What Will Happen to the Cryptocurrency Market After Donald Trump Returns to Power?

Following US President Donald Trump's return, Coinbase saw the Securities and Exchange Commission drop its 2023 lawsuit

Following US President Donald Trump’s return, Coinbase saw the Securities and Exchange Commission drop its 2023 lawsuit, alongside Robinhood Crypto’s investigation closure. On February 25, the SEC also ended its federal probe into Uniswap Labs, triggering market declines with Coinbase and Bitcoin (BTC), the latter of which dropped from its $109,114 peak to $87,000, showcasing a 20% retreat.

There’s no apparent reason in sight, but the overall logic of the investors’ reaction is evident: They are not fond of unpredictability and usually care about the market much more than specific companies.

The reason the SEC dropped all these cases is less important than the answer to what this tells us. It’s no secret that the Trump administration has received crypto donations, which may come in handy later. Let’s recall how Coinbase and Robinhood have donated to Trump, with Uniswap also participating in a crypto super PAC, Fairshake, worth $116 million.

Does the above signal to investors that the donations were accepted, or is it just a coincidence? Is this a warm welcome from Washington for crypto in general? Fortunately, there is a litmus test to determine where the Trump presidency sits on crypto that the industry may highly appreciate. If his administration takes three steps, it may be evidence that they value crypto and care about the market.

Designation of CFTC by the regulator or a shift in the SEC’s position on token securities

The position of the SEC on token securities is crucial, with the commission indicating its intent to designate most tokens as securities under the previous leadership. This designation means that you could be at risk: Even if you are not directly issuing tokens yourself but instead developing a technical solution that interacts with or trades tokens, there could be complications — persistent legal risks connected to potential involvement with unregistered securities. This remains a significant barrier for crypto.

It could also be altered by the Commodity Futures Trading Commission (CFTC). A company’s success has historically been a significant factor in a token’s price, and the classification of the token as a security was not really in the hands of the company. If the CFTC lessens regulations, however, there could be massive implications for businesses in the US, which may be more likely to get involved with cryptocurrencies. A close eye will be kept on any steps taken by the CFTC.

Recently, the CFTC doesn't regulate crypto or have such powers. The transfer of jurisdictions over crypto to the CFTC will serve as a strong signal of the broad pro-crypto stance of the new administration. As a small and less aggressive regulator, the CFTC is less likely to pursue regulation through enforcement and will thus likely adopt a more collaborative stance towards the industry. As a result of any of these two developments, a massive risk US crypto companies face will be eliminated, thus unlocking a floodgate of innovative crypto enterprises entering the lucrative US market.

Adoption of stablecoins

The adoption of stablecoins is also expected to drive the growth of crypto payments, benefiting small and medium-sized businesses (SMBs). These businesses that start using crypto payments tend to turn to stablecoins first, so they must clearly understand the legal backdrop regarding stablecoins. It’s not enough to use hazy legislation that wasn’t intended for stablecoins. Instead, they need a well-defined framework to bring clarity to regulation.

What is the result of a better regulatory approach? More confidence. Companies will enjoy greater certainty in the transition from stablecoin to crypto. And, crucially, as more businesses integrate crypto payments, more opportunities will emerge for US crypto companies. To facilitate this positive cycle, a dedicated legislative framework that recognizes stablecoins as a legitimate means of payment is needed. Direct regulatory oversight, ensuring trust in reserves, and managing risks for stablecoin issuers will also boost confidence.

FinCEN’s role in banking crypto assets

Another sticking point is the problems crypto businesses face when opening bank accounts. Even when they manage it, they face higher service costs and fees as banks perceive significant money laundering risks in the crypto sector. This reluctance to serve crypto is ironic: The industry aims to establish an alternative payment system yet remains reliant on traditional banking.

For the crypto ecosystem to expand, financial institutions must start providing services to crypto-related entities. It’s equally clear that progress will remain limited without the participation of traditional banks. The key to change could lie with the Financial Crimes Enforcement Network (FinCEN). If this bureau takes steps to revise its risk assessment for crypto businesses, banks will adjust their evaluations accordingly. Financial institutions will be more willing to work with crypto companies.

How crypto will unfold in the US is far from obvious: The Trump administration has accepted some crypto donations, but continuing uncertainty is felt in the markets. By keeping an eye on the activities of the CFTC and FinCEN, as well as positive shifts in the regulation of crypto, a