Trump’s Crypto Push: A New Era for Digital Finance?
In a move that has sent ripples through the financial world, former U.S. President Donald Trump wasted no time in signaling his administration’s priorities following the election. Unlike the typical “100-day plans” of incoming CEOs and presidents, Trump unveiled an aggressive “5-day Plan” for digital finance technology policy and regulation. This swift action aims to benefit fintech innovators, capital allocators, and the American people.
This contrasts with the general sentiment from the prior administration, where the “Crypto Wall” was in place.
Following the November election, Trump’s commitment to assert U.S. leadership in fintech innovation, crypto, and digital assets quickly reshaped the regulatory landscape. Appointments to key positions, including SEC and CFTC chairs, a new “crypto and AI czar,” and new committees, signaled a major shift.
Last week’s Executive Order (EO) on digital financial technology set a clear course, outlining plans to become law within the next 12 months. The EO aims to ban Central Bank Digital Currencies (CBDCs), secure industry-backed stablecoins, promote public blockchains, ensure access to banking, and provide regulatory clarity within the tech-neutral regulators.
The new SEC strategy involves a new crypto taskforce and the repeal of the controversial SAB121. This is intended to encourage institutional capital markets to enter crypto markets.
Innovation in technology and digital finance is now recognized as a strategic U.S. asset both from a competition and security perspective.
These moves also align with Trump’s business interests, including the launch of “The Trump and Melania coins,” and the recent announcement that Truth Social is launching a fintech company.
The Trust Factor
Looking ahead, the Trump administration’s approach hinges on trust, a quality that is “hard to earn, easy to lose.” Bitcoin, like all money, depends on confidence, and the administration is betting that the public will embrace crypto as a legitimate and secure way to build wealth, especially given stagnant wage growth for many.
If the administration, with its roster of wealthy figures, appears to be the sole beneficiary of crypto’s success, trust may erode, potentially harming the industry’s future. Moreover, the policy priorities of various caucuses and donors could further complicate this situation.
The Regulator’s Balancing Act
U.S. regulatory agencies, like the SEC and CFTC, face a delicate balancing act. They must navigate the new administration’s deregulation push while ensuring market stability.
Elise Soucie Watts, executive director at Global Digital Finance, acknowledges that the potential moves are positive, but the legislation must pass in both houses, and then be implemented across the U.S. She reminds observers that “it will be crucial not to remove the guardrails, many implemented after the last great financial crisis, that are integral to the smooth functioning of markets as we know them today.”
The moves of the Trump administration put pressure on other countries. Whoever creates the best growing conditions for business may gain substantial financial advantages. However, each country must weigh financial stability, global compliance, and regulatory objectives against an open welcoming environment for growth.
Beyond U.S. Borders
While the U.S. charts its course, other nations are also vying for crypto leadership. Countries like India, China, Brazil, and Indonesia show significant crypto adoption. The race is on to attract capital and talent. However, U.S. will need to compete against these countries for consumer adoption.
Rumors suggest the Emirates government holds a bitcoin reserve that is larger than that of the U.S. government. The U.K also possess a strong fintech heritage. However, reaction time could be the defining factor.
“There is now a constellation of interests in the U.S. that understand the alchemy of this new technology. It is also being prioritized and resourced accordingly, so future Web3 companies and investors in the U.S. can benefit,” said Steve McWhirter, global policy lead at Binance. “The U.S. timeline is six to twelve months maximum. In the same time period, other jurisdictions might not have approved firms that support innovation in their countries, or finalised their policy positions, effectively stifling growth in their markets and economies. Globally this is simply a race for the next generation of global tech companies that bring investment, skills, jobs, and taxes. Those that prioritize it win.”
In the UK, there is pressure on the UK government after A16z’s recent closure of its London office. A recent survey found that 50% of the fintech and crypto firms were rejected from opening a bank account. Laura Navaratnam, U.K. policy lead for Crypto Council for Innovation, said that the U.S. has “decisively entered the race to become the world’s leading cryptoasset hub.”
Policymakers both inside and outside of the U.S. are encouraged to work fast, and be as competitive as possible to succeed.
