As Donald Trump prepares to re-enter the presidency on January 20, 2025, the cryptocurrency world is eagerly awaiting the potential changes his administration might bring. Industry leaders anticipate that President-elect Trump will likely issue several executive orders related to crypto, with at least one expected to potentially trigger a surge in bitcoin’s value.
Associate Professor Vassilis Zikas, a blockchain consultant, and Ph.D. student Agam Shah, both from the College of Computing, share their insights on the implications for the blockchain and cryptocurrency ecosystem.
A New Era for Blockchain Technology
Associate Professor Zikas differentiates blockchain technology from the standard architecture used by traditional financial systems, such as banks. While banks use private ledgers controlled by centralized entities, blockchain utilizes decentralized ledgers that are accessible to all participants in the network. This transparency, according to Zikas, presents both advantages and disadvantages: it promotes accountability but also raises concerns about privacy.
Zikas emphasizes blockchain’s potential to revolutionize global financial transactions by creating a consistent, borderless system for transferring assets. “The process of sending bitcoin from a U.S.-based user to a U.K.-based user is identical to transferring bitcoin domestically,” he explains. This contrasts greatly with traditional international banking, which is often characterized by delays and fees.
Zikas also points out the Trump administration’s previously cautious stance on crypto, noting that they supported the regulation of initial coin offerings and funded blockchain research. Contrarily, the Biden administration, particularly through the Securities and Exchange Commission, fostered uncertainty in the crypto sphere. Many believe this uncertainty encouraged crypto entrepreneurship to move outside the U.S., contributing to a prolonged “crypto winter.”
Building a Regulatory Framework
Agam Shah, a blockchain researcher, highlights the importance of clear regulations in increasing the adoption of cryptocurrency. “A well-structured regulatory framework can encourage institutional participation by reducing uncertainties and risks while protecting retail investors,” Shah states.
Shah also underscores the damaging effects of unregulated practices, such as wash trading, which involves selling a security at a loss and then purchasing a “substantially identical” security within 30 days before or after the sale. High-profile failures, such as the collapse of crypto exchange FTX, eroded public trust and led to significant financial losses for many users. Shah believes the Trump administration’s positive outlook on bitcoin, along with its pro-crypto inclinations, could help develop comprehensive policies that foster innovation while protecting investors.
Shah also points to the advancements in blockchain technology, such as fraud detection tools, emphasizing their importance in maintaining market integrity. “Technological developments will play a pivotal role in ensuring transparency and fairness in the crypto space,” he adds.
Navigating Challenges and Opportunities
Despite the optimism surrounding anticipated policies, Zikas and Shah advise approaching these developments with caution. Zikas emphasizes the need to inform users and policymakers about both the capabilities and limitations of the technology. For example, while blockchain can offer privacy benefits, common blockchain ledgers aren’t totally immune to techniques that can reveal identities. Moreover, while absolute privacy is technologically feasible, it can also facilitate illegal activities.
Shah stresses the necessity of balancing innovation with market stability, especially considering the crypto market’s volatility and the challenges presented by Basel III endgame – the latest update to global capital standards – scheduled to take effect in 2025.
Looking ahead, both Zikas and Shah concur on the essentiality of precise and actionable policies to position the U.S. as a leader in blockchain technology. As the Trump administration seeks to establish the U.S. as a crypto powerhouse, the next few months will be critical in shaping the future of digital assets and blockchain innovation.
By promoting a balanced approach that combines regulatory clarity with technological innovation, the U.S. has the potential to solidify its leadership in the global crypto economy while guaranteeing its ecosystem remains both transparent and secure.
