A detailed article on Trump's "crypto romance" and future direction

According to the Zhitong Finance APP, Donald Trump, who once questioned the value of cryptocurrencies, has changed his stance during his presidential campaign and become a supporter of cryptocurrencies. With expectations of a future regulatory easing environment and various other factors, Bitcoin broke through the $100,000 mark last December, and the market is closely watching Trump's role in the development of cryptocurrencies and his impact on the future.

President-elect Donald Trump was previously skeptical of digital assets, calling Bitcoin "seems like a scam" and stating that the value of cryptocurrencies "is built on thin air."

However, in his recent presidential campaign, Trump has turned into a cheerleader for cryptocurrencies: a speech at the Bitcoin 2024 conference in July marked his complete turnaround. Since his re-election, cryptocurrency prices have soared, especially Bitcoin, which set a historic high of over $108,000 last December, as the market anticipates that the incoming Trump administration will pursue a pro-cryptocurrency agenda.

Trump has promised to be "the president who supports Bitcoin." In a speech in Nashville last July, he praised the largest cryptocurrency by market capitalization, stating that "Bitcoin represents freedom, sovereignty, and independence from government, coercion, and control." He expressed a desire to make the U.S. "the cryptocurrency capital of the world and a Bitcoin superpower." In December, he posted on Truth Social, a social media platform under Trump Media & Technology Group, stating that cryptocurrencies "are crucial to America's future competitiveness."

Trump's embrace of the industry has helped him gain support from well-known cryptocurrency advocates, such as venture capitalists Marc Andreessen and Ben Horowitz, as well as billionaire twins Tyler and Cameron Winklevoss.

Elon Musk, often associated with meme coin speculation, discussed cryptocurrencies on Saturday Night Live and donated $238.5 million to the pro-Trump super political action committee America PAC. Andreessen and Horowitz each donated $2.5 million to pro-Trump right-wing super political action committees. The cryptocurrency industry also spent $135 million, primarily through Fairshake PAC, to support candidates in the November elections, most of whom won their races.

What cryptocurrency projects has Trump personally participated in?

Trump and some of his family members are initiators and beneficiaries of a cryptocurrency project called "World Freedom Finance," which has its own token WLFI. As of the end of October, over 16,000 people hold the World Freedom Finance token. Just weeks ago, this project, supported by Trump and his sons, began selling cryptocurrencies to accredited investors on its platform.

In November, cryptocurrency entrepreneur Justin Sun announced that he would invest $30 million in WLFI tokens, with the Trump family expected to receive at least $15 million. Trump has also ventured into other digital assets. He has released four series of non-fungible tokens (NFTs), all featuring heroic images of him in different outfits and scenarios. He referred to the latest NFT series as digital trading cards, which were sold in the primary market for $99 each in August

Why Did Cryptocurrency Prices Surge?

Last year, from the election until mid-December, the price of the largest market capitalization token, Bitcoin, rose by more than 50%, and other cryptocurrencies also saw significant increases. This was mainly because people believed that Trump and the incoming Republican government would create a more favorable regulatory environment. Investors in the crypto industry indicated that this would lead to more individuals and institutions investing in the sector, while also reducing the risk of enforcement actions by the U.S. Securities and Exchange Commission (SEC).

Trump also appointed crypto advocates to key roles. For example, Elon Musk and Vivek Ramaswamy will lead a consulting group called the Department of Government Efficiency (DOGE). DOGE is named after Dogecoin, which Musk is often associated with.

The demand for Bitcoin exchange-traded funds (ETFs) also helped boost cryptocurrency prices. As of January 8, U.S. Bitcoin ETFs had invested $110 billion, just a year after their debut.

What Has Trump Supported in the Crypto Space?

Trump promised to fire SEC Chairman Gary Gensler on his first day in office; Gensler announced his resignation before Trump's inauguration, preemptively thwarting this attempt.

During Gensler's tenure, the SEC filed legal actions against cryptocurrency companies like Coinbase Global (COIN.US) and Binance Holdings Ltd., accusing them of selling what the regulatory agency deemed unregistered securities.

Trump nominated crypto supporter Paul Atkins to replace Gensler, an announcement that helped Bitcoin break the $100,000 mark for the first time. He also nominated David Sacks for the newly established position of AI and Crypto Czar. Trump created a crypto advisory group composed of industry supporters. In a Truth Social post in December, Trump stated that Bo Hines would serve as the executive director of the Presidential Advisory Committee on Digital Assets, reporting to Sacks.

Trump indicated that he plans to have the U.S. government retain rather than sell Bitcoin assets seized by law enforcement, which would form the basis of a strategic Bitcoin reserve. He also expressed a desire for all Bitcoin to be mined in the U.S., although this commitment may be difficult to achieve due to the decentralized nature of the network and cheaper energy costs in other parts of the world.

What is the Regulatory Environment Like?

The SEC under Gensler has made it clear that it considers most digital assets to be securities, a definition that brings a wide range of requirements. The U.S. top banking regulators issued a comprehensive statement on the dangers of cryptocurrencies at the beginning of 2023. The collapse of the cryptocurrency exchange FTX in November 2022 left global customers facing potential losses of billions of dollars.

Legislation proposed in 2022 to strengthen U.S. regulation of cryptocurrencies has stalled in the Senate Banking Committee, facing an uncertain future. The bill would grant the Commodity Futures Trading Commission (CFTC) additional authority to regulate digital currencies viewed as commodities, which could allow regulators to directly oversee Bitcoin and the second-largest token by market capitalization, Ethereum Currently, the agency's scope of authority is mainly limited to crypto derivatives. According to the bill, the SEC will regulate digital currencies used to raise funds from the public, providing oversight similar to that of stock offerings.

What does the crypto industry want from Trump?

Many industry insiders hope for a less intrusive regulatory approach and the approval of more crypto ETFs. The crypto industry is also seeking specific legal language that defines what crypto is and how the industry should operate legally, which may reduce concerns about lawsuits against government agencies.

Supporters will also be pleased to classify crypto assets as commodities rather than securities, as classifying them as securities would fall under the jurisdiction of the CFTC. Many in the crypto industry believe that the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency have forced banks to limit access to their services for the industry, and they hope to see Trump end this stance.

Some in the crypto industry also hope to see Trump not only implement his plan to introduce a U.S. strategic Bitcoin reserve but also for the government to purchase more tokens as reserves.

U.S. Senator Cynthia Lummis has drafted a bill requiring the Federal Reserve to sell some gold certificates to fund the purchase of gold. According to betting results on the popular prediction platform Polymarket among the cryptocurrency crowd, people currently bet that the likelihood of establishing a reserve within 100 days of Trump's presidency is only about 30%