Key Points
- Bitcoin’s value and political influence have surged, largely due to Donald Trump’s presidential win and the GOP’s recent electoral successes, says NYDIG.
- With the expected changes in political leadership, the cryptocurrency community anticipates a more favorable regulatory climate.
Bitcoin’s value and political clout are experiencing a significant ascent.
The cryptocurrency has seen an impressive 84% growth this year, hitting the $82,000 mark. This increase has been spurred by Donald Trump’s victory in the presidential race and the Republican Party’s recent electoral triumphs, as reported by The New York Digital Investment Group (NYDIG) on November 11.
Political Imperative
Greg Cipolaro, NYDIG’s global head of research, noted that while some investors have begun to invest in Bitcoin, the majority still have no exposure. He stated, “No more excuses.” Cipolaro also underscored Bitcoin’s climbing political significance, cautioning that neglecting the cryptocurrency could soon become a financial blunder.
The political landscape is shifting, suggesting potential changes, with hopes of relaxed regulations that have previously constrained cryptocurrency companies. By 2025, new leaders will take up roles at major federal agencies such as the SEC, OCC, FDIC, and the Treasury Department. This change may pave the way for pro-crypto policies and more supportive regulations.
Pro-Crypto Legislation on the Horizon
The recent electoral results provide the crypto community with a unique opportunity to influence high-level government decision-making. With Republicans now in control of the White House and Congress, there is growing optimism for broader acceptance of cryptocurrencies and blockchain technologies. However, the specifics of forthcoming legislation remain uncertain and depend on the priorities of new appointees.
For nearly eight years, the crypto sector has sought regulatory clarity through various efforts, such as meetings, appeals, and lawsuits. Political action committees (PACs) dedicated to crypto have played a crucial role, investing approximately $135 million in campaign donations and advertisements to support candidates sympathetic to the industry. This strategic investment aims to shape US policy in favor of digital assets.
As Republicans assume leadership in key federal agencies, the crypto community anticipates a more favorable regulatory environment. The SEC, OCC, and FDIC are expected to adopt a more crypto-friendly approach, potentially easing restrictions and facilitating the integration of digital assets into the traditional financial system.
Strategic Moves in Crypto Regulation
Senator Cynthia Lummis has introduced the BITCOIN Act, a significant legislative initiative that proposes the creation of a Bitcoin reserve for the United States. This reserve would allow the government to hold Bitcoin as a shield against economic volatility, bolstering national economic security. The plan includes acquiring 1 million Bitcoins, which could eventually constitute 5% of Bitcoin’s total supply, worth roughly $76 billion at current market rates.
Donald Trump has expressed support for this idea, although his approach differs. He suggests converting 204,000 Bitcoins currently held by the US through law enforcement actions into a strategic reserve. However, legal issues may arise, as many of these Bitcoins belong to identifiable victims, including Bitfinex, which is linked to Tether.
In addition to these proposals, a shift in regulatory leadership could influence how the SEC handles major crypto industry lawsuits. Agencies may become more open to settlements or even abandon some ongoing lawsuits against companies like Ripple Labs, Coinbase, Binance, Kraken, and Cumberland.
