The price of bitcoin hit a new all-time high Wednesday (Nov. 6), and America elected a new president.
The two are far from unrelated. Following the projected victory of Donal Trump in the U.S. presidential elections, bitcoin briefly shot north of $75,000, breaking the prior high of $73,000 reached when exchange traded funds (ETFs) of the digital asset first started trading on Wall Street.
Other cryptocurrencies, such as Ether, Solana, and many memecoins, also experienced substantial gains. The crypto rally reflects investor optimism about a more favorable regulatory environment for the industry under the Trump administration than a potential Harris administration might have allowed for.
During his campaign, Trump pledged to transform the U.S. into the “crypto capital of the planet,” while during the Biden administration the crypto space suffered what it alleged to be “regulation by enforcement” under the U.S. Securities and Exchange Commission (SEC).
Trump has been vocal in his criticism of current SEC Chair Gary Gensler, who has enforced a tough stance on crypto, classifying many crypto assets as securities. The president-elect’s promise to replace Gensler with a more crypto-sympathetic figure has fueled speculation that the SEC would pivot to a more laissez-faire stance under a new chair.
Per the nonprofit industry group Stand With Crypto, the 2024 elections saw 250 “pro crypto” members of Congress elected along with 16 “pro crypto” senators.
‘This is what happens when you mess with the crypto army,” tweeted Gemini Co-founder Cameron Winklevoss on X.
The potential for ongoing policy shifts could catalyze market growth but also raise new questions about risk, investor protections and the balance between innovation and oversight.
Read more: Why Bitcoin and Trump Are Once Again Crypto’s Biggest Story
Crypto Markets Brace for Potential Transformation
Trump has made no secret of his pro-business stance, with promises of lower corporate taxes and reduced regulatory burdens across various sectors, including digital assets. Industry experts anticipate that a Trump administration would embrace a market-oriented approach to crypto regulation, likely encouraging growth and potentially pushing the U.S. closer to becoming a global crypto hub.
As PYMNTS has written, the need for clear regulatory frameworks remains one of the most pressing issues facing the crypto industry, and a Trump administration would likely see significant shake-ups in the leadership of regulatory bodies like the SEC.
Such a shift could lead to relaxed standards around securities classifications and tokenized assets, enabling crypto businesses to operate with greater flexibility.
In May, Trump’s vice president pick J.D. Vance was among the five dozen senators who voted to overturn the SEC’s Staff Accounting Bulletin 121 (SAB 121), which guides how banks should handle customers’ crypto assets, requiring them to treat these assets as liabilities. While the resolution passed, President Biden ultimately vetoed it.
However, deregulation still carries potential risks, particularly if the boundaries around securities laws are pushed too far. This approach might lead to increased volatility in the market, putting unsophisticated investors at risk if they invest in unvetted or under-regulated digital assets.
Crypto markets are inherently volatile, and the possibility of reduced oversight could amplify this characteristic. Deregulation may lead to significant speculative activity, potentially making the crypto market more susceptible to bubbles and crashes.
Read more: Blockchain’s Benefits for Regulated Industries
Crypto-Friendly Federal Initiatives
The Trump team has floated the concept of a dedicated Bitcoin and Crypto Advisory Council aimed at developing and overseeing policies conducive to the industry. Tasked with addressing issues around stablecoins, decentralized finance (DeFi), and central bank digital currencies (CBDCs), the council would be expected to prioritize policy clarity and provide guidelines that favor the industry’s expansion.
Many crypto companies are hopeful that this council will help bridge the gap between regulatory ambiguities and operational clarity, providing them with a transparent framework for growth. Yet, some experts argue that this approach may not fully address consumer protection, leaving open questions on how retail investors would be safeguarded in a rapidly expanding market.
One of the most radical ideas floated by the Trump campaign is the establishment of a “Strategic Bitcoin Reserve.” According to Trump’s advisors, the proposal would involve retaining all current government-held bitcoins and accumulating more to strengthen the nation’s crypto assets. This would position the U.S. as one of the largest sovereign holders of bitcoin, increasing global confidence in its crypto market leadership.
Ultimately, as crypto markets brace for potential transformation, the balance between fostering innovation and ensuring investor protection will be crucial. Trump’s stance could attract capital and talent to the U.S., but without adequate oversight, the same policies that promise growth might also expose the market to significant risks.
