Electing Crypto & High-Stakes Political Gamble

As President Donald Trump settles into his second term, the crypto industry finds itself at the center of Washington’s political and economic agenda, seeking to claim the return on its considerable financial investment in shifting the balance of power firmly into Republican hands in both the Congressional and Executive branches. Trump’s campaign promise to make the United States the “crypto capital of the world” has set the stage for a much-anticipated policy blitz unlike any seen before in digital asset regulation.

With Republicans controlling both chambers of Congress, the first 100 days of Trump’s administration are set to be a pivotal period for cryptocurrency policy. Legislation such as the Stablecoin bill is expected to garner bipartisan support, offering a rare opportunity for cooperation in an otherwise divided Washington. However, beyond rhetoric and executive orders, real change hinges on Congress—not the executive branch—crafting and passing lasting regulations.

Democratic leaders have voiced concerns over stablecoins’ potential role in facilitating illicit activity. Despite this, House Financial Services Chairman French Hill (R-Ark.) remains optimistic about finding common ground. “I remain committed to trying to make these bills a bipartisan success in the House,” Hill told Axios.

And after a brief pump on news of a Trump election, the price of Bitcoin has mostly shrugged, dipping from a recent all-time high of $109,114.88 to $89,260.10 at the time of writing, according to CoinMarketCap. Fluctuations reflect market uncertainty about the administration’s ability to deliver regulatory clarity.

To keep pace with the barrage of changes in law and policy, each week, I will track the promises made and kept (or not) by the President and Congress in this news series titled Electing Crypto.

The Opening Moves: Stablecoins Take Center Stage

One of the administration’s first major policy signals came with the announcement that stablecoin regulation would be among the earliest legislative priorities. Sen. Tim Scott (R-S.C.), Sen. Bill Hagerty (R-Tenn.), Sen. Cynthia Lummis (R-Wyo.), and Sen. Kirsten Gillibrand (D-N.Y.) introduced the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.

The bill aims to:

• Define a payment stablecoin as a digital asset pegged to a fixed monetary value.
• Establish clear procedures for institutions seeking licenses to issue stablecoins.
• Implement reserve requirements and a tailored regulatory framework for issuers.
• Subject issuers with more than $10 billion in circulation to Federal Reserve oversight while allowing state regulation for smaller issuers.

This legislation is positioned as a cornerstone of the administration’s effort to strengthen the U.S. dollar’s supremacy and to expand financial inclusion, although the actual implementation of inclusion is as yet unclear in an environment given Trump’s efforts to dismantle diversity, inclusion, equity accessibility initiatives in the federal government. Additionally, concerns from Democratic lawmakers remain, particularly regarding stablecoins’ potential role in illicit finance.

Some economists argue that a poorly regulated stablecoin market could introduce systemic financial risks, particularly if issuers lack sufficient reserves or engage in speculative investments. Advocates counter that a well-structured regulatory framework can mitigate these risks while fostering innovation and broader financial participation. With bipartisan negotiations ongoing, the ultimate fate of federal stablecoin legislation remains uncertain.

Trump’s Crypto EO: Defining a New Direction

On January 23, 2025, Trump signed a highly anticipated executive order (EO) on digital assets, setting forth a pro-crypto framework. The order:

• Directs the administration to evaluate crypto-friendly policies.
• Bans federal agencies from working on a U.S. central bank digital currency (CBDC).
• Rescinds Biden’s 2022 digital assets executive order.
• Calls for a review of all existing crypto-related regulations within 180 days.

While executive orders can set policy priorities for federal agencies, they do not have the force of legislation. Trump’s EO much like Biden’s digital assets EO (recently removed from the WhiteHouse.gov website) largely serves as a roadmap, delegating responsibility to advisory committees and regulatory reviews rather than implementing immediate regulatory changes.

The executive order is ambitious and true to campaign promises made, however it lacks immediate regulatory enforcement and may serve more as a political gesture than substantive policy change. Proponents believe, however, that it sets the stage for a more favorable legislative environment, particularly in encouraging agencies to establish clearer and less punitive guidelines for digital asset companies.

Trump’s Bitcoin Bet: A U.S. Strategic Bitcoin Reserve?

One of the administration’s most ambitious proposals is the potential creation of a U.S. Strategic Bitcoin Reserve. While Trump’s EO does not formally establish such a reserve, it directs federal agencies to assess the feasibility of holding Bitcoin as a strategic asset.

Backed by Sen. Cynthia Lummis (R-Wyo.), the initiative argues that Bitcoin could:

• Hedge against inflation.
• Strengthen the U.S. dollar’s global dominance.
• Serve as a digital alternative to gold as a reserve asset.

Following the announcement, Bitcoin surged above $106,000, signaling strong market enthusiasm for the administration’s pro-crypto stance.

However, concerns about the volatility of Bitcoin and its implications for monetary policy remain. Traditional economists warn that holding Bitcoin as a reserve asset could introduce new financial stability risks, particularly given its history of dramatic price fluctuations. The proposal also raises questions about how such a reserve would be structured and whether the Federal Reserve or Treasury would oversee its management.

Regulatory Overhaul: A New Era at the SEC

Trump’s appointment of Paul Atkins as Chairman of the SEC marks a dramatic shift from the enforcement-driven approach of former SEC Chair Gary Gensler. Atkins has already begun:

• Supporting the rescission of SAB 121 in favor of clearer crypto custody rules.
• Reforming the SEC’s stance on crypto classification, aiming to differentiate securities from commodities.
• Creating the SEC’s Crypto Task Force, led by Commissioner Hester Peirce, to establish clearer industry guidelines.

These moves could bring regulatory clarity to an industry that faced significant enforcement actions under the previous administration.

Sovereign Wealth Fund And Conflict of Interest Concerns

In an unprecedented move, Trump’s EO also declared the establishment a U.S. sovereign wealth fund (SWF). While intended to boost economic development, the fund raises constitutional concerns since Congress controls federal spending. If the SWF invests in Bitcoin, it could legitimize digital assets as a reserve but also introduce unprecedented volatility risks in federal asset management.

To add fuel to concerns, Trump’s personal involvement in crypto has sparked controversy. Just days before his inauguration, Trump launched his own celebrity meme coins, $TRUMP and $MELANIA, raising significant concerns (by supporters and opponents alike) about:

• Profiteering from his political influence.
• Market manipulation, as Trump-affiliated entities control 80% of the coin supply.
• Ethical concerns regarding transparency in presidential financial dealings.

The First 100 Days: Setting the Stage for a New Crypto Era?

The first 100 days of Trump’s second term have set the most aggressively pro-crypto tone in U.S. history. However, the real test lies ahead. Will Congress deliver meaningful legislation, or will crypto remain a political battleground?

One thing is clear: crypto is no longer an outsider in American politics. It has taken center stage.