Title: How President-Elect Trump Could Spice Up This Holiday Season for Bitcoin, XRP, and Cryptocurrencies
Cryptocurrency enthusiasts are riding a wave of success, with Bitcoin, the leading digital coin, posting impressive gains all year. Yet, it's not just Bitcoin that's seeing an uptick - Trump's victory in the elections has sparked a buying frenzy across the crypto landscape, from Dogecoin to XRP. Here's why this season could be particularly fruitful for Bitcoin and its fellow cryptos.
A Regulatory Climate Shifts in Favor
Trump pledged to support crypto stakeholders if elected, and he's held true to his word so far. Several regulatory developments, mostly favorable towards the crypto sphere, have transpired during his tenure.
For instance, Gary Gensler, chair of the Securities and Exchange Commission (SEC), announced his intention to step down once Trump assumed office. The crypto community and Gensler had a contentious history, with the SEC's lawsuit against Ripple setting the stage for a long-standing fight between the crypto sector and the SEB over the regulation of various cryptocurrencies. In March 2022, the SEC released the Staff Accounting Bulletin (SAB) 121, a controversial rule that required banks to account for crypto assets as liabilities on their balance sheets. Trump's departure may lead to the rescission of this ruling, along with the Ripple lawsuit, which has caused contention in the crypto sector.
Additionally, reports surfaced that the Trump administration plans to delegate regulation of Bitcoin and Ethereum spot markets to the Commodities Futures Trading Commission (CFTC). The crypto community prefers regulation by the CFTC as it is less complex and easier to comply with than the SEC's stringent securities laws. With Trump's support in Congress, easier regulatory measures could theoretically expedite crypto legislation.
Expect More Wins for Cryptos
The regulatory environment under a second term of Trump could be even more advantageous for cryptocurrencies. Here are some potential developments that could unfold:
Wider Liquidity through Spot ETFs
With a friendlier SEC, crypto enthusiasts might finally see more conventional investment brokerages like Robinhood offer various cryptocurrencies and the approval of spot ETFs for tokens like XRP and Solana. However, an overbought market might come into play, curtailing the rally's momentum heading into 2025.
More Support from Congress
The recently elected Republican majorities in Congress should further propel crypto legislation forward, as Coinbase's Chief Policy Officer Faryar Shirzad suggests. Two crucial bills, including the Financial Innovation and Technology for the 21st Century Act, are moving through Congress, which could provide much-needed clarity for the crypto sector.
Ban on Central Bank Digital Currencies (CBDCs) and Emphasis on Stablecoins
Under a second Trump term, CBDCs may face a ban, while stablecoins gain traction as a preferred digital asset due to their reduced volatility and potential use cases. This regulatory shift could attract more interest from investors and business entities who are wary of the uncertainty and volatility that plague the crypto space.
Task Force on Digital Assets
The formation of a task force led by SEC Commissioner Hester Peirce, known as “Crypto Mom,” signals that the SEC is becoming more open-minded in its approach to crypto regulation. By providing clearer guidelines and reducing uncertainty, the task force may help alleviate some of the concerns faced by crypto companies and give a much-needed boost to the sector.
DeFi and Tax Compliance
The SEC's classification of DeFi websites as "brokers" and the requirement for them to screen customers and record transactions may be challenged under a more crypto-friendly administration. If overturned, this decision could positively impact the DeFi sector, potentially allowing many DeFi websites to continue operating without incurring prohibitive regulatory burdens.
As Trump prepares for a second term, the crypto world is looking at a new era of growth, adoption, and innovation. A more favorable regulatory environment could attract more investors, boost liquidity, and provide clearer guidelines for cryptocurrency companies, ultimately transforming the industry as we know it.
In light of these regulatory changes, investors may see opportunities for profitable investing in the crypto market. With Trump's support, finance policies could be more favorable towards cryptocurrencies, potentially leading to increased money flow into this sector.
Furthermore, the crypto community is hopeful that under Trump's second term, they might witness a ban on Central Bank Digital Currencies (CBDCs) and an emphasis on stablecoins, which are less volatile and have various useful applications, potentially attracting more interest from investors and businesses.
