The cryptocurrency industry is anticipating regulatory changes under Trump

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The cryptocurrency industry is anticipating regulatory changes under Trump

After pouring record sums into the 2024 US election, the cryptocurrency industry is hopeful — if not certain — of a new friendly reception from policymakers in Washington, D.C. after what it saw as a hostile environment in the Biden administration.

Cryptocurrency-related interests have poured millions of dollars into the election campaigns of President Donald Trump and pro-crypto candidates, hoping that he and his supportive Congress will enact industry-friendly regulations after dealing with dozens of enforcement actions from the Securities and Exchange Commission (SEC) under Biden. .

On the list of potential policy priorities is legislation that would provide clarity on the place of cryptocurrencies in markets, a US-backed “strategic bitcoin reserve,” and legislation on stablecoins, which are cryptocurrencies whose value is tied to another asset.

Even with a Republican majority, Congress could end up stuck on major new legislation. But cryptocurrency advocates still welcome new leadership at key regulatory agencies like the Securities and Exchange Commission, which they have criticized for being heavy-handed in targeting the industry.

“I think we’re going to see movement from the executive branch and through Congress,” said Zach Shapiro of the Bitcoin Policy Institute, adding that he would be very surprised if at least one or two of the sweeping bills don’t pass.

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Fairshake PAC, an outside political group that has received large donations from major cryptocurrency interests such as platform company Coinbase, was one of the most active such groups in 2024.

Shapiro noted “the influence that cryptocurrencies as a political force seem to have up and down the ballot in the 2024 election,” including what he called the “incredible influence” of groups like Fairshake PAC.

“I think this did not escape the notice of lawmakers,” he said.

For its part, the Trump team indicated that a new day will dawn on how the industry is managed.

“There have been efforts in the bureaucratic swamp in Washington to stifle innovation through more regulation and higher taxes, but President Trump will make good on his promise to encourage American leadership in cryptocurrencies and other emerging technologies,” said Brian Hughes, a spokesman for the transition team. Context said days before Trump was sworn in.

Reuters reported that Trump is expected to sign an executive order to create a cryptocurrency advisory council.

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Stifle innovation?

At or near the top of the priority list is a legislative decision on how digital assets are classified — an important distinction that can determine whether tokens are regulated through an entity like the Commodity Futures Trading Commission (CFTC) or the Securities and Exchange Commission.

Cryptocurrency enthusiasts have long been searching for a definition on whether coins and tokens should be classified as commodities, or securities, which would fall to the SEC. More stringent reporting and recording requirements.

“Right now, if you try to make a registered offering in the form of a token, it’s really unclear where and how those tokens can be traded and what disclosures you have to make,” Shapiro said.

Trump allies and cryptocurrency supporters in Congress, such as Senator Cynthia Lummis of Wyoming, are also keen on creating a US strategic reserve of bitcoin — an idea to which Trump appeared open during a recent appearance on the New York Stock Exchange.

Supporters say the reserve will help cement the United States’ position as a leader in the sector and help bolster the country’s finances in the long term.

“Bitcoin is changing not only our country but the whole world, and becoming the first developed country to use Bitcoin as a savings technology ensures our position as a global leader in financial innovation,” Loomis said in a statement when she unveiled the Bitcoin Reserve Bill.

Another issue is legislation that would provide a regulatory framework for how stablecoins, or cryptocurrencies whose value is tied to another asset, are dealt with.

How much Congress can pass is “highly uncertain and probably subject to some amount of maneuvering within the industry based on the different priorities of different people,” Shapiro said.

“house of cards”

While the industry may be happy to turn the page on Biden-appointed officials like former SEC Chairman Gary Gensler, consumer advocacy groups warn that the shift toward a freer environment could open the door for scammers to flourish.

“I’m not terrible, but I lived through that guy’s first administration [Trump]“I’m not optimistic about anything consumer-friendly,” said Ira Rheingold, executive director of the National Consumer Advocacy Association (NACA).

“I consider cryptocurrencies a house of cards that will be torn down by the wrong blow of wind.”

Rheingold Group was part of a team that sued cryptocurrency platform Gemini last year, alleging that Gemini’s user agreement passed losses on to its customers in violation of federal and D.C. law.

Gemini did not respond to requests for comment on the lawsuit.

“If I were a legitimate cryptocurrency company, I would want regulation because I think regulation legitimizes the business and gives people some protection,” Rheingold said.

However, he’s not sure how D.C. policymakers will handle things.

“From a cynical point of view, I can see how much money the cryptocurrency industry is pumping into Washington, so one might think they have a shot at something,” he said. “But I honestly don’t know.”

“Should something be done? Yes. But I would rather do nothing but create regulations that legitimize an industry I have deep concerns about.”

Alex Gladstein of the Human Rights Foundation said he is looking for specific policies when it comes to making bitcoin — which comprises most of the cryptocurrency market — more available for savings, to make payments and to mine bitcoin.

“I think it’s very simple: Will America in 2028 be a better place to save and buy Bitcoin and join the Bitcoin business than it is today?” said Gladstein, whose nonprofit group runs, among other things, a fund aimed at promoting the use of Bitcoin for human rights defenders in politically hostile countries.

“Or is your money going to be taken out of your bank and are we going to worry about censorship and deplatforming and things like that for being in the Bitcoin community? We’re going to take one of two approaches here.”

Reporting by David Shervinsky. Editing by Anastasia Moloney and Elaine Wolfhurst; The Thomson Reuters Foundation is the charitable arm of Thomson Reuters.

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