The Trump Administration has unveiled a series of proposed changes that could significantly alter the landscape of cryptocurrency in the United States. President Donald J. Trump’s perspective on digital assets has notably shifted since his previous term. In 2019, he expressed skepticism towards cryptocurrencies, but by June 2024, he attended a Bitcoin conference where he declared his ambition to position the United States as the “crypto capital of the planet.” During this event, he pledged to stockpile cryptocurrency, ensure that all digital currencies would be mined domestically, and indicated plans to dismiss Gary Gensler, the then-chair of the U.S. Securities and Exchange Commission (SEC). Currently, the total market capitalization of cryptocurrencies exceeds $1 trillion, with Bitcoin’s value rising by 40 percent since Trump’s election. Given the growing prominence and acceptance of cryptocurrencies worldwide, it is essential to consider the potential legal and regulatory reforms that could occur under a second Trump Administration.
### SEC Leadership Changes
President Trump has promised to remove Gensler “on day one,” and the SEC has confirmed that Gensler will depart on January 20, 2025. Under Gensler’s direction, the SEC concentrated on enforcement actions against fraud and violations of securities laws, targeting several significant cryptocurrency firms and a number of celebrities. On January 7, 2025, Trump nominated Paul Atkins to lead the SEC. A former SEC Commissioner from 2002 to 2008, Atkins is known for his opposition to enforcement actions. He currently serves as the CEO of Patomak Global Partners, a consulting firm that advises several cryptocurrency businesses.
### Shift in Regulatory Approach
Under Atkins, the SEC is beginning to pivot away from strict enforcement-based regulations. On February 10, the SEC sought a 60-day delay in its litigation against Binance, citing a possible resolution, and on February 14, it requested a 28-day pause in its case against Coinbase. In its court filing on February 14, the SEC stated that additional time was needed to prepare responses to Coinbase’s petition as its review of cryptocurrency-related issues continues.
### Classification of Digital Assets
A significant regulatory shift anticipated in the Trump Administration involves redefining how digital assets are classified. Gensler maintained that most digital assets qualify as securities, while the U.S. Commodity Futures Trading Commission (CFTC) views various cryptocurrencies, including Bitcoin, as commodities. This classification is critical, as treating cryptocurrencies as securities would subject them to stricter regulations, potentially limiting access to financial markets. The Trump Administration has indicated a desire for regulatory clarity, reportedly favoring the CFTC’s classification of cryptocurrencies as commodities. This could lead to an expansion of the CFTC’s authority over digital assets, while the SEC’s oversight role may diminish, particularly regarding key markets like Bitcoin and Ethereum.
### Nomination of CFTC Leadership
On February 13, 2025, Trump nominated Brian Quintenz to head the CFTC. Quintenz, who served as a CFTC Commissioner from 2017 to 2021, is an advocate for cryptocurrency. His most recent role was leading policy for a cryptocurrency-focused venture capital firm.
### Taxation and Regulatory Clarity
The taxation of cryptocurrencies continues to generate debate, with some proponents advocating for the elimination or reduction of capital gains taxes on digital assets to stimulate investment and usage. In response to the uncertainty surrounding decentralized finance (DeFi) platforms—financial systems that leverage blockchain for transactions—regulators and lawmakers are pursuing initiatives to clarify regulations. President Trump’s executive order establishing a “Presidential Working Group on Digital Asset Markets,” alongside the SEC’s task force to develop a comprehensive regulatory framework, reflects the administration’s aim for clearer guidelines. Such moves could encourage innovation by easing the regulatory burden on emerging companies struggling to understand their legal responsibilities.
### Balancing Privacy and Regulation
The decentralized characteristics of many digital assets heighten the risk of illicit payments being untraceable. However, strict anti-money laundering (AML) regulations could impede the broader adoption of these assets, and government oversight may infringe upon user privacy rights. The Trump Administration may adjust the balance between privacy and AML regulations, potentially relaxing some rules to facilitate cryptocurrency adoption while still addressing illegal activities.
### Stance on Central Bank Digital Currency
President Trump has publicly opposed the establishment of a U.S. central bank digital currency (CBDC), asserting that he “will never allow” such a currency to be created. Nevertheless, he has expressed support for the “safe and responsible expansion of stablecoins,” emphasizing the need for regulatory clarity to enhance their safety and usability. Stablecoins, which are often pegged to the U.S. dollar, are considered less volatile and have the potential to serve as a widely accepted medium of exchange.
### Commitment to Domestic Bitcoin Mining
As part of his vision for the United States to become the “crypto capital of the planet,” President Trump has committed to ensuring that all “the remaining Bitcoin” is “made in the U.S.A.” Currently, the United States accounts for about 37 percent of Bitcoin mining, while China, despite its ban on Bitcoin mining since 2021, still holds a 21 percent share. Trump’s objective is closely linked to energy policies, as he aims for the U.S. to achieve “energy dominance,” which may lead to incentives or reduced regulatory obstacles for energy use and infrastructure.
### Proposed Bitcoin Reserve
In addition, some leaders in the cryptocurrency market have proposed the creation of a U.S. Bitcoin reserve. On July 31, 2024, Senator Cynthia Lummis (R-Wyo.) introduced the Bitcoin Act of 2024, which aims to establish a strategic Bitcoin reserve similar to the national petroleum reserve, committing the U.S. government to acquire one million Bitcoins—approximately five percent of the total circulating supply—over five years.
### Potential Impact on Cryptocurrency Adoption
The proposed changes from the Trump Administration have the potential to transform the cryptocurrency environment in the United States. A more transparent regulatory framework, decreased litigation risks, economic incentives for digital assets through tax reforms or energy policies, and government investments in digital assets could all contribute to greater adoption and innovation in blockchain technology. Enhanced regulation may also mitigate investment risks for cryptocurrency companies, fostering a more welcoming environment for both firms and investors. Moreover, a favorable regulatory landscape may encourage banks and hedge funds to develop and offer their own digital assets, broadening access to these investments for a wider audience.
### Return of Talent to the U.S.
In recent times, numerous digital asset companies have left the United States, citing an unwelcoming regulatory environment and taking valuable talent abroad. A shift in regulations and the overall attitude of the Trump Administration towards cryptocurrency could entice American professionals to return and innovate within the blockchain sector domestically.
