What does Trump mean for the cryptocurrency industry?

As President-elect Donald Trump prepares to take office on Monday, the cryptocurrency industry is feeling particularly optimistic. Trump embraced the cryptocurrency industry during his presidential campaign, and was supported by many wealthy investors with ties to the industry.

Trump was greeted with prolonged applause when he took the stage at a Bitcoin conference in Nashville in July. For about an hour, he outlined his policies on cryptocurrencies, suggesting that he would “embrace” the industry and make sure the rules are “written by people who love your industry, not hate it.”

“The United States will be the cryptocurrency capital of the planet and the Bitcoin superpower of the world,” he said.

Now, six months later, Trump is back in the White House and is expected to be a key ally of the emerging industry. He has appointed several crypto-friendly business figures to key roles in his administration, including Paul Atkins to lead the Securities and Exchange Commission and venture capitalist David Sachs as his AI and cryptocurrency czar. Tech billionaire Elon Musk, a cryptocurrency enthusiast, has also become a key ally of Trump and is expected to play a key role in influencing policy.

Cryptocurrencies are digital currencies that are bought or sold online. Every transfer is tracked in a public ledger called the blockchain. The prices of these assets rise and fall and sometimes fluctuate dramatically. Unlike traditional currency, cryptocurrency is decentralized, meaning it is not controlled by a bank or government.

“It’s going to be a really interesting time,” said Hannah Halaburda, a cryptocurrency expert at New York University.

Cryptocurrency investors have reacted greatly to Trump’s election, Halaburda said. In the weeks and months following his victory, the prices of many cryptocurrencies soared, including bitcoin, which rose to a record high of $108,000 in December. These rises are an indication that many in the industry believe the next four years will bring less regulation and more innovation, Halaborda said.

“The price of cryptocurrency is based almost entirely, and in some cases entirely, on sentiment…. There will be new innovation. There will be new experiences. There will be new excitement,” she said.

Trump’s views on cryptocurrency appear to be in stark contrast to the tough stance taken by the Biden administration. Biden’s SEC Chairman, Gary Gensler, has been aggressive in cracking down on cryptocurrency companies, filing lawsuits for fraud and money laundering. When Trump pledged at the Bitcoin conference to fire Gensler upon taking office, he received the loudest applause of the night, a sign that Gensler had become Public Enemy No. 1 to many in the industry.

“I didn’t know he was so unpopular,” Trump joked after hearing the applause.

Gensler will not give Trump the opportunity to fire him, announcing that he will resign from his position at noon on Monday, just like Trump, Her family launched their own cryptocurrency project in SeptemberHe is sworn in as president. In an interview with Yahoo Finance, Gensler didn’t back down from his aggressive stance on cryptocurrencies, describing many digital assets as “highly speculative.”

“You have to wonder what the real use case is,” he said. “What is their value proposition?”

Cryptocurrency interests played a large role in the presidential election, funding several candidates interested in cryptocurrencies. According to the watchdog group Open Secrets, three pro-crypto political action committees have spent more than $130 million to elect their supporters.

For example, in Ohio, $40 million went to Republican cryptocurrency supporter Bernie Moreno, who unseated longtime Democratic Sen. Sherrod Brown. Brown’s defeat was a major win for the cryptocurrency industry, as Brown chaired the Senate Banking Committee and favored stricter regulations for cryptocurrencies.

“This will be the most pro-crypto government we have ever seen,” said Christine Smith of the Blockchain Association, which calls for a “pro-innovation policy environment in the digital asset economy.”

Smith said many in the industry would welcome some regulation, especially regarding third-party exchanges. Smith said proper regulations could help prevent failures like the collapse of cryptocurrency exchange FTX in 2022, after its CEO, Sam Bankman Fried, diverted consumer funds into other investments. Proper regulation can root out bad actors without crippling the new industry, Smith said.

“This is a very exciting time to strengthen American leadership in this area by putting the right regulatory framework in place,” she said.

Note: This article has been updated to correct a typo.