NASHVILLE, TN – Donald Trump reacts at the Bitcoin 2024 conference in Nashville, TN. (Photo by … (+)
As the 2024 US presidential election enters its final days, Donald Trump appears to be gaining ground. Although the final outcome is not assured, current trends suggest that if this trajectory continues, Trump will win.
At the same time, the price of bitcoin has surged, recently crossing the $67,000 mark, a level not far from its all-time high of $73,750 reached seven months ago.
Given this price rise and bitcoin’s new status as a presidential campaign issue for Trump and Kamala Harris, many are now wondering: what impact would a second Trump presidency have on bitcoin policy and its price? ?
Trump and his close circle of advisors, including Robert F. Kennedy Jr., as well as his sons Eric and Don Jr., have expressed appreciation for the value of bitcoin, in stark contrast to the current administration’s more skeptical stance. .
Meanwhile, the Bitcoin community widely views Trump’s potential leadership as a boon for the industry, particularly because of his promise to remove Gary Gensler as chairman of the Securities and Exchange Commission (SEC).
Changes to crypto regulations coming?
Gensler has been widely criticized in both the Bitcoin space and the broader crypto space for regulating through capricious enforcement measures rather than proactive, principled rulemaking. Long suspected of joining Elizabeth Warren’s anti-crypto army in exchange for a coveted position in a Democratic administration, Gensler may be questioning his political instincts in the face of Harris’ defeat.
This “regulation by enforcement” from the SEC has stifled innovation and capital investment in the crypto industry. (Note: “The crypto industry” is just another word for a galaxy of startups and companies that are using new technologies to advance financial technology.)
Crypto companies practically begged to be allowed into the US compliance and regulatory regime, were rebuffed, and then faced costly legal consequences for crossing an invisible line. This is why the crypto industry rallied behind Trump – and why Harris was unable to attract their support, having hesitated to explicitly reject the Trump approach. Biden administration.
A change in leadership at the SEC could trigger a seismic shift in the regulatory environment for Bitcoin in the United States, but the broader story is even more significant than that.
A recent investigative report from Nic Carter revealed a targeted and possibly illegal effort by regulators in 2022 to shut down crypto-friendly banks. This initiative known as “Operation Chokepoint 2.0” has been known for years, but its depths have only recently been discovered. Carter’s report revealed a coordinated plan to not only limit access to banking services for any company dealing in crypto, but also to intentionally bankrupt otherwise healthy banks that were willing to work with financial innovators .
If Trump were to win and dismantle these behind-the-scenes efforts, it would radically change the fintech landscape. Banks – keenly aware that their traditional business models are underperforming in today’s economy – already have a strong incentive to adopt Bitcoin. But they won’t be able to take the plunge until their compliance departments are convinced that the U.S. government’s regulatory posture has permanently changed. There is little appetite for new relationships with crypto companies if there is a risk that the next administration will pull the rug out from under them.
However, a regulatory thaw under Trump’s presidency may outlast his administration. Large public companies, pension funds and institutional investors are already starting to add bitcoin to their balance sheets, both in physical form and through ETFs. The recent approval of Bitcoin ETF spot options will invite even more capital inflows and create a new layer of liquidity and price discovery in the market.
Bitcoin price depends on privacy and self-custody
What could all this mean for the price of Bitcoin? Increased liquidity and institutional adoption would likely stabilize some of bitcoin’s notorious volatility, making it more attractive as a store of value to traditional investors. At the same time, Bitcoin’s flat supply, alongside a significant rise in demand, could push its exchange rate higher against the dollar – with one important caveat.
Bitcoin is a digital property and has a physical existence. It is possible, and relatively simple, for businesses, individuals, and investment funds to maintain physical bitcoins in their own custody.
However, the increased demand for physical bitcoin is not quite the same as the increased demand for exposure to the price of bitcoin, which can be obtained using paper bitcoin.
If investors are not educated about the importance of self-custody, any increase in demand will result in an increase in the supply of paper bitcoins (also known as IOUs). This increase in supply would prevent the spot price of bitcoin from rising as high as it otherwise would.
Additionally, unless financial privacy becomes a priority for voters, one of the Bitcoin network’s most important capabilities – final settlement every 10 minutes – will be at risk.
If and when Operation Chokepoint 2.0 is dismantled and Elizabeth Warren’s anti-crypto army fades into obscurity, the crypto community will face a pivotal moment. Leaders and developers must choose which projects will most effectively advance both the industry and humanity as a whole.
Their top priority should be to educate the public on the critical importance of self-custody and provide tools for individuals to secure their own assets.
Equally vital is the development of robust financial privacy technologies, the most important of which in the near term is silent payments.
Without financial privacy and self-custody within reach of every consumer, driving bitcoin adoption could become indistinguishable from laying the groundwork for central bank digital currencies (CBDCs).
The convergence of political and financial forces appears to be paving the way for a new phase in Bitcoin’s journey, one that could see it firmly cemented as a central pillar of US monetary policy and global financial markets. It’s not yet clear what a Trump presidency would mean for Bitcoin, but if he follows through on his stated Bitcoin policy, the price of $1,000,000 per Bitcoin may not be as far away as it seems. appeared in the past.
