As Donald Trump prepares for his second term as U.S. President, the cryptocurrency industry is anticipating a seismic shift that could propel digital assets into the financial mainstream. Celebrations within the sector reflect hopes for reduced regulatory scrutiny, increased adoption, and a more crypto-friendly environment under his administration.
In mid-December, Eric Trump, the President-elect’s second son, took center stage at the Bitcoin MENA 2024 conference in Abu Dhabi. Addressing a jubilant audience, he declared that his father would become “the most pro-crypto president” in history. “The nastiness in the system… guys, they made our life miserable,” Eric Trump said, criticizing the U.S. government’s treatment of both the Trump family and the crypto industry. “Had it not been for those attacks, I don’t think my eyes would have been as open to the crypto industry… I saw them come after you. I saw them strip your bank accounts.”
New Policies, New Opportunities
The crypto community’s optimism is fueled by Trump’s campaign promises, including creating a strategic bitcoin reserve, establishing a crypto advisory council, and appointing pro-crypto figures to key regulatory positions. Paul Atkins, a known crypto advocate, has been nominated to head the Securities and Exchange Commission (SEC). Additionally, the President-elect’s family’s ties to the crypto industry, including investments through their platform World Liberty Financial, have cemented confidence in a favorable policy landscape.
The sector’s euphoria was palpable when bitcoin surged past $100,000 shortly after Trump’s election victory. Eric Trump reportedly called his father at dawn to celebrate the milestone, which marked a stark turnaround from the 2022 crash that sent bitcoin tumbling to $16,000.
Professor Yesha Yadav of Vanderbilt University Law School described the revival as “a turnaround of near-mythical proportions,” while adding that a more permissive regulatory environment could attract record institutional investments. “Not only is [the crypto industry] back, it is going to become institutionalized,” she said.
Risks of Rapid Adoption
However, experts warn of potential systemic risks as crypto becomes more integrated into traditional finance. Professor Eswar Prasad of the Brookings Institution cautioned, “The combination of greater legitimacy and light regulation is what I really worry about.” He added that broader adoption at the retail and institutional levels could amplify the fallout from future price crashes.
Stablecoins, in particular, are seen as a vulnerability due to their reliance on U.S. Treasuries. “If there is a run on stablecoins, it could set off a chain of events that destabilize parts of the traditional financial system,” Prasad noted. The Federal Reserve Bank of New York echoed similar concerns, highlighting potential spillover effects into broader financial markets.
End of Biden-Era Crackdowns
During President Joe Biden’s tenure, the crypto industry faced intense regulatory scrutiny. Under SEC Chairman Gary Gensler, the regulator pursued lawsuits against major crypto firms, including Coinbase, Kraken, and Ripple, often accusing them of selling unregistered securities. Trump’s election marks a likely departure from such enforcement actions. Gensler has already announced plans to resign on inauguration day, with Trump making his removal a priority.
“That kind of stuff is going to come to a screeching halt,” said Coy Garrison, a partner at Steptoe and former SEC counsel. Industry leaders are also optimistic about the appointment of pro-crypto figures like Howard Lutnick, head of Cantor Fitzgerald, as commerce secretary, and Scott Bessent as Treasury secretary. Both have expressed strong support for digital assets.
Lobbying for Legitimacy
The crypto industry’s embrace in Washington has not been coincidental. Major players, including Coinbase, Ripple, and venture capital firms like Andreessen Horowitz, poured millions into lobbying efforts to secure favorable policies and elect pro-crypto politicians. Groups like Fairshake, a political action committee, spearheaded campaigns that emphasized financial freedom and innovation while avoiding direct mentions of cryptocurrencies.
“The industry has paid a lot of people a lot of money and is going to expect to see the receipts,” said Hilary Allen, a professor at American University Washington College of Law.
As Trump’s administration takes shape, crypto executives are focusing on achieving clear regulatory guidelines, including defining which tokens qualify as securities and repealing restrictive accounting rules. Advocates are also pushing for greater access to banking services, which has remained a challenge under Biden’s administration.
The Road Ahead
While Trump’s presidency offers an unprecedented opportunity for the crypto sector, it also raises questions about the balance between innovation and oversight. As institutional money flows into digital assets, the stakes for ensuring financial stability grow ever higher.
Professor Allen summarized the dilemma succinctly: “As this becomes more integrated, we sub out mortgage-related assets from 2008 and sub in crypto, which are only more volatile.”
The coming years will test whether Trump’s crypto-friendly policies can unlock a golden era for the industry without exposing the broader financial system to new vulnerabilities.
