The Trump Administration has put forward proposals that could significantly alter the landscape of cryptocurrency in America. President Donald J. Trump has shown a notable shift in his views on digital currencies since his previous term. In 2019, he expressed skepticism regarding cryptocurrencies, but by June 2024, he attended a Bitcoin conference where he declared his ambition to transform the United States into the “crypto capital of the planet.” During this event, he made several bold promises, including plans to stockpile cryptocurrency, ensure that all digital currencies are mined domestically, and remove Gary Gensler, then the Chair of the U.S. Securities and Exchange Commission (SEC).
As of now, the total value of all cryptocurrencies exceeds $1 trillion, with Bitcoin’s price having surged by 40% since Trump’s election. Given the growing importance and worldwide acceptance of cryptocurrency, it is pertinent to consider the potential legal and regulatory modifications that may occur under a second Trump Administration. Trump pledged to dismiss Gensler “on day one,” and the SEC announced that Gensler would resign on January 20, 2025. Under his direction, the SEC has prioritized enforcement against fraudulent activities and violations of securities laws, including actions against several high-profile cryptocurrency firms and celebrities.
On January 7, 2025, Trump nominated Paul Atkins to lead the SEC. Atkins served as an SEC Commissioner from 2002 to 2008, a time when he was known for opposing enforcement measures. He currently heads Patomak Global Partners, a consulting firm that advises various cryptocurrency enterprises. The SEC, now under Atkins, is already shifting its approach from regulation through enforcement to a more collaborative stance. For instance, on February 10, the SEC requested a 60-day pause in its litigation against Binance, seeking a resolution, and on February 14, it asked for a 28-day pause in its case against Coinbase, citing an ongoing review of crypto-related issues.
Shifting Regulatory Perspectives on Digital Assets
A significant regulatory change anticipated in the current Administration is a new approach to how digital assets are classified. Gensler maintained that most digital assets should be treated as securities. In contrast, the U.S. Commodity Futures Trading Commission (CFTC) has categorized numerous cryptocurrencies, including Bitcoin, as commodities. This distinction is critical, as classifying cryptocurrency as a security could subject it to stricter regulations and limit access within the financial sector.
The Trump Administration has indicated a desire to clarify regulations in the cryptocurrency space. Reports suggest that the Administration supports the CFTC’s designation of cryptocurrencies as commodities under its jurisdiction. Consequently, the upcoming years may witness an expansion of CFTC authority over digital assets, while the SEC’s involvement may diminish. The CFTC could take on oversight of key areas in the digital asset market, including the spot markets for Bitcoin and Ethereum, along with the platforms where they are traded.
On February 13, 2025, Trump nominated Brian Quintenz to lead the CFTC. Quintenz, who served as a CFTC Commissioner from 2017 to 2021, is a well-known advocate for cryptocurrencies and recently worked as the head of policy for a cryptocurrency venture capital firm. Discussions around the tax treatment of cryptocurrencies have also gained traction, with some proponents urging the removal or reduction of capital gains taxes on digital assets to stimulate investment and usage.
Regulatory Clarity and Decentralized Finance
In light of the regulatory ambiguities surrounding Decentralized Finance (DeFi) platforms—financial systems utilizing blockchain technology for peer-to-peer transactions—regulators and policymakers are initiating efforts to establish clearer guidelines. President Trump established a “Presidential Working Group on Digital Asset Markets,” while the SEC set up a task force aimed at developing a comprehensive regulatory framework. These initiatives may encourage innovation by alleviating the regulatory challenges faced by emerging companies trying to navigate their legal obligations.
The decentralized characteristics of numerous digital assets also pose challenges, as they can facilitate untraceable illicit transactions. However, stringent anti-money laundering regulations could impede the broader acceptance of digital currencies. The Trump Administration might recalibrate the balance between privacy rights and anti-money laundering measures by modifying or easing certain existing regulations to promote cryptocurrency adoption while still addressing illegal activities.
Trump’s Opposition to a Central Bank Digital Currency
President Trump has publicly opposed the establishment of a U.S. central bank digital currency (CBDC), asserting that he “will never allow” its creation. Nevertheless, he has expressed support for the “safe and responsible expansion of stablecoins,” seeking regulatory clarity to enhance their safety and promote wider usage. Stablecoins are typically pegged to the U.S. dollar, making them less volatile. Advocates believe they have the potential to become a widely accepted medium of exchange.
In line with his ambition to establish the U.S. as the “crypto capital of the planet,” Trump has pledged that all “remaining Bitcoin” will be “made in the U.S.A.” He aims for cryptocurrencies to be “mined, minted, and made in the U.S.A.” Currently, approximately 37% of Bitcoin mining occurs in the U.S., while 21% takes place in China, despite the latter’s ban on Bitcoin mining in 2021. Trump’s objectives are closely linked to energy policy, as he seeks to position the U.S. as “energy dominant,” which may lead to incentives or reduced regulatory constraints regarding energy consumption and infrastructure.
Moreover, several leaders in the cryptocurrency sector are advocating for a U.S. Bitcoin reserve. On July 31, 2024, Senator Cynthia Lummis (R-Wyo.) introduced the Bitcoin Act of 2024, which proposes to establish a strategic Bitcoin reserve by committing the government to acquire one million Bitcoins—approximately 5% of the total circulating supply—over five years.
Potential Impact of Proposed Changes
The proposed changes from the Trump Administration could significantly transform the cryptocurrency landscape in the United States. A clearer regulatory framework that reduces litigation risks, along with economic incentives for digital assets through tax or energy policies, and direct government purchases of digital currencies, may lead to heightened adoption and innovation in blockchain technology.
Enhanced regulation of digital assets could mitigate investment risks for both cryptocurrency companies—lessening fears of agency enforcement—and investors alike. There is potential for cryptocurrencies to receive institutional backing within the financial sector, with banks and hedge funds possibly developing their own digital assets, thereby broadening access to a larger audience.
In recent years, numerous digital asset companies have relocated from the United States, citing an unwelcoming regulatory environment, resulting in a loss of American talent to international markets. A regulatory shift, along with the changing government attitude presented by the Trump Administration, could encourage these professionals to return and further develop blockchain technologies within the United States.
