As President-elect Donald Trump prepares to take office Monday, the cryptocurrency industry is feeling particularly optimistic. Trump embraced the crypto industry during his presidential campaign, and many wealthy investors with ties to the industry supported him.
Trump was greeted by a lengthy applause when he took the stage at the Bitcoin conference in Nashville in July. For nearly an hour, he outlined his policies on cryptocurrency, suggesting that he would "embrace" the industry and make sure the rules are "written by people who love your industry, not hate your industry."
“The United States will be the crypto capital of the planet and the Bitcoin superpower of the world,” he said.
Now six months later, Trump is on his way back to the White House and is expected to be a major ally to the budding industry. He has tapped several crypto-friendly business figures to fill key roles in his administration, including Paul Atkins to lead the Securities and Exchange Commission and venture capitalist David Sacks as his AI and crypto czar. Tech billionaire Elon Musk, a cryptocurrency enthusiast, has also become a major ally of Trump and is expected to play a key role in influencing policy.
Cryptocurrencies are digital coins that are bought or sold online. Every transfer is tracked on a public ledger called a blockchain. These assets rise and fall in price and have at times fluctuated dramatically. Unlike conventional currency, cryptocurrency is decentralized, meaning it is not controlled by a bank or government.
“It will be a really interesting time,” said Hanna Halaburda, a crypto expert at New York University.
Halaburda said cryptocurrency investors have reacted in a big way to Trump's election. In the weeks and months after he won, many crypto prices skyrocketed, including Bitcoin, which soared to a record $108,000 in December. Halaburda said those spikes are an indication that many in the industry believe that the next four years will bring less regulation and more innovation.
“Price of cryptocurrency is almost entirely and, in some cases entirely, based on vibes ... ," she said. “There will be new innovation. There will be new experimentation. And there will be new excitement."
Trump's views on cryptocurrency appear to stand in major contrast to the tough stance taken by the Biden administration. Biden’s SEC chair, Gary Gensler, was aggressive in cracking down on crypto companies, bringing lawsuits for fraud and money laundering. When Trump pledged at the Bitcoin conference to fire Gensler upon taking office, he received the loudest applause of the night, a sign that Gensler has become enemy No. 1 for many in the industry.
"I didn't know he was that unpopular," Trump joked after hearing the applause.
Gensler won't be giving Trump the opportunity to fire him, announcing he'll be resigning from office at noon Monday, right as Trump, whose family launched its own cryptocurrency venture in September, is sworn in as president. In an exit interview with Yahoo Finance, Gensler didn't back down from his aggressive stance toward cryptocurrency, blasting many digital assets as "highly speculative."
"You have to question what is there true use case," he said. "What is their value proposition?"
Crypto interests played a big role in the presidential election, funding many crypto-friendly candidates. According to the watchdog group Open Secrets, three pro-crypto Super PACs spent more than $130 million to get their supporters elected.
For example in Ohio, $40 million went to Republican crypto supporter Bernie Moreno, who went on to unseat longtime Democrat Sen. Sherrod Brown. The defeat of Brown was a big win for the crypto industry, as Brown chaired the Senate Banking Committee and favored tougher crypto regulations.
"This is going to be the most pro-Crypto government we’ve ever seen," said Kristin Smith of the Blockchain Association, which advocates for a "pro-innovation policy environment for the digital asset economy."
Smith said that many within the industry welcome some regulation, in particular over third-party exchanges. Smith said proper regulations can help prevent fiascos like the collapse of the crypto exchange FTX in 2022, after its CEO, Sam Bankman-Fried, funneled consumer money into other investments. Smith argued proper regulations can root out bad actors without crippling the new industry.
“This is a very exciting time to sort of cement U.S. leadership in this space by having the right regulatory framework in place,” she said.
Note: This article was updated to correct a typo.