Proposed Changes in Cryptocurrency Regulations by the Trump Administration
The Trump Administration has introduced potential reforms that could fundamentally alter the cryptocurrency environment in the United States. The viewpoint of former President Donald J. Trump regarding digital currencies has undergone a notable transformation since his initial term. While he expressed doubts about cryptocurrencies back in 2019, his attendance at a Bitcoin conference in June 2024 marked a pivotal moment. During that event, Trump declared his ambition to position the U.S. as the “crypto capital of the planet,” committing to stockpiling cryptocurrencies, ensuring all crypto mining occurs within the country, and promising to dismiss Gary Gensler, the then-current Chair of the U.S. Securities and Exchange Commission (SEC). Currently, the total market capitalization of cryptocurrencies exceeds $1 trillion, with Bitcoin’s value surging by 40% since Trump’s election. Given the growing importance and widespread acceptance of cryptocurrencies, it is crucial to examine the regulatory adjustments that may occur should Trump return to power.
Leadership Changes at the SEC
President Trump has made it clear he intends to replace Gensler “on day one,” coinciding with the SEC’s announcement that Gensler’s resignation will take effect on January 20, 2025. Under Gensler’s leadership, the SEC prioritized enforcement actions against fraud and violations of securities laws, targeting several prominent cryptocurrency firms claiming to be market makers, as well as various celebrities. On January 7, 2025, Trump nominated Paul Atkins to lead the SEC. Atkins previously served as a commissioner from 2002 to 2008, where he gained a reputation for opposing enforcement initiatives. Currently, he is the CEO of Patomak Global Partners, a consulting firm that advises multiple cryptocurrency businesses. The SEC under Atkins has already taken steps to shift its focus from enforcement-based regulation, with requests for litigation pauses against major players like Binance and Coinbase as it seeks potential resolutions.
Reclassification of Digital Assets
One significant regulatory change anticipated in the Trump Administration is the reevaluation of how digital assets are classified. Gensler maintained that most cryptocurrencies should be deemed securities. In contrast, the U.S. Commodity Futures Trading Commission (CFTC) has categorized many digital currencies, including Bitcoin, as commodities. This classification is critical; if cryptocurrencies are classified as securities, they would be subjected to stricter regulations, possibly limiting their accessibility within the financial sector. The Trump Administration appears to advocate for regulatory clarity in this area, leaning towards the CFTC’s classification of cryptocurrencies as commodities. This shift could result in an expanded role for the CFTC in overseeing various aspects of the digital asset market, including the spot trading of Bitcoin and Ethereum, while the SEC’s influence may wane.
Leadership at the CFTC
On February 13, 2025, Trump nominated Brian Quintenz to head the CFTC. Having served as a commissioner from 2017 to 2021, Quintenz is a known supporter of cryptocurrencies, with his most recent role as head of policy for a cryptocurrency venture capital firm. The tax implications surrounding cryptocurrencies have also sparked considerable debate, with some proponents advocating for the reduction or elimination of capital gains tax on digital assets to stimulate investment and usage.
Efforts for Clearer Regulatory Guidelines
In response to the ambiguities surrounding Decentralized Finance (DeFi) platforms, which leverage blockchain technology for peer-to-peer financial transactions, regulators and lawmakers have been working towards establishing clearer guidelines. Trump’s executive order to form a “Presidential Working Group on Digital Asset Markets,” along with the SEC’s task force aimed at crafting a comprehensive regulatory framework, illustrates this movement towards clarity. These efforts could stimulate innovation by alleviating the regulatory pressures that new companies face in defining their legal responsibilities.
Balancing Privacy and Regulation
While the decentralized characteristics of many digital assets present challenges in tracking illegal transactions, stringent anti-money laundering measures could impede the broader acceptance of cryptocurrencies. The Trump Administration may alter the current balance between privacy rights and anti-money laundering regulations by revising or easing certain existing rules to foster cryptocurrency adoption while still addressing illicit activities.
Opposition to Central Bank Digital Currency
President Trump has also expressed strong opposition to the establishment of a central bank digital currency (CBDC)—a proposed digital version of the U.S. dollar—asserting that he will “never allow” such a currency to be created. However, he has indicated support for the “safe and responsible expansion of stablecoins,” aiming for regulatory clarity to enhance their safety and adoption. Stablecoins, which are often pegged to the U.S. dollar, tend to be less volatile and are viewed by proponents as a potential regular medium of exchange.
Trump’s Vision for U.S. Bitcoin Mining
Another component of Trump’s plan to secure the U.S. position as the “crypto capital of the planet” includes his commitment to ensure that all “remaining Bitcoin” is “made in the U.S.A.” Currently, the U.S. accounts for approximately 37% of global Bitcoin mining, while China, despite its ban on bitcoin mining since 2021, still represents about 21%. Trump’s objectives are closely linked to energy policy, as he aims for the U.S. to achieve “energy dominance,” which may involve providing energy incentives or lessening regulatory barriers related to energy consumption and infrastructure.
Proposing a U.S. Bitcoin Reserve
Additionally, several leaders in the cryptocurrency market are championing the establishment of a U.S. Bitcoin reserve. On July 31, 2024, Senator Cynthia Lummis (R-Wyo.) introduced the Bitcoin Act of 2024, which proposes the creation of a strategic Bitcoin reserve similar to the U.S. petroleum reserve. This legislation would obligate the federal government to acquire one million Bitcoins—around 5% of the total circulating supply—over a five-year period.
Potential Impacts of Regulatory Changes
The proposed adjustments by the Trump Administration could significantly transform the cryptocurrency landscape in America. A clearer regulatory environment, combined with reduced litigation risks, economic incentives for digital asset utilization through tax reforms or energy policies, and direct government acquisitions of digital assets, could catalyze greater adoption and innovation within blockchain technology. Enhanced regulation of digital assets might also mitigate investment risks for cryptocurrency companies, who would face less fear of enforcement actions, and investors alike. There is a possibility that institutional adoption of cryptocurrency could rise in the financial sector, with banks and hedge funds potentially developing their own digital assets to make these resources more accessible to a broader audience.
Reinvigorating the U.S. Crypto Industry
In recent years, numerous digital asset firms have relocated outside the United States, seeking more favorable regulatory climates and taking valuable talent with them. A shift in regulatory stance, along with the overall change in government sentiment brought about by the Trump Administration, could encourage these professionals to return and contribute to the development of blockchain technologies within the U.S.
