After pouring record sums of money into the 2024 U.S. elections, the crypto currency industry is hopeful – if not certain – of a newly friendly reception from D.C. policymakers under Trump after what it perceived to be a hostile environment in the Biden administration.
Crypto-aligned interests pumped millions of dollars into campaigns for President Donald Trump and pro-crypto candidates, hoping he and a supportive Congress would enact industry-friendly regulations after dealing with dozens of enforcement actions from the Securities and Exchange Commission (SEC) under Biden.
On the potential policy priority menu is legislation that would offer clarity on crypto’s place in the markets, a U.S.-backed “strategic Bitcoin reserve” and legislation on stablecoins, which are cryptocurrencies whose value is tied to another asset.
New Leadership
Even with Republican majorities, Congress could well end up stymied over major new legislation. But crypto advocates are still welcoming new leadership at key regulatory agencies like the SEC, which they have criticized for being heavy-handed in targeting the industry.
“I think we’re going to see movement both from the executive branch and through Congress,” said Zack Shapiro with the Bitcoin Policy Institute, adding that he would be very surprised if there were not at least one or two comprehensive bills passed.
The Fairshake PAC, an outside political group that received major donations from key crypto interests like the platform company Coinbase, was one of the most active of such groups in 2024.
Shapiro noted “the effect that crypto (as) a political force seems to have had up and down the ballot in the 2024 election,” including what he called “the stunning impact” of groups like the Fairshake PAC.
“I think that did not escape legislators’ notice,” he said.
For its part, Trump’s team suggested a new day will dawn on how the industry is governed.
“There has been an effort in the Washington bureaucratic swamp to stifle innovation with more regulation and higher taxes, but President Trump will deliver on his promise to encourage American leadership in crypto and other emerging technologies,” Brian Hughes, a spokesman for the transition team, told Context days before Trump was sworn into office.
Trump was expected to sign an executive order creating a crypto advisory council, Reuters reported.
Stifling Innovation?
At or near the top of the priority list is a legislative decision on how digital assets are categorized – a significant distinction that could determine whether tokens are regulated through an entity like the Commodity Futures Trading Commission (CFTC) or the SEC.
Crypto enthusiasts have long been looking for a definition of whether coins and tokens should be classified as commodities, the purview of the CFTC, or securities, which would fall to the SEC and mean tighter reporting and registration requirements.
“Right now if you were to try and do a registered offering in token form, it’s really unclear where and how those tokens can trade and what disclosures you need to make,” said Shapiro.
Trump allies and crypto backers in Congress like Sen. Cynthia Lummis of Wyoming are also keen on creating a U.S. strategic Bitcoin reserve – an idea Trump appeared open to during a recent appearance at the New York Stock Exchange.
Proponents say the reserve would help cement the United States as a leader in the sector and help bolster the country’s finances in the long run.
“Bitcoin is transforming not only our country but the world and becoming the first developed nation to use Bitcoin as a savings technology secures our position as a global leader in financial innovation,” Lummis said in a statement when she unveiled the Bitcoin reserve bill.
Another issue is legislation that would provide a regulatory framework for how to treat stablecoins, or cryptocurrencies whose value is linked to another asset.
Shapiro said how much Congress is able to pass “is very much up in the air and is probably subject to some amount of jockeying within the industry based on different people’s different priorities.”
‘House Of Cards’
While the industry might be pleased to turn the page on Biden-appointed officials like former SEC Chair Gary Gensler, consumer advocacy groups warn that a swing towards a more laissez-faire environment could open the door for scammers to flourish.
“I’m not apocalyptic, but I lived through the first administration of that guy [Trump], and I am not optimistic about anything that’s consumer-friendly,” said Ira Rheingold, executive director of the National Association of Consumer Advocates (NACA).
“I view crypto as a house of cards that the wrong blow of wind will knock down.”
Rheingold’s group was part of a team that sued the crypto platform Gemini last year, alleging Gemini’s user agreement shifts losses to its customers in violation of both federal and D.C. law.
Gemini did not respond to requests for comment on the lawsuit.
“If I was a legitimate cryptocurrency company, I would want regulation because I think regulation actually legitimizes the business and gives people some protection,” Rheingold said.
Still, he’s unsure of how D.C. policymakers will approach things.
Buy More Bitcoin?
“From a cynical point of view, I can see how much money the crypto industry is pouring into Washington, so one would think that they have a chance at making something happen. But I honestly don’t know,” he said.
“Should something be done? Yes. But I’d rather nothing be done than regulations that legitimize an industry I have deep concerns about.”
Alex Gladstein with the Human Rights Foundation said he is looking out for specific policies when it comes to making Bitcoin – which comprises most of the crypto market – more accessible for savings, making payments, and Bitcoin mining.
“I think it’s very simple: is America in 2028 going to be a better place to save and buy Bitcoin and join Bitcoin businesses than it is today?” said Gladstein, whose nonprofit group, among other things, operates a fund intended to promote the use of Bitcoin for human rights defenders in politically hostile countries.
“Or are you going to get debanked and are we going to be worrying about censorship and being de-platformed and things like that for being in the Bitcoin community? We’re going to go one of two ways here.”
(with inputs from Reuters)
