one.
The Trump White House and SEC are expected to be beneficial to the crypto industry and markets have reflected that. Bitcoin prices have exploded in the days after President-elect Donald Trump claimed victory, notching new record highs, something that speaks to the optimism for change in the new administration and with a new Congress.
“I do think that there is a lot of optimism within the industry for a more friendly regulatory environment,” Jennifer Schulp, director of financial regulation studies at the Cato Institute, told the Washington Examiner.
CONGRESSIONAL REVIEW ACT: WHAT TO KNOW ABOUT THE TOOL REPUBLICANS HOPE TO USE TO UNDO BIDEN RULES
After Trump’s embrace of the crypto industry earlier this year, top bitcoin miners launched a new nonprofit called the Bitcoin Voter Project, which is focused on educating and galvanizing voters around bitcoin and cryptocurrencies.
Brian Morgenstern, president of the group, said during an interview with the Washington Examiner that he thinks there will be a “more balanced approach” to crypto in the new administration.
“Where the administration considers the benefits of these assets and the value creation, and trying to be globally competitive, so that the jobs and all the value is captured by the United States, instead of trying to malign our industry and chase us to other countries,” Morgenstern, who is also head of public policy at Riot Platforms, said.
The price of bitcoin on Monday, less than a week after the election, was approaching $89,000 — a staggering 28% increase from just the night of the election.
The agency with the most influence over crypto is the SEC. Trump is expected to move to replace Gensler with someone more friendly to the industry. The changes to SEC policy could start soon after, according to Schulp.
“I would expect to see attempts to kind of roll back at least some of the enforcement actions against crypto, and an attempt to start getting a ball rolling on making new regulation,” Schulp said. “For the most part, the acting chair has a good amount of authority.”
Trump could appoint one of the current Republican SEC commissioners, Hester Peirce or Mark Uyeda, as acting chair. Uyeda already indicated that he expects a sea change in policy at the SEC.
“The commission’s war on crypto must end, including crypto enforcement actions solely based on a failure to register with no allegation of fraud or harm,” Uyeda said on Fox Business. “President Trump and the American electorate have sent a clear message. Starting in 2025, the SEC’s role is to carry out that mandate.”
And the Biden administration has really rattled the industry, one of the reasons why the Bitcoin Voter Project was able to drum up support.
Earlier this year, the Biden administration found itself at odds with crypto proponents by opposing bipartisan legislation that passed the House 279-136 and is meant to bring regulatory clarity for digital assets while safeguarding investors and consumers.
Additionally, several Democrats, including Senate Majority Leader Chuck Schumer (D-NY), broke with the administration and voted in May to cancel a SEC accounting policy rule related to cryptocurrency that critics argue discourages companies and major custodians from holding crypto assets for customers.
Schulp expects that accounting policy to be rolled back under the new Trump administration.
Gensler critics argue he has been too heavy-handed with crypto regulation and has failed to provide clear guidelines on which digital assets are commodities and which are securities, which would require exchanges to register as securities broker-dealers with the SEC.
Gensler has also faced criticism for the SEC’s so-called “regulation by enforcement” approach in the crypto space. SEC enforcement actions against crypto companies have nearly doubled since Gensler took over in 2021.
Biden’s regulators have consistently clashed with crypto investors. The SEC has been particularly tough in the wake of the collapse of the major exchange FTX.
Bitcoin takes a lot of energy to mine, and the Biden administration has tried to curb domestic mining, Morgenstern said. He said that agency will likely change tack under Trump.
“I would expect a Trump Energy Department to take the opposite approach, that they see the potential for bitcoin mining to help achieve the president’s energy dominance agenda,” Morgenstern said.
While a lot of the crypto crackdown has come from the agency side of things, Congress also has a role to play — particularly now that Republicans appear cruising to control both chambers and the White House.
Sen. Tim Scott (R-SC) is the expected incoming chairman of the Senate Banking Committee, which would likely be involved with crypto legislation. A spokesperson for the ranking member indicated that Scott would help legislate guidelines for digital assets.
“Sen. Scott will work to build a regulatory framework that establishes a reliable pathway for the trading and custody of digital assets that will promote consumer choice, education, and protection and ensure compliance with appropriate Bank Secrecy Act requirements,” the spokesperson said.
Morgenstern said a market structure would be helpful as it would provide clear rules of the road for the industry to thrive in the U.S.
Another piece of pro-crypto legislation that might be considered is from Sen. Cynthia Lummis (R-WY), who is one of the staunchest advocates for the industry on Capitol Hill.
She has proposed legislation, the BITCOIN Act, that would establish a strategic bitcoin reserve and would initiate a bitcoin purchase program with the goal of the U.S. acquiring a total stake of approximately 5% of total bitcoin supply. The bill would also affirm self-custody rights of private bitcoin holders.
Lummis told the Washington Examiner that Trump will be the “most pro-bitcoin and pro-crypto president in our nation’s history” and under him the U.S. will be better positioned to create a strategic bitcoin reserve.
“Congress has already shown there is strong bipartisan support for embracing the crypto industry, and I am excited for the opportunity to partner with President Trump and my colleagues to take this great leap toward a new financial frontier and make our economy strong again,” she said in a statement.
Morgenstern said he and his group are optimistic about the future of bitcoin and cryptocurrency under Trump, who is set to take office on Jan. 20. He said that “the sky is the limit” in terms of changes that can be made.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
“That’s why we funded the Bitcoin Voter Project and other ways of supporting pro-bitcoin candidates,” he said. “Because we lived for four years under a government that tried to put us out of business. We had a candidate run against that government saying, I want you to succeed. I want the United States to be the Bitcoin superpower of the world.”
“I think it’s going to be a much more friendly environment where we can thrive,” Morgenstern added.