‘Crypto’ rejoices as Trump’s win expected to turf guardrails

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Donald Trump’s second term as U.S. president promises to be impactful for the ‘crypto’ sector, thanks to the expected removal of regulatory guardrails and legislators terrified of becoming the target of crypto campaign financing.

Shortly before Trump’s electoral college victory over his opponent Kamala Harris was called by Fox News late Tuesday night, the BTC token posted a new all-time fiat value high of just over US$75,350, eclipsing its previous record of $73,800 set this March. The token briefly topped $76,000 for the first time on Wednesday and remains comfortably above $75,000 at the time of writing.

Other prominent tokens were similarly elevated following Trump’s victory, buoyed by the thought of the first self-identified ‘crypto president’ entering the White House. And yet the WLFI token of Trump’s decentralized finance (DeFi) project, World Liberty Financial, didn’t get much of an election boost. The number of WLFI sold did finally top one billion after three weeks on the market (but that’s only 5% of the number they expected to sell on day one).

Trump’s party also retook the Senate and appears poised to retain control of the House of Representatives (counting remains ongoing). Coupled with a safe right-leaning majority on the U.S. Supreme Court and the ability to resume stacking federal courts with GOP stalwarts (and one or two lunatics), the sky’s the limit for what heights speculative digital assets might hit over the next four years.

In the short term, all eyes turn to the lame duck session of Congress that will get underway next week and extend through January until the newly elected members take their seats post-inauguration. Legislation governing stablecoin regulation—particularly so-called ‘payment stablecoins‘—is among the crypto-focused bills that could come up for debate and/or voting, along with the FIT21 market structure bill passed by the House this summer.

Even if a crypto bill fails to pass in the lame duck, the odds are good for an early vote in 2025, particularly since Sen. Sherrod Brown (D-OH) went down to defeat against challenger Bernie Moreno, a political neophyte who enjoyed a $40.1 million campaign financing boost from the pro-crypto Fairshake political action committee.

Brown is the current chair of the Senate Banking Committee and a noted crypto critic. With Brown out of the picture, Ranking Member Tim Scott (R-SC) will likely chair the committee going forward. Scott previously pledged to launch a digital asset subcommittee should the GOP prevail at the polls.

However, crypto operators may pressure politicians to hold off on passing any of the existing bills because they now believe they can achieve vastly more permissive legislation and even ‘lighter touch’ regulation in the new Congress.

In July, Trump promised to “immediately appoint a [BTC] and crypto presidential advisory council” if he regained the presidency. This council’s mandate would be “to design transparent regulatory guidance for the benefit of the entire industry, and they will get it done in 100 days.” Trump assured crypto fans, “From now on, the rules will be written by people who love your industry, not hate your industry.” So, odds are that the sector will be keen to wait until January before the sausage-making begins in earnest.

Tether breathing easy

Speaking of someone who loves this industry, Trump transition team co-chair Howard Lutnick of Wall Street financial services firm Cantor Fitzgerald (NASDAQ: ZCFITX) is now sitting in the catbird seat. Lutnick, who allegedly custodies the U.S. Treasury bills allegedly owned by the issuers of the Tether (USDT) stablecoin, had already started lobbying legislators on crypto issues dear to Cantor’s heart long before Tuesday’s vote.

The question now becomes, does Lutnick have enough juice with Trump to convince him to convince legislators to craft new stablecoin legislation that doesn’t so explicitly elevate Tether’s rival Circle, the U.S.-based issuer of the USDC stablecoin, at Tether’s expense?

At the very least, Lutnick will almost certainly be able to convince Trump to pick someone to lead the Department of Justice who’s willing to (a) not seize Tether’s T-bills and (b) shelve the criminal indictments that are reportedly just waiting to be unsealed. To paraphrase Jesse Pinkman, Tether can’t keep getting away with it. And yet, it seems they will.

Gensler’s countdown to extinction

Trump’s other pro-crypto pledges include blocking any plans by the Federal Reserve to pursue the launch of a central bank digital currency (CBDC). Fed Chair Jerome Powell swears the Fed has no CBDC plans, but recent Treasury documents that suggested CBDCs should replace stablecoins are likely being put into the fireplace as we speak.

Trump has pledged to commute the life sentence of Ross Ulbricht, founder of the Silk Road dark web marketplace, and establish a “strategic national [BTC] stockpile.” Trump has also made vague promises to America’s struggling block reward miners, which presumably will involve access to cheap electricity and reduced environmental constraints.

However, Trump’s most immediate pro-crypto action will be to fire Securities and Exchange Commission (SEC) chairman Gary Gensler, something Trump promised to do “on day one” of his second term.

Strictly speaking, Gensler has the option of remaining in his post until his term officially ends in 2026, as tradition holds that a president can only remove an SEC chair ‘for cause.’ But Trump has rarely felt constrained by precedent, and the anti-Gensler vibe of the GOP congressional caucus strongly suggests Gensler’s days are numbered.

Assuming Gensler’s toast, the implications for ‘crypto’ are immense. For one thing, active civil complaints against a variety of operators (Binance, Coinbase, Consensys, Cumberland, Hex, Kraken, Ripple Labs) will likely be withdrawn with no consequences for the defendants. Similarly, crypto operators who have received a Wells notice but have yet to face an SEC civil complaint (Crypto.com, OpenSea, Robinhood Crypto, Uniswap) will likely never receive that complaint.

