Crypto Regulation for a New Era: Trump’s Plan to Lead the Digital Economy
In Brief
The 2024 U.S. presidential election ushered in a pro-crypto government, setting the stage for the U.S. to lead in blockchain, cryptocurrency, and AI through strategic, balanced policies.
The 2024 U.S. presidential election marked a pivotal moment for the cryptocurrency industry. With a president-elect who has declared his vision to make the United States the global hub for blockchain technology, cryptocurrency, and artificial intelligence, the stage is set for a transformative era.
Coupled with a Congress that now includes over 290 pro-crypto members, the industry finds itself supported by a pro-crypto government.
This newfound support could cement the U.S. as a leader in technology and innovation. However, the road ahead requires not just enthusiasm but carefully crafted policies that balance regulation, innovation, and economic opportunity.
The #1 Priority
Preventing harmful actions by bad actors should remain a core objective of regulatory efforts. However, the enforcement-driven strategies adopted during the Biden administration often muddied regulatory lines, consumed significant taxpayer resources, and cost U.S. businesses over $400 million, according to industry estimates.
Some of the worst financial scams the country has ever seen went unpunished as authorities fought over who had authority. The solutions to these problems lie in a more strategic approach to enforcement and a reorganization of priorities rather than in new legislation or regulations.
Clear Regulations
For the crypto industry to fully thrive, policies that reflect a deep understanding of the complexities inherent in decentralized blockchain technologies are required. A critical guiding principle must be that while companies, institutions, and their activities should face appropriate regulation, the technology itself should remain unregulated.
This principle mirrors how the internet is treated today: it’s not illegal to create a website or develop an app, but how those platforms are utilized is subject to legal scrutiny. As highlighted by Judge Katherine Polk Failla on the lawsuit against Uniswap, imposing liability on blockchain technologies for their misuse is like holding payment platforms like Venmo accountable for criminal transactions facilitated through their services.
What the crypto industry urgently needs is a foundation of clear, transparent, and consistent regulations, underpinned by legislation rather than discretionary enforcement. Key elements, such as robust client asset protections and detailed disclosures, should be prioritized to foster confidence and security. A period of unparalleled development may be upon us, ushering in a new breed of trailblazing entrepreneurs and institutional actors free from the personal dangers and legal ambiguity that have hindered the industry’s advancement.
Regulators cracked down hard on cryptocurrency businesses when the Biden administration was in office in an effort to reduce market instability and criminal activity. In contrast, President-elect Donald Trump has pledged to take a more supportive stance, signaling a departure from restrictive measures. His commitment is already taking shape with the appointment of crypto-friendly figures like Paul Atkins as the incoming Securities and Exchange Commission chair and David Sacks as the White House’s designated crypto policy leader.
In a statement, Trump transition team spokesperson Brian Hughes underscored the administration’s commitment, noting that efforts to “stifle” innovation within Washington’s bureaucratic landscape are coming to an end. Trump, Hughes promised, is determined to champion American leadership in the burgeoning crypto sector, paving the way for the United States to become a global hub for blockchain-driven innovation.
The National Bitcoin Reserve
One intriguing proposal under consideration is the establishment of Bitcoin as a strategic reserve asset. A draft executive order, prepared by an industry group, outlines a plan for the Treasury Department to amass a $21 billion national Bitcoin reserve.
Advocates argue that this would position the U.S. ahead of global competitors in monetizing Bitcoin and prevent future economic disadvantages. The idea highlights the increasing awareness of Bitcoin’s potential as a geopolitical financial tool.
There is ongoing debate among experts regarding whether President-elect Donald Trump could use executive powers to establish a national cryptocurrency reserve, potentially through the Treasury Department, or if such a move would require Congressional approval. The idea, while ambitious, has sparked significant discussion within the industry and beyond.
One prominent advocacy group, the Bitcoin Policy Institute, has already taken proactive steps by drafting a potential executive order that could serve as a blueprint for creating a federal Bitcoin stockpile. The draft outlines a plan for the United States to designate Bitcoin as a strategic reserve asset, with the Treasury Secretary directed to allocate $21 billion over a year to build this reserve.
Zack Shapiro, head of policy at the Bitcoin Policy Institute, emphasized the urgency of taking action, arguing that the U.S. must act swiftly to stay ahead of global competitors in leveraging Bitcoin’s value. He pointed out the risks of delaying such efforts, warning that rivals could capitalize on the cryptocurrency’s rising price while the United States lags behind. However, Shapiro declined to confirm whether the group had formally shared their draft with Trump’s transition team, leaving the proposal’s future uncertain.
Crypto’s Maturing Ecosystem
Since the first launch of Bitcoin throughout the financial crisis of 2008, the cryptocurrency sector has seen significant growth. What started as a unique digital currency has developed into a complex ecosystem driven by smart contracts, decentralized finance (DeFi), and other blockchain-based services.
Specifically, stablecoins have become an integral element of this ecosystem. These dollar-pegged digital assets today comprise a $200 billion industry and play a significant role in expanding the U.S. dollar’s impact as the worldwide reserve currency. Stablecoin issuers have even become large holders of Treasury notes, emphasizing their incorporation into conventional financial institutions.
The industry’s 24/7 marketplaces also show how outdated banking systems can’t keep up with the constant volume of business. By contrast, public blockchains effortlessly support uninterrupted trade, delivering a look into the future of finance.
The Role of Artificial Intelligence
The accelerating integration of artificial intelligence (AI) with blockchain technology opens up new frontiers for innovation. The combination of transparency, openness, and scalability inherent in both technologies could lead to transformative solutions.
For instance, applications like the World app allow users to verify their identity anonymously and securely, showcasing the potential for responsible innovation. As AI continues to advance, its intersection with blockchain could unlock unprecedented opportunities in sectors ranging from finance to healthcare.
All Eyes on Executive Orders
Donald Trump has pledged to address the barriers crypto firms face within the traditional financial system, particularly banks’ reluctance to engage due to regulatory scrutiny. While regulators claim banks can work with compliant crypto companies, many in the industry argue that oversight has created significant hesitancy.
Trump is expected to issue an executive order encouraging more collaboration, signaling his administration’s support. However, experts like Jonah Krane, a partner at Klaros Group, note such an order would lack legal force since federal bank regulators operate independently.
Additionally, Trump plans to establish a dedicated crypto industry council, with discussions underway regarding its structure and staffing. Drawing inspiration from past executive actions, he may also issue a directive to reshape crypto regulations.
This could parallel his 2017 banking reform order, asking agencies to reassess outdated rules. While immediate policy changes are unlikely, these steps signal a clear shift toward accommodating crypto and fostering its integration into the financial mainstream.
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