August 2024

The cryptocurrency community has found itself a new ally and his name is Donald Trump. Appearing as a keynote speaker at the Bitcoin 2024 Conference in Nashville last month, the Republican nominee for the upcoming US election unveiled his plan to make the US the “crypto capital of the planet”. The idea of an administration with a pro-crypto stance saw the price of Bitcoin surpass US $66,000 with the initial reaction from the crypto community being one of excitement. Looking at the bigger picture, it is interesting to see the potential impact if regulators altered their view and no longer treated Bitcoin and cryptocurrency as the enemy.

Is There Any Merit in Trump’s Strategy?

As per his recent remarks, if elected to office, Trump plans to:

• HODL (hold on for dear life) Bitcoin. “Keep 100% of all Bitcoin the US government currently holds or acquires in the future”
• Fire SEC Chair Gary Gensler
• End operation choke point 2.0 which is a coordinated effort to deny Bitcoin companies access to traditional financial services
• Establish a Bitcoin advisory council

According to Trump, stockpiling Bitcoin would help reduce inflation and energy prices. Economists say that this is contingent on two factors: the price of Bitcoin rising and not sending the price into a freefall after any potential sell-off from the government.

Increased Regulation is Inevitable

This has been an area of heated debate. The decentralised nature of cryptocurrency has been one of its core attractions since its inception. Many are against government intervention but as digital assets and blockchain technology become mainstream, governments are forced to respond. There are four main categories of cryptocurrency regulation: taxation, AML/CFT, consumer protection and licensing. The US, UK and prominent APAC countries including Australia and Singapore have all introduced crypto regulations. In contrast, crypto trading and mining remains banned in China – one of the biggest financial markets.

How Could This Affect the Crypto Community?

The idea that cryptocurrency regulations will be written by advocates of the industry who have a thorough understanding of it, has to be considered a positive. From the outset, there have been significant concerns around cryptocurrencies, mainly regarding potential negative impacts on financial markets, investors and the environment. Proactive regulation can enhance the legitimacy of cryptocurrency and attract more investors which would both increase the value and decrease volatility.

Then and Now

Not so long ago in 2021, Donald Trump said Bitcoin seemed like a scam and that he didn’t like it because it was another currency competing against the US dollar. He now owns over $1m in crypto, and his change in stance has many pointing to it as a simple ploy to get Bitcoin maxis to vote for him. This view is flawed as it fails to take into account the standing of the US as the world’s largest national economy and leading global trader – an influence that should not be underestimated. As the US continues to shape its cryptocurrency policies, the global regulatory frameworks will more than likely follow suit just as they have in the past.

This means that cryptocurrency traders worldwide will be affected and few of them would be against friendlier policies in their own jurisdictions.