The Golden Age of Bitcoin and Cryptocurrency

20 November, 2024

Binance CEO Richard Teng told the Financial Times that Trump’s victory was a “big boost for crypto,” and the new US administration may be more open-minded about digital assets. Executives optimistically anticipated a fundamental shift in policy in Washington, welcoming the end of the Democratic regime, which was perceived as more “hostile” towards cryptocurrencies.

Binance was fined $4.3 billion last year for anti-money laundering and sanctions violations, while its former CEO was imprisoned.

A year ago, the crypto industry eyed the election as a pivotal moment to change attitudes in Washington, which they believed was stifling innovation and driving businesses out of the US. This week, their faith and strategies, including raising $170 million for political campaigns this year, paid off. Bitcoin surged to a new all-time high of $81,000. Billions of dollars poured into US Bitcoin ETFs, according to Bloomberg data.

“America will embrace economic freedom,” said Brian Armstrong, CEO of Coinbase, a cryptocurrency exchange. Investors hope that the White House, under Trump, will initiate a program that sparks interest from major US institutions in cryptocurrencies.

Shervin Pishevar, a venture capitalist close to Trump and Elon Musk – one of the President-elect’s biggest supporters – said the US is “on the cusp of sensible crypto policy.” Trump has strongly touted the benefits of Bitcoin for the US economy during his campaign, endorsing the creation of a strategic Bitcoin reserve and even promoting a new crypto project backed by his sons.

Many in his inner circle are also pro-crypto. Vice President-elect JD Vance is a cryptocurrency owner.

“This is an extremely important day for the crypto industry,” said Mike Novogratz, the billionaire founder of Galaxy Digital, a crypto investment firm, despite his support for Kamala Harris’ campaign. “We’re in the early innings of a favorable year… with good news every week,” he added.

However, the crypto industry had also planned for the other outcome. Efforts to build consensus in Washington around clear crypto laws failed under the Democrats, while the EU, Singapore, and other nations have passed initial regulations on digital assets.

To gain more favorable support in Washington, the industry heavily invested in influencing political races—and it seems to have paid off.

However, the biggest challenge lies with the SEC, where Chairman Gary Gensler is pursuing an aggressive regulatory campaign. Major players like Binance, Coinbase, and Ripple have faced lawsuits in the recent past. While Trump has vowed to fire Gensler on day one, this may face legal hurdles as Gensler’s term extends until July 2026.

Experts predict a significant shift in the regulatory approach. Amy Lynch, a former SEC inspector, suggests that the Trump administration might transfer primary regulatory authority from the SEC to the CFTC, creating a more “risk-accepting” environment with less oversight. This could spur rapid growth but also carries the risk of large-scale fraud.

One of the industry’s top priorities is reforming regulations around how banks handle customers’ digital assets. The SEC’s 2022 accounting rule requires institutions to treat customer-held digital assets as liabilities on their balance sheets, rather than off-balance-sheet items. With the Congress likely tilting towards the Republicans, hopes are high for a repeal of this regulation.

Vu Hao (According to FT)