Early on Monday, the price of bitcoin soared past $109,000, coinciding with the impending inauguration of President-elect Donald Trump. The cryptocurrency market is buzzing with optimism, anticipating that Trump will soon introduce measures to foster its growth after regaining the presidency.
Trump, who once expressed skepticism about bitcoin, has undergone a significant change in stance. He now actively supports cryptocurrencies, having launched a new venture in this field and pledged during his campaign to position the United States as the “crypto capital” of the globe. His commitments involve establishing a U.S. reserve of cryptocurrency, implementing regulations favoring the industry, and appointing a dedicated crypto “czar.”
During a bitcoin conference last summer, Trump assured attendees, “You’re going to be very happy with me.”
Bitcoin, launched in 2009, remains the most widely used cryptocurrency, functioning as a decentralized digital currency exempt from control by banks or government entities. Over time, cryptocurrencies have fluctuated between obscurity and mainstream acceptance, often marked by extreme volatility. Despite their controversial reputation, especially due to association with crime and fraud, cryptocurrencies have displayed resilience, bouncing back from significant downturns. Enthusiastic investors in the crypto sector, feeling marginalized under the Biden administration, supported Trump in the lead-up to the election. Bitcoin experienced a remarkable increase in value following Trump’s success, hitting over $100,000 last month before retreating briefly to around $90,000. Just before his inauguration, it surged by over $9,000, according to CoinDesk.
Two years earlier, bitcoin was valued around $20,000, illustrating its dramatic climb. Trump’s cabinet selections include numerous crypto advocates, with key posts in the Treasury and Commerce departments, as well as the Securities and Exchange Commission, being filled by individuals friendly toward the cryptocurrency landscape.
To mark this shift, industry heavyweight hosted the inaugural “Crypto Ball” recently, celebrating what they termed the first “crypto president.” Tickets for the event sold out rapidly, priced in the thousands.
In anticipation of his administration’s roll-out, here are some early actions Trump is likely to undertake:
**CRYPTO COUNCIL**
As a candidate, Trump pledged to establish an advisory council focused on developing straightforward regulations for cryptocurrencies within his first 100 days in office. Although specifics about the council remain vague, his post-election announcement of tech leader David Sacks as the crypto “czar” indicated his commitment to the cause. Furthermore, Trump recently named Bo Hines, a former congressional candidate, as the executive director of the “Presidential Council of Advisers for Digital Assets.”
At the previous bitcoin conference, Trump informed supporters that any new regulations would be crafted by those who support the industry rather than oppose it. His pick for the SEC, Paul Atkins, has been a noted proponent of digital currencies. Investors in the crypto realm have expressed frustration with what they perceive as a hostile stance from the Biden administration, attributing this to stringent enforcement actions that have hindered innovation, particularly from the previous SEC chair, Gary Gensler.
Peter Van Valkenburgh, executive director of the advocacy group Coin Center, commented that expectations from the Trump administration include a more favorable tone from the SEC. Gensler recently took pride in his agency’s efforts to regulate the sector, which he argued has been plagued by misconduct.
**STRATEGIC BITCOIN RESERVE**
Trump further assured the public that under his presidency, the U.S. government would accumulate a stockpile of bitcoin similarly to its gold reserves. He expressed that the government would retain rather than auction the cryptocurrency it captures through law enforcement.
Proponents have circulated a draft executive order proposing a “Strategic Bitcoin Reserve,” which would be managed by the Treasury Department’s Exchange Stabilization Fund, targeting an initial holding of at least $21 billion worth of bitcoin. Senator Cynthia Lummis of Wyoming has even introduced legislation to mandate such a stockpile, suggesting it would diversify the government’s assets and provide a buffer against financial uncertainties. Detractors point out that bitcoin’s inherent volatility may render it an unsuitable reserve asset.
The establishment of such a reserve could represent a significant move toward normalizing and legitimizing bitcoin in the eyes of skeptics, according to Zack Shapiro, an attorney leading policy at the Bitcoin Policy Institute.
**ROSS ULBRICHT**
During this year’s bitcoin conference, Trump garnered applause by reaffirming his intention to commute Ross Ulbricht’s life sentence. Ulbricht is the founder of Silk Road, a marketplace that facilitated drug sales via cryptocurrency. His case has galvanised support within some crypto advocacy and libertarian circles, fueling claims that government investigations exceeded their bounds.
