Bitcoin has blasted through a series of record highs since President-elect Trump’s election victory as the crypto industry anticipates a significant shift in federal policy.
The price of one bitcoin neared $100,000 this week, rising more than 40 percent since the reelection of Trump, who has pledged to be the most pro-crypto president and make the U.S. the “crypto capital of the planet.”
The expected departure of Securities and Exchange Commission (SEC) Chair Gary Gensler coupled with Trump’s Cabinet picks is further fueling excitement among crypto investors, who see greener pastures ahead for the polarizing industry.
“The sense is the new administration, at the very least, is going to facilitate productive engagement with the regulators,” said Katherine Kirkpatrick Bos, the general counsel for cryptography software company Starkware. “For the past four years, there was little to no productive engagement between crypto and the SEC.”
“It was very combative. There is now a sense that there will be productive conversation surrounding these core legal issues has made institutional investors very excited and more willing to engage with crypto assets,” she added.
The crypto community’s embrace of Trump’s victory was seen almost immediately in the market. Bitcoin spiked eight percent on the day after the election, setting off a days-long rally before it reached a record high of more than $98,700 last Friday.
Bitcoin started to slide back towards $90,000 earlier this week, along with a drop among other smaller crypto stocks. Still, observers told The Hill they are confident the surge will last, with one analyst calling the market “structurally sound.”
Despite past skepticism of digital currencies, Trump is surrounding himself with pro-crypto voices as heads back to the White House and bolstering confidence in the industry.
The president-elect tapped billionaire investor Scott Bessent last week to lead the Treasury Department. Bessent, the founder and CEO of hedge fund Key Square Group, is a known supporter of digital assets.
Calling him the “perfect pick,” Brad Garlinghouse, the CEO of crypto firm Ripple, said Bessent will be the “most pro-innovation, pro-crypto Treasury Sec we’ve ever seen.”
The fervor further ramped up amid reports Trump’s transition team is mulling the creation of a White House staff position focused specifically on cryptocurrency policy or a “crypto czar” who would oversee policy and regulation.
“Most of us have been trying to build the next generation of the financial system and the next generation of the internet in the United States,” cryptocurrency exchange Coinbase chief policy officer Faryar Shirzad told The Hill. “And we have had such difficulty doing it because of the lack of regulatory clarity. And now we have an administration and a Congress who are going to come in and they understand the potential of the technology.”
Coinbase played a central role in pushing the industry’s political engagement forward this election cycle, loading $70.5 million into the Fairshake super PAC, according to Federal Election Commission data.
As Trump’s cabinet fills up, speculation swirls over who will be named SEC chair after Gensler’s departure. The crypto industry repeatedly clashed with Gensler and the Biden administration over Washington’s crypto-critical approach.
Floated names for SEC chair include former acting Comptroller of the Currency Brian Brooks, former SEC Chair Paul Atkins and former SEC general counsel Robert Stebbins, Axios reported.
The past four years were “regulation by enforcement,” Nathan McCauley, co-founder and CEO of crypto platform Anchorage Digital, told The Hill, adding he hopes the next administration will bring “regulation by rulemaking.”
Many in the industry say they are looking for a more concrete regulatory framework, including new laws that address the unique aspects of this asset class, and believe new leadership will usher change.
“There are a number of things that just don’t fit in our current regime,” Bos said.
“The most basic thing that the new chair can do is just signal an openness to providing the clarity that the industry has been asking for,” Shirzad added.
Federal lawmakers appear to be following Trump’s friendly tone towards crypto.
Sen. Cynthia Lummis (R-W.Y.) told the Washington Examiner last week she plans to reintroduce the BITCOIN Act in the upcoming session.
The bill, first introduced last summer with no movement, proposes the creation of a strategic bitcoin reserve in which the U.S. would purchase a large amount of the cryptocurrency and hold it as a reserve.
Lummis told the Examiner that the push for it is “gaining momentum” to combat inflation and curb further devaluation of the dollar.
Trump indicated he is open to a crypto reserve and promised at The Bitcoin Conference in July to ensure the federal government keeps “100 percent” of bitcoin in the U.S. and does not sell off its bitcoin holdings.
Whether Lummis’s measure passes out of the Senate remains to be seen, but the industry remains optimistic, especially in the wake of leadership changes in the upper chamber.
Among the changes include Senate Banking Committee Chair Sherrod Brown (D-Ohio), who lost reelection this fall to Sen-elect Bernie Moreno (R-Ohio).
Moreno touted a pro-crypto approach in contrast to Brown’s opposition to legislation aiming to clarify federal regulation of the industry.
Sen. Tim Scott (R-S.C.), also seen as a strong supporter of crypto, is expected to take the helm of the Banking Committee, further stoking excitement.
At a talk with Lummis last August, Scott pledged to secure rules and regulations that “promote innovation, protect consumers and keep opportunity” in the U.S.
The South Carolina Republican, however, could face opposition from Sen. Elizabeth Warren (D-Mass.), who is poised to become the ranking member of the Banking Committee and has repeatedly pushed regulators to take a tougher stance on crypto trading.
The interest in crypto is seen across parties, marking a shift for some lawmakers who once treaded carefully when discussing the crypto industry in the wake of the collapse of FTX and its founder.
“After the election, a lot of Democrats want to talk, want to understand, want to take part of this effort,” Chen Arad, the co-founder of crypto security and compliance hub Solidius Labs.
“This is bigger than any party at this point, so it’s moving in that direction one way or another ultimately because the elections demonstration that this is important to Americans.”
Solidius Lab formed the Crypto Market Integrity Coalition (CMIC), a cohort of 55 crypto institutions including Coinbase and Robinhood, in 2022.
The coalition, laid out its policy recommendations in a letter to Congressional leaders. Their proposals include the establishment of a national framework for stablecoins, a type of cryptocurrency tied to a fixed value, and a market structure bill that will more clearly define the differing authorities of the SEC and Commodity Futures Trading Commission (CFTC).
The House passed the Financial Innovation and Technology for the 21st Century Act (FIT 21) earlier this year which would have done this, though it was not taken up in the Senate.
