Will a Trump Win Energize or Depress the Crypto Market?

As the U.S. presidential elections draw closer, crypto and politics collide again. The two major contenders–current President Joe Biden and former President Donald Trump–appear to be currying the favour of the crypto elite to secure their bids. Trump, in particular, has been so overt with his declarations in support of crypto and all associated technologies that it makes one wonder if he truly means what he is saying. 

While one might be able to make a slightly successful argument that cryptocurrencies operate independently of political influence, election outcomes can influence market conditions—majorly through regulatory changes and other complex interplay between economic forces and government policies. In this article, we look at one possible scenario: a Trump victory, and whether it could potentially turbocharge crypto or send it down the abyss.

How Did We Get Here? Trump’s Evolving Stance on Crypto

Donald Trump is famous for many things, and one of them is his apparent dislike for crypto, at least before now. The former president has voiced scepticism about cryptocurrencies multiple times. Notably, he tweeted in 2019 that he was “not a fan of Bitcoin and other cryptocurrencies“ and suggested their value was “based on thin air.”

Fast forward to the present, and Trump’s rhetoric on cryptocurrency has undergone a dramatic transformation. In recent months, he has voiced strong support for digital currencies in speeches and social media posts, positioning himself as a champion of crypto innovation and freedom. What changed? No one can tell. All we know is that Trump is now a big fan of crypto.  

This shift appears to be part of a broader strategy to differentiate himself from the Biden administration, which has taken a more cautious and regulatory approach to crypto. In May 2024, during a campaign speech, Trump promised to “stop Joe Biden’s crusade to crush crypto,” a statement that drew enthusiastic applause from his audience. He further pledged, “I will ensure the future of crypto is made in the USA, not driven overseas. I will support the right to self-custody for the nation’s 50 million crypto holders.” 

He seems to back this up with his actions, too. Trump’s campaign became the first major presidential campaign to accept cryptocurrency donations.  He went as far as actively encouraging supporters to donate using cryptocurrency, stating during a speech, “If you can’t do it, I’ll make sure you can.” 

Trump’s new stance also aligns him with a growing segment of the Republican party that sees crypto as a symbol of financial freedom and innovation. Notably, the approach has energized parts of the crypto community, leading to increased engagement and, potentially, a new source of campaign funding. By embracing crypto donations, Trump is trying to tap into a tech-savvy, often younger demographic that has traditionally been less engaged with conservative politics.

On the other end, Trump’s pro-crypto statements have had a tangible impact on the cryptocurrency market, particularly in the memecoins sector. Following his endorsement of crypto donations, there was a significant surge in the value of election-related memecoins.

One of the most notable beneficiaries was MAGA Coin, named after Trump’s iconic “Make America Great Again” slogan. Since its launch on August 11, 2023, $MAGA has seen an astounding 35,211% increase in value, catapulting it to the 13th largest memecoin by market capitalization. This dramatic rise underscores the potential influence of political figures on the crypto market and highlights the increasing intertwining of politics and digital currencies.

So, what are the possible implications of a Trump victory in the US election for the crypto market?

What Would Happen to Crypto in the US if Donald Trump Is Elected Again?

We tried to group the potential scenarios for the U.S. cryptocurrency market and regulatory landscape in the event of a Trump victory in November into three broad categories. Each scenario could have far-reaching implications for the industry, investors, and the broader economy.

Scenario 1: Trump Makes Good on His Promises

If Trump follows through on his campaign promises, we could see a significant shift in the country’s approach to cryptocurrency regulation and adoption. Interestingly, some stakeholders believe this would be the case. House Majority Whip Tom Emmer, who recently endorsed Trump, believes a second Trump administration would be more supportive of the crypto industry. According to Brian Brooks, a former top bank regulator under Trump, the former president’s appointees to regulatory positions will likely be open to or even friendly towards crypto.

Though making regulations is the lawmakers’ responsibility, a crypto-friendly Trump administration could push for regulations that provide clarity and support for the industry. This would help strengthen the sector’s already substantial presence in the US market. Trump’s policies could even lead to broader acceptance and use of cryptocurrencies in everyday transactions. 

By fostering a crypto-friendly environment, the U.S. could position itself as a global leader in the digital currency space. And this is more like what Trump has been saying he wants to do. He has made specific policy promises that resonate with the concerns of the crypto community. 

In June 2024, he posted on Truth Social, his preferred social media platform, stating, “Bitcoin mining may be our last line of defense against a CBDC. Biden’s hatred of Bitcoin only helps China, Russia, and the Radical Communist Left. We want all the remaining Bitcoin to be MADE IN THE USA!!! It will help us be ENERGY DOMINANT.”

Scenario 2: Trump Ignores Crypto

Despite his campaign promises, there’s a possibility that a second Trump administration might choose to ignore or deprioritize crypto-related issues. A hands-off approach might mean things remain the same; we keep seeing this current continued reliance on enforcement actions rather than proactive regulation.

The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) might continue to vie for jurisdiction over various aspects of the crypto market. This conflicting regulatory approach creates further uncertainty for businesses and investors looking to make long-term plans in the crypto space.

In the absence of federal action, individual states might take it upon themselves to regulate crypto activities, leading to a patchwork of different regulations across states, complicating operations for crypto businesses. Some states become crypto havens, while others implement stricter controls. This leads to increased compliance costs for crypto businesses trying to navigate multiple regulatory regimes and operating across multiple states. 

Inaction at the federal level could also hinder the development of a comprehensive national strategy for crypto and blockchain technology. The U.S. might lose the opportunity to shape global crypto standards and practices, as it will fall behind other countries in the race to harness blockchain technology for economic and strategic advantage.

In the end, making any big changes to crypto rules would probably be up to lawmakers, making the future of crypto laws unsure under this president.

Scenario 3: Trump Turns on Crypto

This might be surprising, but there’s always the possibility that Trump could renege on his promises once he is in office and fight crypto with the last ounce of his blood. He is a politician, after all. If that’s the case, the future will be bleak for crypto in the U.S. and everywhere else, as Trump himself has said. 

If this happens, we may see the introduction of stricter regulations or bans on certain crypto products and services, such as privacy coins or decentralized finance (DeFi) protocols.

Faced with an unfavourable regulatory environment, many crypto businesses would inevitably exit the U.S. market and relocate to more crypto-friendly countries, which may result in the loss of jobs and tax revenue associated with the crypto industry. It also reduces the global influence of the U.S. in shaping the future of digital finance.

RELATED: Does Crypto Really Need the U.S. Anyway?

Given the U.S.’s influence on global financial policy, a crypto crackdown could shift the balance of power in the industry, potentially benefiting countries with more supportive regulatory environments. There would also be a fragmentation of the global crypto market into regulated and unregulated jurisdictions as some countries might follow suit with their own restrictive policies.

Final Thoughts

The impact of a ‘Trump return’ on the crypto market remains a subject of intense speculation. While his current pro-crypto stance suggests a favourable outcome for the industry, the possibility of policy changes or inaction cannot be ruled out. The scenarios outlined above represent a range of potential outcomes, each with its own set of implications for the crypto industry, investors, and the broader economy.

As the US political landscape continues to evolve, stakeholders in the crypto space must remain vigilant and adaptable. The interplay between politics and cryptocurrency is likely to become even more pronounced in the coming years, underscoring the importance of political engagement from the crypto community.

Regardless of the election outcome, one thing is clear: cryptocurrency has become too significant to ignore in national and international politics. The policies implemented over the next few years could have lasting impacts on the future of digital finance and the global economic order.

Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence. 

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