As Donald Trump prepares to take over the presidency on January 20, the cryptocurrency industry is abuzz over the potential impact of his administration’s policies. According to reports, industry executives expect President-elect Trump to issue several crypto-related executive orders on his first day, at least one of which is expected to trigger a surge in bitcoin prices. College of computer science experts – associate professor and blockchain consultant Vassilis Zikas and Ph.D. student Agam Shah – discuss the implications for the blockchain and cryptocurrency ecosystem.
A new era for Blockchain technology
Associate Professor Zikas highlights the fundamental differences between blockchain and the common architecture used by traditional financial systems like banks. While banks rely on private ledgers maintained by centralized entities, blockchain uses decentralized ledgers accessible to all participants. This transparency, he explains, is a double-edged sword: it increases accountability but raises confidentiality concerns.
Zikas highlights blockchain’s potential to revolutionize global financial transactions by providing a consistent, borderless mechanism for transferring assets. “The process of sending Bitcoin from a US-based user to a UK-based user is identical to transferring Bitcoin domestically,” he explains. This stands in stark contrast to traditional international banking, which is fraught with delays and fees.
The associate professor also notes that the previous Trump administration had a mixed stance on crypto. While remaining cautious, he supported regulating initial coin offerings and funding blockchain research. In contrast, the Biden administration’s stance, led by the Securities and Exchange Commission, has created uncertainty in the crypto space and reportedly helped push crypto entrepreneurship out of the United States and into a prolonged “crypto winter.” .
Building a regulatory framework
Blockchain researcher Agam Shah highlights the importance of clear regulation to drive crypto adoption. “A well-structured regulatory framework can encourage institutional participation by reducing uncertainties and risks while protecting retail investors,” he notes.
It highlights the damage caused by unregulated practices, such as wash trading, which occur when you sell a security at a loss and buy a “substantially identical” security within 30 days before or after the sale. High-profile failures like cryptocurrency exchange FTX have eroded public trust and many users have lost money. Shah believes the Trump administration’s positive sentiment toward bitcoin, coupled with his administration’s pro-crypto stance, could lay the foundation for comprehensive policies that foster innovation while protecting investors.
Shah also highlights advances in blockchain technology, such as tools to detect fraudulent activity, as critical to maintaining market integrity. “Technological developments will play a central role in ensuring transparency and fairness in the crypto space,” he adds.
Navigating Challenges and Opportunities
Despite the optimism surrounding the anticipated policies, Zikas and Shah suggest a cautious approach. Zikas emphasizes that users and policymakers need to be aware of the scope (and limitations) of the technology. For example, while blockchain may offer privacy benefits, common blockchain ledgers are not completely immune to identity discovery techniques. And even if absolute privacy is technologically feasible, it can facilitate illicit activities. Shah, meanwhile, emphasizes the importance of balancing innovation with market stability, especially given the volatility of the crypto market and the challenges posed by the final phase of Basel III – the latest update. update of global capital standards – which is expected to come into force in 2025.
Looking ahead, Zikas and Shah agree that clear, concrete policies will be key to positioning the United States as a global leader in blockchain technology. As the Trump administration aims to transform the United States into a crypto powerhouse, the coming months will be crucial in shaping the future of digital assets and blockchain innovation.
By fostering a balanced approach combining regulatory clarity and technological innovation, the United States could solidify its leadership in the global crypto economy, while ensuring the ecosystem remains transparent and secure.
