Crypto’s Trump Trade 2025

Republican or Democratic politics aside, the election of Donald Trump as next US president appears to have gifted the crypto market an early Christmas present with a year-end rally. But will the contents match expectations when the parcel is unwrapped after Trump’s inauguration on January 20?

The crypto market reacted positively to Trump’s victory on November 6: Bitcoin rose 9 percent on the day and then consistently broke all-time highs before clearing the USD 100,000 mark on December 4. The total crypto market capitalisation recently passed USD 3.7 trillion.

The rally has largely been tied to Trump’s presidential election win, given that his campaign contained a series of promises in favour of the crypto industry.
Here we take a look at those promises and what they might mean for crypto.

The Campaign Pledges
It was clear that crypto was becoming a voter issue in the run up to the election. It is no secret that Trump targeted crypto voters during his campaign when he laid out a number of crypto-friendly several reforms that would take place under his next administration.

In July, Trump addressed the Bitcoin 2024 conference in Nashville, promising to create a US reserve with the 213,000 Bitcoin seized during previous law enforcement operations. Although he stopped short of saying his administration would actively buy crypto, he inferred that future seizures could be added to that stockpile. Shortly afterwards, the Bitcoin Act 2024, filed by Senator Cynthia Lummis, proposed that the Federal Reserve should reallocate some of its gold reserves to Bitcoin, sparking discussions about potentially narrowing the gap with gold’s USD 17.7 trillion market cap (currently more than 9x Bitcoin’s USD 1.9 trillion).

In the same speech, Trump vowed to remove Securities and Exchange (SEC) chair Gary Gensler, who many saw as stymying innovation with a regulation-by-enforcement approach. Gensler has since handed in his resignation notice for January 20, with Trump nominating Paul Atkins to replace him as SEC chair.

The markets have reacted positively to the news but so far have there is no clear indication of how the SEC plans to shift away from applying traditional securities laws to crypto assets. However, Trump has proposed giving the CFTC more oversight as part of a broader effort to develop clearer guidelines and restructure the relationship between the two regulators.

Another pledge in Nashville was to create an advisory council to help shape future US crypto policy. Former PayPal executive and venture capitalist, David Sacks, has been appointed to head the body that will help shape US crypto and AI policy. But as yet, details are currently scarce on exactly what the new “Crypto Czar” will do and how the agency will function.

Campaign promises to make the US “the crypto capital of the planet” might be viewed as political posturing. But the Crypto Advisory Council proposal, along with rumours of Trump meeting several heavyweights of the crypto industry, such as Coinbase CEO Brian Armstrong, sends a signal that the new administration will pay more serious attention to the crypto market and look to understand its potential opportunities for the US economy.

Meanwhile, Trump’s opposition to the Federal Reserve issuing a USD central bank digital currency (CBDC) is also music to the ears of the DeFi community, especially as it aligns with Republican efforts to protect privacy through legislative measures such as the Anti-CBDC surveillance act – which bans the Fed from issuing a CBDC without congressional approvals.

For now, there is little doubt that Trump is sending out a clear message that his administration will adopt a more positive stance towards the crypto industry.

The Current Sticking Points
The US regulatory approach has given rise to claims of an anti-crypto bias dubbed “Operation Chokepoint 2.0” where crypto projects with legitimate companies have allegedly been blocked from banking services, or left without adequate regulatory guidance. a16z co-founder Marc Andreessen drew more attention to this issue in a recent podcast, suggesting that over 30 tech companies and crypto founders have been “debanked” under the Biden administration.

There have also been complaints about the SAB 121 accounting bulletin that has been applied to institutions that safeguard customers’ crypto asset holdings. Whether they control those assets or not, banks and other financial intermediaries must recognise liabilities and assets on their balance sheets. This ruling both creates a greater compliance burden for banks and does not appear to align with the decentralised nature of crypto-asset custody.

While any changes will take time to come into effect, Trump has certainly signalled his determination to tackle the perceived bias in a series of campaign speeches and interviews.

A Turning Point Ahead
Although it is too early for the crypto industry to start celebrating, there are positive signs. The Republican clean-sweep in Congress and growing bipartisan crypto support could provide new crypto legislation with a relatively smooth passage. Concrete proposals, such as a change to tax policy in relation to Bitcoin miners and profits on some tokens, require approval from Congress and the Senate, both of which now have Republican majorities. The appointment of former PayPal COO David Sacks as his “White House AI & Crypto Czar”, as well as with several major firms jockeying for advisory council seats, all point towards gathering momentum.

Above all, the crypto market needs a strong dose of stability and legal certainty that will allow it to function effectively and safely. This is especially critical in the US which is very influential in defining financial and technological standards for much of the world.

A firm foundation of regulatory clarity would also act as a springboard for dynamic growth and innovation, in the US and elsewhere. Appointing the right people to key positions and having regulatory bodies with a friendlier stance towards decentralised technologies would be a decisive first step in the right direction.

About the Author
Article authored by Sygnum Bank