Trump will relax cryptocurrency regulations: How big is the gap between promise and reality?

Author: Turner Wright, CoinTelegraph; Compiler: Baishui, Golden Finance

With seven days left until U.S. President-elect Donald Trump takes office, many in the cryptocurrency industry are watching his future personnel choices and policy statements.

Since Trump went from calling Bitcoin a "scam" in 2021 to claiming to embrace the technology during his 2024 presidential campaign, Trump has made a number of promises to the digital asset industry that could affect regulation and enforcement. While there is no way to know if he intends to prioritize fulfilling these promises once he takes office - or if he will deliver on them at all - there have been some changes in the regulatory landscape ahead of his scheduled inauguration.

Fire Gary Gensler ‘On Day One’

At the Bitcoin 2024 conference, Trump promised to fire SEC Chairman Gary Gensler on his first day in office, January 20. Many speculated that Gensler was more likely to announce his resignation before Trump took office, even though the SEC chairman’s term ends in June 2026.

On November 22, about two weeks after the U.S. presidential election, Gensler announced that he would resign on the day of Trump’s inauguration, paving the way for the Senate to confirm another SEC chairman. The president-elect will have the power to appoint an acting head of the regulatory agency until the Senate confirms Gensler’s full-time successor.

On Dec. 4, Trump announced his intention to nominate former SEC Commissioner Paul Atkins to serve as commission chairman in 2025. Whoever becomes SEC chair will have the power to change regulatory policy and related enforcement actions for digital assets as securities — a move that crypto users have harshly criticized Gensler for.

Will financial regulators take a different direction starting in 2025?

Beyond making a general promise to change the SEC’s stance on “vilifying” the cryptocurrency industry and “preventing average Americans” from moving money to exchanges, it’s unclear what plans Trump might have for the commission in a second term.

If confirmed as SEC chair, Atkins would have the power to chart his own path. If Trump disagrees with a decision, he could call out the potential commission head on social media or apply other political pressure.

Some members of the 119th Congress have suggested supporting passage of the Financial Innovation and Technology for the 21st Century Act (FIT21), which would clarify the roles of the SEC and the Commodity Futures Trading Commission (CFTC) with respect to digital assets. However, even without this bill, there have been reports that Trump intends to appoint a CFTC chair who supports crypto regulation that is favorable to the industry.

According to “Project 2025” — a conservative policy framework that the Trump transition team rejected during the campaign but reportedly pivoted to hiring decisions after Election Day — lawmakers should “modernize the definition of a commodity […] and clarify the treatment of digital assets.” The framework also recommends that any administration “eliminate regulatory barriers” at the SEC.

“The SEC and the CFTC should clarify the treatment of digital assets [by promulgating] joint regulations to provide that a holder of a digital asset shall not be treated as a party to an investment contract [and] amend the definition of a commodity to include digital assets that are not securities.”

The Trump-Vance transition website did not mention the SEC or CFTC in its policies at the time of publication.

Presidential Advisory Commission on Bitcoin and Cryptocurrency

At the Bitcoin 2024 conference, Trump also expressed his intention to create a commission focused on issues related to digital assets:

“Their task will be to design transparent regulatory guidelines that benefit the entire industry, and they will do that work in 100 days. We will write regulations, but from now on, the rules will be written by people who love your industry, not those who hate your industry.”

As of January 13, the president-elect has appointed former PayPal COO David Sacks as his “crypto and AI czar” to lead the commission, and former House Republican candidate Bo Hines as executive director.

Trump said Hines and Sacks will work to “foster innovation and growth in the digital asset space while ensuring industry leaders have the resources they need to succeed,” but at the time of publication he had not provided further details on the committee’s activities and whether they might include favorable regulations.

Stop the Fed from Developing a CBDC

Trump said at the Bitcoin 2024 conference: “The creation of a central bank digital currency is over. There will never be a CBDC as long as I am president of the United States.”

Rep. Tom Emmer said the Fed has been exploring the development of a digital dollar for years, including making a CBDC one of its “primary responsibilities” in March 2024. To date, the central bank has not proposed any timeline for a potential digital dollar, but many U.S. lawmakers and political candidates running in 2024 have opposed CBDCs.

While U.S. presidents do have the power to appoint and potentially fire the Fed chair, their power to influence central bank policy is somewhat limited.

Trump can make public statements to put political pressure on the Fed to make certain decisions, and may even remove a chair who disagrees with him, but he can't necessarily order the Fed to take actions such as raising or lowering interest rates.

During his first term, Trump appointed Jerome Powell to the Fed chair. Although the president-elect criticized interest rates as being too high, he publicly said he would not try to fire Powell, allowing the Fed chair to serve until at least the end of his term in May 2026.