What Would A Trump Presidency Do For Crypto?

Crypto regulation is becoming an increasingly partisan issue, with pro-crypto Republicans holding the SEC to account.

Would Trump's approach align him with the crypto industry?

Yesterday, Donald Trump decisively won the Iowa Caucuses, meaning he is now the clear frontrunner for the 2024 Republican presidential nomination.

Another Trump presidency would prove divisive and controversial, and raises all kinds of questions about the economy, foreign policy, and other key areas—as, of course, would another term for Biden. This article only discusses the potential impact on the crypto sector.

Crypto Skeptics

The cryptocurrency industry finds itself at a pivotal juncture as the Biden era unfolds, as it navigates regulatory challenges and every victory has to be won through the courts. As months have passed, crypto has increasingly become a partisan issue, with House Republicans championing the cause and seeking to hold the SEC and Biden administration to account for throttling the nascent industry with regulation-by-enforcement and uncertainty.

Donald Trump's previous presidency saw him deride crypto, notably in 2019 when Meta was seeking to launch a stablecoin and bitcoin was once again back in a bull market.

However, there's no question that the return of the GOP in 2024 would offer hope for digital asset firms, at least on the regulatory front. A shift in Washington's crypto posture is likely, as Republicans draft regulatory proposals aligning with the industry's interests and float crypto-friendly names for key roles. Moreover, Trump's own stance may well have changed in the intervening years, as he has benefited significantly from fundraising in the crypto realm.

Risk Vs Deregulation

The Biden administration, along with Democrat-leaning regulators, has generally taken a hostile stance toward crypto, citing concerns about risks to consumers and the broader financial system. Senators like Elizabeth Warren have made it a key element of their campaigns, aiming to shut down an industry she views as nothing short of evil.

However, House Majority Whip Tom Emmer, a prominent crypto proponent, suggests that a second Trump administration could be more friendly to the crypto industry. Despite Trump's earlier criticisms of digital assets, recent developments, including his investment in crypto and the issuance of a non-fungible token (NFT), indicate a shift in his views (albeit one likely driven by pragmatic concerns about fundraising).

Trump NFTs on OpenSea
The first series of Trump NFTs have seen over 15,000 ETH in trading volumes.

Brian Brooks, a former top bank regulator under Trump, highlights that key Republican officials on Capitol Hill have rallied around crypto and advocated for industry-friendly regulations. The rise of crypto on the right, driven in part by privacy concerns, is evident in the support from Republican presidential candidates like Vivek Ramaswamy and Florida's Ron DeSantis.

A Partisan Issue

A recent poll by the Crypto Council for Innovation showed that 51 percent of US crypto owners would vote for Trump, emphasizing the growing alignment of crypto interests with the GOP. The 2024 election is poised to be the most consequential yet for the crypto industry, determining the extent to which the federal government grants legitimacy and a supportive rulebook for its growth.

The Securities and Exchange Commission (SEC) is likely to be a key target for the crypto industry in a Republican administration. Potential appointees like Brian Brooks, SEC Commissioner Hester Peirce, and former SEC Division of Investment Management director Dalia Blass are being floated.

While the crypto industry maintains a nonpartisan stance, almost by definition (crypto is an open set of technologies that transcends divisions), the increasingly partisan nature of crypto policy discussions presents challenges. The industry's efforts to appeal to lawmakers on both sides of the aisle may be complicated if crypto regulation becomes a partisan or ideological issue. As things stand, however, a Trump presidency would likely be a win for the crypto industry—no matter what the other implications could be.

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