(Bloomberg) -- President-elect Donald Trump was once skeptical of digital assets, saying Bitcoin “seems like a scam” and that crypto’s value was “based on thin air.”
Times have changed. During his latest presidential campaign, Trump pivoted to crypto cheerleader: a July speech at the Bitcoin 2024 conference capped his complete about-face. Since his reelection, cryptocurrency prices have surged — especially Bitcoin’s, which hit a record high above $108,000 in December — amid expectations that his incoming administration will pursue a pro-crypto agenda.
What has Trump said about crypto?
Trump has pledged to be a “pro-Bitcoin president.” He praised the original digital asset in his July speech in Nashville, saying “Bitcoin stands for freedom, sovereignty and independence from government, coercion and control.” He’s said he wants to make the US “the crypto capital of the planet and the Bitcoin superpower of the world.” He called crypto “critical to the future of American competitiveness” in a December post on Truth Social, the social media platform owned by Trump Media & Technology Group Corp.
Trump’s embrace of the industry helped him land support from prominent crypto boosters like venture capitalists Marc Andreessen and Ben Horowitz, and the billionaire twins Tyler and Cameron Winklevoss.
Elon Musk, who riffed on crypto on Saturday Night Live and is often associated with memecoin speculation, donated $238.5 million to America PAC, a super political action committee supporting Trump. Andreessen and Horowitz each donated $2.5 million to the Right for America pro-Trump super-PAC. The crypto industry also spent $135 million, largely through the Fairshake PAC, backing candidates in the November elections — most of whom won their races.
What crypto projects is Trump personally involved with?
Trump and some of his family members are promoters — and beneficiaries — of World Liberty Financial, a crypto project that has its own token named WLFI. More than 16,000 people were holders of the World Liberty Financial token as of the end of October, just weeks after the project backed by Trump and his sons began selling the cryptocurrency to accredited investors on its platform.
After crypto entrepreneur Justin Sun announced in November that he would invest $30 million into WLFI tokens, the Trump family stood to collect at least $15 million. Trump has also ventured into other digital assets. He has released four collections of nonfungible tokens featuring heroic images of himself in different costumes and settings. The most recent collection of NFTs, which he dubbed digital trading cards, sold in August for $99 each on the primary market.
Why have crypto prices surged?
Bitcoin, the largest token by market capitalization, saw price gains of more than 50% from the election through mid-December, and other cryptocurrencies have also surged. Prices have risen on the assumption that Trump and the incoming Republican administration will create a more friendly regulatory environment. Investors in the crypto industry say this should lead to more people and institutions investing in the space, while also decreasing the risk of enforcement actions by the US Securities and Exchange Commission.
Trump has also enlisted crypto champions for important roles. Musk and Vivek Ramaswamy, for example, will lead an advisory group called the Department of Government Efficiency (DOGE). DOGE shares a name with a memecoin — Dogecoin — with which Musk is popularly associated.
Demand for Bitcoin exchange-traded funds has also helped to raise crypto prices, with $110 billion invested in US Bitcoin ETFs as of Jan. 8 — just a year after their debut.
What has Trump endorsed on the crypto front?
Trump had pledged to fire SEC Chair Gary Gensler on day one of his presidency; Gensler pre-empted any such attempt when he announced his intention to resign before Trump was inaugurated.
Under Gensler’s tenure, the SEC filed legal complaints against cryptocurrency companies such as Coinbase Global Inc. and Binance Holdings Ltd. for selling what the regulator alleged were unregistered securities.
Trump nominated crypto supporter Paul Atkins to replace Gensler, and that announcement helped Bitcoin climb above $100,000 for the first time.
The president-elect nominated David Sacks to the newly created position of artificial intelligence and crypto czar. Trump is also creating a crypto advisory group, made up of backers of the industry. Trump said in a December Truth Social post that Bo Hines will be the executive director of the Presidential Council of Advisers for Digital Assets, reporting to Sacks.
Trump said he plans to have the US government keep rather than sell Bitcoin holdings seized by law enforcement, making these assets the basis of a so-called strategic Bitcoin stockpile. Trump has also said he would like all Bitcoin to be mined in the US; this promise may prove difficult to fulfill due to the reality of decentralized networks and cheaper costs of energy in other parts of the world.
What’s the regulatory environment been like?
The SEC under Gensler had made clear it considers most digital assets to be securities, a designation that brings with it an extensive set of requirements. The top US banking regulators separately issued a sweeping statement in early 2023 on the dangers of crypto. The collapse in November 2022 of the FTX crypto exchange left customers around the world facing the potential for billions of dollars in losses.
Legislation proposed in 2022 to tighten US oversight of crypto has stalled in the Senate’s banking committee and faces an uncertain future. The bill would give the Commodity Futures Trading Commission additional authority to oversee digital coins that are deemed to be commodities — likely providing the regulator direct oversight of Bitcoin and Ether, the second-largest token by market capitalization. Currently the agency’s remit is mostly limited to crypto derivatives. Under the bill, the SEC would police digital coins that are used to raise money from the public, providing supervision similar to its oversight of a stock offering.
What does the crypto industry want from Trump?
Many in the industry want a more hands-off regulatory approach and approval of additional crypto ETFs. The crypto industry is also looking for specific legal language on what exactly crypto is and how the industry should operate legally, which could reduce worries of lawsuits from government agencies.
Advocates would also welcome having cryptoassets classified as commodities rather than securities, which would then make them fall under the remit of the CFTC. Many in the crypto industry believe the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency have forced banks to limit the industry’s access to their services, a posture they would like to see Trump end.
Some in the crypto industry would also like to see Trump not only follow through on his plan to introduce a strategic US Bitcoin stockpile, but also have the government buy more of the token for the reserve.
US Senator Cynthia Lummis has written a bill that would order the Federal Reserve to sell some of its gold certificates to fund those purchases. Bets on Polymarket, a predictions platform popular with the crypto crowd, currently imply only about a 30% probability that a reserve will be created in Trump’s first 100 days in office.
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