Ever since cryptocurrencies became a subject of discussion in the public sphere, the media has been serving us a constant stream of good and bad news coming from this nascent and frantic industry. However, the crypto news today is mostly positive, and that is largely due to the wave of optimism that has swept through the market since Donald Trump was re-elected as President of the United States.
Trump’s changing relationship with crypto
Trump has had a rather fickle relationship with the asset class as he hasn’t been a supporter from the very beginning. In fact, he vehemently criticized digital currencies in the past, calling them a disaster waiting to happen and saying he was not a fan of Bitcoin. And yet, the Republican leader seems to have had a change of heart in the meantime, expressing his newfound interest and love for the crypto economy quite vocally on several occasions over the past year. Trump attended various crypto events, accepted crypto donations for his presidential campaign, and even went as far as stating that he intended to turn the US into the “crypto capital of the planet”, although he didn’t specify how he would go about it.
Well, it’s been several weeks since Trump returned to the Oval Office, and now the entire crypto community is waiting with bated breath to see if the President will make good on his promise. So far, the new administration seems to have had a favorable impact on the crypto industry, bringing notable changes in a really short period of time.
The chain of positive events started with the Bitcoin price spiking to a new all-time high of $109,114 ahead of Donald Trump’s inauguration day and continued with several other developments that are expected to usher in a new era for crypto.
The surprising launch of the Trump meme coin
Just three days prior to his inauguration, President-elect Donald Trump announced the launch of his own meme coin, $TRUMP, in a post on his social media platform, Truth Social. The asset saw an incredible surge from $6.50 to $73 in less than two days before losing most of the initial gains and settling at around $12. The market was still reeling from the news when incoming First Lady Melania, emulating her husband’s move, released her own meme token, $MELANIA, on the eve of the inauguration.
Meme coins are a highly volatile crypto subset whose value is driven entirely by market hype and community support, with no innovative features or functionalities to back up their worth. Therefore, the launch of the meme coin duo by the first family attracted mixed reactions from experts and the media.
However, despite the criticism, many agreed that the creation of an official Trump-branded meme coin can be interpreted as a vote of confidence for digital currencies and a sign that the current administration will continue to endorse them, boosting their legitimacy as a result.
It doesn’t even matter if the two meme coins perform well or not since they weren’t intended as investment mechanisms anyway but as a way to express support for the values and ideas they represent. They’re clearly labelled as meme coins, so everyone already knows what to expect from them. The crypto ecosystem stands to gain from their arrival regardless since this indicates an increased acceptance of digital assets.
More lenient crypto regulations
Under the previous administration, the Securities and Exchange Commission (SEC), led by Chair Gary Gensler at the time, carried out a major crackdown on crypto, which posed serious problems for many firms and projects in the industry, including Coinbase and Ripple Labs.
President Trump gave reassurances that he will put an end to this aggressive approach to crypto regulations that the SEC has adopted in the past, and the first steps in this direction have already been made. Gensler resigned from his post before Trump was sworn in as President. Trump then nominated Paul Atkins, who is known for his crypto-friendly views, to replace Gensler as the head of the agency, and now all it takes is for Congress to rule on the decision.
However, the SEC hasn’t been standing still while awaiting confirmation. The regulator has already begun its activity under Trump, and one of the decisions it’s taken so far is the withdrawal of the Staff Accounting Bulletin No. 121, which required financial institutions holding crypto assets to list them as liabilities on behalf of clients. According to crypto advocates, this move could encourage traditional financial institutions to embrace crypto products and thus pave the way for wider crypto adoption in the future.
The crypto executive order
Early in his second term, Trump also signed a highly debated executive order aimed at advancing the adoption of crypto assets and financial technologies, as promised during his electoral campaign. This implied the establishment of a working group led by Special Advisor for AI and Crypto David Sacks, with the purpose of monitoring existing crypto regulations and proposing solutions for the development of new rules and guidelines for the industry.
However, probably the most important point on the executive order’s agenda was the prospect of creating a crypto strategic reserve. Recently, President Trump announced that plans for this upcoming reserve are already underway, mentioning that it will include Bitcoin, Ether, XRP, Solana, and Cardano.
Historically, the US has built numerous strategic reserves, also known as stockpiles, for scarce assets such as oil, gold, helium, or uranium to ensure economic stability in times of crisis. However, the news that the administration is currently working on a crypto reserve has sparked criticism from financial experts and even industry insiders who argue that creating a stockpile based on the belief that crypto assets will appreciate over time doesn’t make sense.
What’s next for crypto under Trump?
Overall, opinions regarding Trump’s stance and involvement with crypto are, as expected, quite divided. While some believe that the President’s actions are falling short of his promises, others think his focus on digital currencies is taking on worrying proportions. For crypto investors, the crypto initiatives under the new administration could mean looser regulations, new opportunities in meme coins, and broader institutional acceptance. However, the inherent volatility of crypto assets and the lack of clarity at the moment call for caution. It’s worth remembering that Trump’s second term has only just begun, and it might be too soon to form an opinion on the direction where things are headed.
