Trump's Crypto-Friendly Orders: A Game Changer for the Industry?

As President-elect Donald Trump prepares to assume office on Jan. 20, the crypto industry is abuzz with anticipation about his plans for the sector. Trump has pledged to make the US "the crypto capital of the planet" and has hinted at several crypto-friendly executive orders in his first few days in power. Here's what we can expect and how these orders could impact the crypto market and its participants.

Deregulation and Enforcement

Trump's administration is expected to take a more favorable stance towards the crypto industry, potentially leading to deregulation in certain areas. This could involve reducing the regulatory burden on crypto exchanges, ICOs, and other crypto-related businesses, making it easier for them to operate and grow. Additionally, the new SEC chair, likely to be former Commissioner Paul Atkins, is expected to redirect the agency’s enforcement strategy, focusing on clear instances of fraud and Ponzi schemes involving crypto while avoiding targeting legitimate players.



Crypto as a Strategic Reserve

One of Trump's most notable promises is to create a Bitcoin strategic reserve, involving the US government investing in Bitcoin as a store of value, similar to the gold reserve or other commodities. This move could have significant implications for the crypto market, potentially driving up the price of Bitcoin and other cryptocurrencies. A strategic Bitcoin reserve could also signal to institutional investors that crypto is a legitimate asset class, potentially driving more investment into the market.

Restoring Crypto Mining

Trump has also promised to restore crypto mining in the US. This could involve providing incentives for mining operations to set up shop in the US, potentially leading to an increase in mining activity and a corresponding increase in the hash rate, which could strengthen the security of the Bitcoin network.

Expanding the CFTC's Authority

The Trump administration is planning to expand the Commodity Futures Trading Commission’s (CFTC) authority to oversee significant portions of the $3 trillion digital asset market. This would involve assigning the CFTC oversight of spot markets for digital commodities, including Bitcoin and Ethereum, which account for about 70% of the global crypto market. The plan also includes regulating the exchanges where these assets are traded. This move would mark a pivotal shift in US crypto regulation, aiming to replace the current enforcement-heavy approach with a more innovation-friendly framework.

Clarification of the Treatment of Digital Assets

The Trump administration is expected to provide more specific guidance for crypto assets not intended to be securities, such as non-fungible tokens (NFTs), tokenized commodities, tokenized real-world assets, and stablecoins. This could help innovators avoid the sale of these digital assets turning into the sale of a security, depending on the facts and circumstances of the transaction.

Custodial Services

The Trump administration may choose to repeal the SEC's staff accounting bulletin requiring public companies holding crypto assets as a custodian to report them as liabilities on their balance sheets. This ruling has severely limited the ability of banks and other financial institutions from providing custodial services. Repealing this ruling could make it easier for financial institutions to provide custodial services for crypto assets.

Market Impact

Trump's anticipated crypto-friendly executive orders could have a significant impact on the crypto market and its participants. These orders could drive a market rally, attract more investors, and foster a more stable and secure crypto market, ultimately positioning the US as a global leader in the crypto space. However, it is important to note that the actual implementation of these changes will depend on various factors, including the political landscape, the priorities of the new administration, and the feedback from industry stakeholders.

In conclusion, President-elect Donald Trump's anticipated crypto-friendly executive orders could have a significant impact on the crypto market and its participants. These orders could drive a market rally, attract more investors, and foster a more stable and secure crypto market, ultimately positioning the US as a global leader in the crypto space. However, it is important to note that the actual implementation of these changes will depend on various factors, including the political landscape, the priorities of the new administration, and the feedback from industry stakeholders.