The 2024 US presidential election proved to be a turning point for the cryptocurrency industry. In a surprising turn of events, crypto emerged as one of the biggest winners, with President Trump embracing a staunchly pro-crypto stance and the industry flexing its lobbying muscle like never before. The results have far-reaching implications for the future of digital assets and blockchain technology in the United States.
Trump’s Crypto Conversion
One of the most stunning developments was Donald Trump’s full-throated endorsement of Bitcoin and cryptocurrencies. The former real estate mogul turned politician had previously expressed skepticism about digital assets, but he underwent a dramatic transformation during the campaign. Trump not only vocalized support for crypto but even launched his own DeFi protocol called World Liberty Financial.
The official Republican platform explicitly backed the crypto industry, and Trump made specific promises such as pardoning Ross Ulbricht, ousting SEC Chair Gary Gensler, allowing Bitcoin mining, ending Operation Chokepoint 2.0, and having the government hold BTC. This marked a seismic shift from just a few years ago when crypto was barely on the political radar.
An Orange-Pilled Administration
Beyond the president himself, Trump surrounded himself with a team of crypto advocates and enthusiasts. VP-elect JD Vance owns Bitcoin and has a long track record of engaging with the industry. Vivek Ramaswamy, the new co-head of the Department of Government Efficiency (DOGE), has been a crypto bull for some time. Even Elon Musk, a sort of right-wing George Soros, has cozied up to crypto over the years.
Other key players like Jared Kushner, Trump’s sons Don Jr. and Eric, and even young Barron are all rumored to be crypto-curious at minimum. The anticipated Treasury Secretary nominee Scott Bessent is an outspoken crypto and Bitcoin supporter. This pro-crypto inner circle signals that digital assets will be a priority for the administration.
Crypto Clout Grows
The election also marked a stunning success for crypto lobbying, which has ballooned in recent years. The largest industry Super PAC, FairShake, went 48 for 48 on the races where it backed a candidate. Other advocacy groups like Coinbase’s Stand With Crypto recorded major wins, with 273 pro-crypto and only 122 anti-crypto House Representatives elected.
In the Senate, crypto forces helped unseat banking committee chairman Sherrod Brown, a staunch opponent, in favor of industry entrepreneur Bernie Moreno. The new Republican Senate leaders, John Thune and Tim Scott, have both spoken favorably about crypto in the past. This indicates that key laws on stablecoins and market structure are likely on the docket early next year.
Stablecoin Stability
Stablecoins could be one of the biggest beneficiaries post-election. The largest stablecoin issuer Tether, which has been plagued by regulatory scrutiny and legal battles, unexpectedly gained a political lifeline from Trump confidante Howard Lutnick. As Cantor Fitzgerald CEO and keeper of Tether’s reserves, Lutnick brings his crypto-friendly stance to the administration’s inner sanctum.
With the President’s ear and DOJ/SEC shackled, the $125B stablecoin juggernaut could see its regulatory risk dwindle significantly. Tether’s founder Paolo Ardoino is likely popping champagne corks in celebration from his perch in the Bahamas. Whether Tether opens its books further is TBD, but the political scrutiny is poised to subside.
DeFi’s Bright Future
Decentralized finance (DeFi) protocols and their tokens could be another winner as Gensler departs the SEC. DeFi has been hamstrung by securities law uncertainty, with founders forced to tiptoe between making tokens appealing to holders and avoiding security status. An SEC regime change offers the opportunity to treat these tokens as light-touch pseudo-equity requiring some disclosures.
Such a framework would level the playing field and provide more investor transparency, while allowing founders to align incentives through token distribution. The market anticipates this sea change, as major DeFi tokens have already started to rally. Expect the flight to quality to continue in the coming months as the SEC’s token agenda crystallizes.
Banks Embracing Crypto
American banks have long sought to custody crypto assets and service the industry but have been stymied by discouraging regulations and guidance. Rules like the SEC’s SAB121 make it prohibitively expensive for banks to custody crypto, while the FDIC insists that no more than 15% of banks’ deposits come from crypto firms. Operation Chokepoint 2.0 has further dissuaded many institutions.
Expect this to change dramatically under the new administration. Removing SAB121 will be trivial once a new SEC chair is installed. Banks will be free to custody crypto, service industry clients without limitations, and potentially even issue their own stablecoins. A level playing field with foreign banks in the crypto arena is finally in sight.
Prediction Markets Prevail
Finally, crypto-based prediction markets emerged as a star of the election cycle. Platforms like Polymarket demonstrated greater accuracy than traditional pollsters and pundits, calling several key races well in advance. This showcased the promise of “putting your money where your mouth is” and leveraging the wisdom of crowds.
With the mainstream failure of polling and punditry, on stark display yet again, expect prediction markets to cement their place in the political prognostication pantheon. These decentralized platforms, enabled by cryptocurrency rails, are proving to be a killer app for forecasting and will only grow in prominence and impact for future elections.
The 2024 US presidential election will go down as a landmark moment for the maturation and mainstream acceptance of cryptocurrencies and blockchain technology. With a pro-crypto administration taking the reins and the industry bulking up its lobbying arsenal, the stage is set for a new era of regulatory clarity, institutional adoption, and accelerating innovation. While challenges remain, crypto has indisputably arrived as a political and economic force to be reckoned with.
