How Trump Could Change Crypto

The industry had championed his candidacy and donated millions to his campaign as well as a host of down-ballot races. Analysts expect a more permissive environment for crypto innovation and regulation as a result.

The election outcome might lead to a full Republican takeover of the U.S. government, as it appears that the White House, Senate, and possibly the House will be under their control. This has left the crypto industry elated, as they have been at odds with the Biden Administration, particularly the Securities and Exchange Commission, for four years regarding digital assets, but are hopeful about the election results.

According to CoinDesk analysts and other experts, here’s a possible interpretation of how the new political environment might impact regulations, resources, and significant ventures.

Bitcoin to $100K and beyond

Yesterday’s election results have boosted Bitcoin, as its price surged to a record high shortly following the closing of polls. According to CoinDesk senior analyst James Van Straten, this upward trend may continue even further.

Van Straten stated that Bitcoin (BTC) is currently trading below its inflation-adjusted price of approximately $77k, making it a potentially affordable investment opportunity. Moreover, Google search traffic related to Bitcoin over the past year has reached low levels, indicating that the market isn’t experiencing exuberance or fear of missing out (FOMO). As we approach the traditionally bullish fourth quarter, there are still two weeks remaining for institutional investors to disclose their Bitcoin Exchange-Traded Fund (ETF) holdings by the Nov. 14 deadline in their 13-F filings. Lastly, MicroStrategy’s recent announcement of a massive at-the-market equity offering could serve as a catalyst for other institutions to follow suit and invest in Bitcoin.

There are caveats, though.

In simpler terms, “Van Straten warned that if Trump’s proposed tariffs on China are implemented, consumer prices might rise, leading to an increase in bond yields as we see now. This could keep interest rates high and potentially lead to further rate hikes. Such a scenario could dampen investments, including bitcoin, which are considered risky.

Good for Tether (USDT), less so for Circle (USDC)

Winning the presidency benefits Tether, the company behind the largest stablecoin USDT, due to its association with Cantor Fitzgerald. This financial powerhouse oversees more than $100 billion in U.S. Treasuries for Tether. Notably, Howard Lutnick, CEO of Cantor Fitzgerald, has been a strong supporter of Trump during his presidential campaign and serves as co-chair on the President-Elect’s transition team.

According to reports, Tether is being scrutinized for allegedly breaching sanctions and anti-money laundering regulations. However, just because Trump has been elected doesn’t automatically mean the investigation will disappear; it might simply be less vigorously pursued compared to under the Biden administration, as suggested by CoinDesk markets reporter Tom Carreras.

Carreras stated that Tether is expected to continue expanding and solidifying its dominance in the stablecoin market. With a market capitalization of $120 billion, USDT is approximately three times larger than its closest competitor, Circle’s USDC. “With Trump’s victory, there seems to be no limit for Tether’s growth, which might make it even more challenging for Circle to compete with its rival.

However, Circle, the US-based stablecoin issuer, might have a more achievable route toward becoming a public company, according to Carreras’ assessment.

Good for solana (SOL), less so for ether (ETH)

Solana (SOL), the third largest cryptocurrency, would also benefit from the election outcome.

As an analyst, I’m expressing my perspective on the upcoming change of leadership at the SEC. It’s reasonable to anticipate that the incoming chairperson might not exhibit the same level of adversity towards cryptocurrencies as Gary Gensler has shown. This potential shift could lead to a more favorable regulatory environment for crypto, including financial firms filing for spot SOL exchange-traded funds (ETFs). If this occurs, there’s a good chance that Solana’s regulatory uncertainty will be addressed, paving the way for larger interactions between financial institutions and the network.

A friendlier Securities and Exchange Commission (SEC) might not limit Ethereum as the sole smart contract platform with a U.S. spot ETF for its token (ETH), or the only one with regulatory clarity about its status as a commodity, according to Carreras. This implies that other platforms like Solana could also potentially have similar opportunities. In simpler terms, we might see increased competition between Ethereum and Solana, as both may be vying for a level playing field.

More market breadth

Thus far this year, the increase in crypto prices has primarily been observed in Bitcoin and a limited number of well-known assets. Out of the 20 assets included in the CoinDesk 20 index, only six were experiencing gains as of November 1 (Bitcoin Cash, Render, Near, Bitcoin, Ether, Solana).

Currently, after the recent election, Andy Baehr, the managing director at CoinDesk Indices, anticipates a wider surge of positive momentum.

A year ago, optimism about Bitcoin ETFs was fueling markets and positive feelings, with Bitcoin taking the lead, according to Baehr. This year, however, there’s hope for more robust regulatory frameworks that could pave the way for a broader use of multiple digital assets. Fast blockchains like Layer 1 and Layer 2, as well as DeFi, are expected to benefit from this improved market structure, which may encourage growth opportunities.

Over the last 24 hours (up until 11.30 am Eastern Time), the CoinDesk 20 Index has experienced an 8% increase, primarily driven by gains in Uniswap, Solana, and Avalanche.

DeFi to benefit, led by Uniswap

The prices of assets within the decentralized finance sector have remained fairly low during this cycle, but there’s a strong possibility that they might pick up soon.

In his political platform, Donald Trump stated that he aims to establish the United States as a significant center for digital currencies. This could potentially lead to more advantageous laws regarding Decentralized Finance (DeFi), according to Shaurya Malwa, CoinDesk’s deputy managing editor for data and tokens.

The candidate’s stance suggests a shift in policy aimed at easing regulations on cryptocurrency, which might mean smoother sailing for Decentralized Finance (DeFi) platforms in the U.S. This could be achieved by providing clearer directives regarding token sales, and possibly classifying certain tokens as commodities instead of securities under SEC jurisdiction.

As an analyst, I’ve noticed a positive response from traders regarding President Trump’s tenure. Specifically, Uniswap’s UNI token has experienced a 15% surge over the past 24 hours, which seems to have alleviated concerns about an ongoing SEC lawsuit that accused the protocol’s creators of selling securities within the U.S.

Goodbye Gensler ?

In the speech where he accepted the position, Trump expressed his intention to lead based on a straightforward principle, “Actions spoken, actions delivered.” This statement, if true, might signal a wave of significant transformations in the realm of digital assets, as suggested by analysts at WU Blockchain.

Typically, SEC chairs resign after a new president takes office. Gary Gensler, who has faced widespread criticism in the crypto community due to his tough stance on enforcement against major cryptocurrency companies, is anticipated to step down by the end of this year; however, his successor’s appointment may take time, as reported by Jesse Hamilton from CoinDesk. Despite this, it should be noted that Gensler’s term doesn’t expire until January 5, 2026, and it is not certain that he will be immediately removed from office.

In a recent piece, Hamilton stated that another term for President Donald Trump wouldn’t necessarily mean the end of Gensler’s role. If he chose to hold his ground, he could complete his tenure as commissioner, ensuring a Democratic majority at the agency until the incoming president makes appointments and the Senate confirms them.

Back in May, Trump expressed his intention to reduce the sentence of Ross Ulbricht, the founder of Silk Road, who is currently serving a life term. In contrast, he publicly voiced his disapproval towards a “digital dollar” or a central bank digital currency in January, aligning with numerous other Republican contenders who have expressed similar views.