Donald Trump has pledged to lead “the most crypto-friendly administration in U.S. history.” Granted, this is not a difficult hurdle to clear. Nonetheless, the groundswell of vocal and financial support President Trump received since July’s Bitcoin 2024 conference points to substantive policy changes on the horizon.
It’s fair to question how quickly banks and credit unions will embrace these changes after facing years of regulatory pushback. Recent news from Davos suggests banks are open to adoption.
The visible participation of traditional FIs will be pivotal in completing crypto’s mass-market evolution. Back-office R&D leveraging crypto’s underlying technology (examples including digital ledgers and cryptographic keys), which had continued throughout the two-year “winter,” is also poised to move the ball forward in less headline-grabbing ways.
Working within the System
Among President Trump’s biggest applause lines at Bitcoin 2024 was his promise to fire SEC Chair Gary Gensler, who had established himself as a lightning rod for the crypto community. Although the industry’s ire stemmed from his aggressive approach to enforcement actions, Gensler’s stance that digital assets like Bitcoin qualify as securities and are, therefore, subject to SEC jurisdiction fueled regulatory uncertainty, as well as lawsuits against market leaders like Coinbase and Ripple. (Gensler also greenlighted the launch of ten Bitcoin ETFs during his tenure, albeit following adverse legal rulings.)
Gensler spared President Trump the dismissal by resigning prior to the inauguration. Paul Atkins, a former SEC Commissioner and respected lawyer in crypto circles, has been nominated to succeed him. In the interim, Mark Uyeda, a Republican member of the U.S. Securities and Exchange Commission, will be the acting chair of the agency. Atkins’ path to confirmation appears smooth, and it’s no coincidence that his nomination coincided with Bitcoin’s initial surge past $100,000.
In actions involving the CFPB – which is also headed for a leadership change with the inevitable exit of Director Rohit Chopra – the new administration’s priority is to reduce the regulatory burden on financial institutions. It may, therefore, be surprising that the crypto industry’s objective is a clear, common-sense set of rules, which may well translate to additional regulation.
The Search for Stability
The price of Bitcoin is widely considered a barometer for the health of the broader crypto ecosystem. However, this measure overlooks a key portion of the picture. Stablecoin’s significant advances continued throughout Bitcoin’s trough of disillusionment. While FIs may focus on opportunities to meet customer demand for Bitcoin and other digital altcoins as an investment vehicle and store of value, stablecoins represent the more promising avenue for reimagining the means of exchange, particularly for cross-border transactions.
Since stablecoins are designed to maintain a precise value, there is no reason to hold them in hopes of appreciation. Yet the more than $200 billion in existence (nearly all pegged to the U.S. dollar, with USDC and Tether by far the biggest) clearly indicate a recognition of market use cases. Even without legislative support, stablecoin activity has grown to such an extent that by some measures, it already exceeds Visa’s network dollar volume (though it still lags far behind in transaction counts).
Despite its volatility challenges, more companies have begun accepting payment in Bitcoin, working with players like BitPay to streamline the process and limit exchange risk. Meanwhile, digital innovators like Nubank have expanded rewards programs that incent customers to hold USDC, a model remarkably similar to paying interest on deposits. The Trump administration’s goal of passing a stablecoin bill within its first 100 days could advance adoption in the United States.
There’s also the debate over establishing a Strategic Bitcoin Reserve akin to the government’s gold holdings at Fort Knox. From a sheer supply/demand perspective, this would further boost Bitcoin’s price outlook. The details of an actual rollout would be very thorny, and the concept itself runs counter to crypto’s initial goal of creating a financial system unfettered by nation-state influence.
The Bottom Line
Any remaining doubts regarding the ongoing role of digital assets in the U.S. financial system were presumably laid to rest over the past 90 days. The Trump administration’s regulatory priorities, including new leadership at influential agencies, are set to provide greater clarity and a pathway for crypto innovation in the mainstream banking sector. Whether you’re considering supporting customers eager to hold digital assets like Bitcoin or evaluating stablecoins as a means of moving money for your FI or its clients, SRM can help you explore the details.