What Trump’s Win Means for Your Crypto
Written by
Andrew Lisa
Edited by
Jenna Klaverweiden
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President-elect Donald Trump campaigned on a pro-crypto platform. He strived — successfully, by most accounts — to differentiate himself from Vice President Kamala Harris and paint the Biden administration as hostile to digital currency.
According to CNBC, Trump promised to launch a strategic national crypto stockpile if reelected and elevated A-list crypto cheerleaders like Robert F. Kennedy Jr. and Elon Musk as his most visible surrogates. Both men are currently prepping for prominent roles in the incoming administration.
If Trump follows through on his campaign promises, investors can expect a dramatic shake-up in the crypto markets. Even if he doesn’t, they might be in for a different, but no less consequential, four years.
“A second Donald Trump presidency could have a significant impact on cryptocurrency, though the direction depends heavily on his policies,” said Blake Morgan, managing partner of oil and gas crypto tokenization company Mineral Vault. “Trump’s prior administration was known for a mixed stance on crypto, often viewing it with skepticism. However, if his recent shift toward supporting digital innovation continues, it could lead to a more favorable regulatory environment, which the market would likely respond to positively.”
Here are more details on what Trump’s win could mean for crypto.
The Bulls Have Every Reason To Anticipate a Market Rally
The crypto markets are like the stock market in that they react to emotion, optimism and expectations — and the expectation is that Trump was not making empty promises to woo “crypto bro” voters or to curry favor with big-money donors like Musk.
“The general investor’s perspective is that Trump’s shift to pro-crypto is genuine and not only a pre-election maneuver,” said Patrick Gruhn, former head of FTX Europe and CEO of Perpetuals.com, which facilitates a kind of derivatives trading called crypto perpetual futures. “Trump obviously learned about the crypto industry and revised his position from being a skeptic to an explicit crypto advocate.”
The markets have already responded with soaring gains even while President Joe Biden is still in office. In the days after Trump’s victory, Bitcoin was up 80% on the year when it hit a new record above $80,000. It has since surged to over $91,000.
New Tax Rules Could Let Crypto Traders Keep More Profit
For crypto investors, market fluctuations and price changes are just one way Trump’s policies could affect their wallets.
“Tax implications are another key area,” Morgan said.
According to TurboTax, the IRS treats cryptocurrency as property. When investors buy, sell or exchange it, it’s a taxable event that results in a capital gain or loss, and CNBC reported that capital gains tax increases under Trump and his GOP-majority allies in Congress won’t happen, according to economists.
“If Trump pursues lower capital gains taxes, this could make crypto investments even more attractive,” Morgan said.
Hope for a Friendly SEC and — Finally — Regulatory Clarity
According to the New York University School of Law, Biden’s Securities and Exchange Commission (SEC) has been criticized for regulating cryptocurrency by enforcing existing laws instead of by developing the modernized, more transparent and healthier regulatory framework for which industry advocates have long been clamoring.
A second Trump term could change all that.
“Ultimately, the crypto market thrives on regulatory clarity and confidence,” Morgan said. “If Trump’s policies align with fostering innovation while providing clear guidelines, it could be a boost for the industry, both in the U.S. and globally.”
‘An Almost Hostile Environment’
According to Fortune, the crypto industry feels as if it has spent the last three years under the boot of its archnemesis, SEC chair Gary Gensler, who it accuses of pursuing an unfair vendetta against crypto firms as part of President Biden’s hardline anti-crypto philosophy.
“Fortunately, Trump has promised to fire him on day one,” said Andreas Brekken, founder of SideShift.ai, a cryptocurrency swap service that has processed more than $1.25 billion in transactions since it launched in 2019.
Gruhn concurred.
“With Trump’s election, the crypto industry can expect way more favorable regulations in the U.S., which will allow the entire industry to grow,” he said. “Under the Biden administration for the last four years, the industry has suffered from an almost hostile environment to crypto and a regulation-by-enforcement approach by the SEC, which created substantial legal uncertainty for crypto businesses. Now the market is pricing in the new opportunities.”
For many, the changing of the guard alone is a cause for unbridled optimism.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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