On early Monday, the value of bitcoin soared to approximately $109,000, coinciding with the impending inauguration of President-elect Donald Trump. This surge comes as the cryptocurrency sector anticipates that Trump will implement pro-crypto measures upon his return to the presidency.
In the past, Trump expressed skepticism towards bitcoin and labeled it a potential scam. However, he has since adopted a more favorable stance towards cryptocurrencies, demonstrating enthusiasm for the sector. He has initiated a cryptocurrency venture and pledged during his campaign to transform the U.S. into the global “crypto capital,” taking significant steps early in his administration.
Some of his proposals include the establishment of a U.S. cryptocurrency reserve, implementation of regulations supportive of the industry, and the appointment of a dedicated “crypto czar.” Trump notably assured cryptocurrency advocates at a bitcoin conference last summer: “You’re going to be very happy with me.”
Bitcoin, which emerged in 2009 as a decentralized form of digital currency independent of banks or governmental oversight, is the leading cryptocurrency. Over the years, cryptocurrencies have experienced fluctuating popularity, shifting from niche investments to more mainstream financial assets.
Despite facing significant skepticism, especially regarding their use in illicit activities and their reputation for volatility, cryptocurrencies have managed to survive numerous market corrections. Following Trump’s electoral victory, bitcoin’s price rose to over $100,000 for the first time last month after being around $90,000 and witnessing an increase of over $9,000 on the Monday preceding the inauguration.
Two years prior, bitcoin’s trading price was roughly $20,000. Now, with an administration beginning to take shape, Trump has selected several notable figures who are advocates for cryptocurrencies to serve in key regulatory and cabinet roles, including positions within the Treasury, Commerce Department, and Securities and Exchange Commission (SEC).
In a celebratory move, crypto proponents organized a “Crypto Ball” event to mark the inauguration of what they call the first “crypto president,” where tickets sold for several thousand dollars, indicating a strong interest in the intersection of politics and cryptocurrency.
Upon assuming office, Trump is expected to act on his commitment to establish a special advisory council aimed at formulating “clear” and “straightforward” regulations for the digital currency industry within his first 100 days. While specific details regarding the council’s structure and members remain ambiguous, Trump has appointed David Sacks, a tech executive, as the administration’s crypto czar, and also designated Bo Hines as the executive director of the “Presidential Council of Advisers for Digital Assets.”
Last year, Trump assured crypto supporters that forthcoming regulations would be crafted by individuals who are supportive of the cryptocurrency industry. His selection for SEC commissioner, Paul Atkins, is known for his advocacy of digital assets, drawing a distinction from the current SEC chair, Gary Gensler, who has faced criticism for his stringent regulatory stance.
Many in the crypto space expressed dissatisfaction with what they perceived as excessive enforcement by the Biden administration, which they believe curtailed innovation in the sector. Peter Van Valkenburgh, executive director of Coin Center, suggested that a shift in tone and approach is one of the expected outcomes from Trump’s administration.
Additionally, Trump has promised to create a strategic reserve of bitcoin for the U.S. government, mirroring existing practices with gold reserves. He emphasized during the summer’s bitcoin conference that rather than auctioning seized bitcoin, the government should retain these assets to build a robust reserve. Proposed draft legislation suggests the Treasury Department should manage a “Strategic Bitcoin Reserve,” aiming to hold a minimum of $21 billion in bitcoin.
Further, Republican Senator Cynthia Lummis has advocated for legislation that mandates the U.S. government to maintain a stockpile of bitcoin, arguing that it would enhance the diversification of government assets while others caution against its volatility as a reserve asset.
Trump also reiterated his intention to commute the life sentence of Ross Ulbricht, the founder of the notorious online drug marketplace Silk Road, which facilitated transactions through cryptocurrencies, a pledge that received enthusiastic support from the crypto community during the year’s bitcoin conference. Ulbricht’s case remains a point of contention among advocates and activists who argue that the government’s pursuit in this matter was overreaching.