As for whom Trump might install in Gensler’s place, potential candidates include Robinhood’s chief legal officer Dan Gallagher, SEC commissioner Hester ‘Crypto Mom’ Peirce, two former Commodity Futures Trading Commission (CFTC) chairmen—Chris ‘Crypto Dad’ Giancarlo and Heath Tarbert (the latter currently works for Circle)— plus former SEC general counsel Robert Stebbins and former SEC commissioner Paul Atkins (the latter served on Trump’s 2016 transition team).

Whoever replaces Gensler will have a profound impact on the sector. To cite just one example, the Coinbase (NASDAQ: COIN) digital asset exchange, which saw its shares rise by nearly one-third the day after the vote, will almost certainly launch all manner of shitcoins, including those in which they have a financial interest. Basically, if you thought we were already living in a memecoin paradise, you ain’t seen nothing yet.

Fairshake just getting started

The Ohio senate race saw over $308 million spent by outside groups, making it the most expensive congressional race of this election. The $40 million that Fairshake spent boosting Moreno over Brown represented around 13% of this $308 million and 30% of the total $133 million spent by Fairshake and two affiliated PACs—Defend American Jobs (pro-GOP) and Protect Progress (pro-Dem)—to elect pro-crypto candidates in 2024.

Combined with individual donations from crypto execs, Fox Business reported that the sector raised over $238 million to spend on 2024 races. Over $22 million of this haul went directly to Trump’s campaign, nearly twice the $12 million that went to Harris (and 99% of that came via Ripple co-founder Chris Larsen).

Fairshake derives the bulk of its funding from three sources: Coinbase, Ripple Labs, and the individuals behind the tech-focused Andreessen Horowitz (a16z) venture capital group. This trio contributed over $138 million to Fairshake and its affiliated PACs.

Additional funding came from the Jump Crypto market maker ($15 million); the Gemini exchange’s Winklevoss twins ($5 million); $1 million apiece from Circle, Kraken, and the Union Square Ventures group; $800,000 from Ethereum-based blockchain software outfit Consensys, plus numerous smaller donations.

Before Tuesday’s vote, Coinbase and a16z each announced eight-figure top-ups to Fairshake’s funding that will be utilized in the 2026 mid-term elections. On October 30, Armstrong tweeted that Coinbase had “committed another $25M” to Fairshake, while the morning of the vote saw a16z’s Chris Dixon issue a statement that “we are contributing over $23m in additional funds to Fairshake and its affiliated PACs.”

At the time this was written, the Coinbase-funded astroturf group Stand with Crypto claimed that 258 pro-crypto candidates were elected to the House versus only 116 anti-crypto pols. In the Senate, the results were closer, with 17 pro and 12 anti.

Fairshake’s triumphalism omits the fact that it chose not to back some extremely pro-crypto candidates, including John Deaton, whose bid to unseat the reliably anti-crypto Sen. Elizabeth Warren (D-MA) came up short on Tuesday. Fairshake appears to have recognized that Warren was a shoo-in for re-election and didn’t want to tarnish its alleged kingmaker status.

And Fairshake’s ads—whether pro- or anti-candidate—made no mention of crypto whatsoever, poking a serious hole in the industry’s mantra that 40 million Americans hold crypto and were prepared to disregard all other political concerns to ensure Congress treated digital assets with kid gloves.

Regardless, given the prevailing narrative surrounding the 2024 results, crypto’s financial threat will likely only further intimidate 2026 candidates to toe the line or face the consequences. 

Hands up if you never got laid in high school

The post-election gloating by some Fairshake funders started well before the race was called. Gemini’s Cameron Winklevoss danced on Sherrod Brown’s political grave, tweeting “[t]his is what happens when you mess with the crypto army.” Cameron celebrated “how much we are going to accomplish in the next 4 years now that the crypto industry won’t be hemorrhaging $ billions on legal fees fighting the SEC.” His brother Tyler taunted Gensler, saying, “The crypto army couldn’t have done it without you.”

Coinbase CEO Brian Armstrong tweeted a screenshot of Moreno being declared Ohio’s senate winner alongside text claiming that “[b]eing anti-crypto is simply bad politics” and celebrating the imminent arrival of “America’s most pro-crypto Congress ever.”

Armstrong also issued a lengthier tweet claiming that “the country fully repudiated the work of Senator Warren and Gary Gensler.” But as mentioned above, Warren kept her senate seat, so we guess “the country” doesn’t include Massachusetts. Armstrong also did his best Crypto Lex Luthor act, saying, “DC received a clear message that being anti-crypto is a good way to end your career.”

Coinbase CFO Paul Grewal got in on the action, tweeting at the SEC: “Stop suing crypto. Start talking to crypto. Initiate rulemaking now. There’s no reason to wait.”

Ripple CEO Brad Garlinghouse tweeted his suggestions for Trump’s first 100 days in office, including “moving the digital asset market structure bill [FIT21] forward in the Senate.” Garlinghouse also offered a shortlist for new SEC chair, including Giancarlo, Brooks or Gallagher.

Future imperfect

As the saying goes, elections have consequences, and 2024’s election promises to have major ramifications for a whole lot of things more important than digital Beanie Babies. But there’s no question that ‘crypto’ is heading into a decidedly more laissez-faire environment, which, given the U.S. financial system’s large footprint, will impact economies well beyond its borders.

With Coinbase and other crypto operators continuing to press their claim that U.S. federal watchdogs worked to limit crypto’s access to the traditional financial system, one of the sector’s top priorities will be to require banks to accept corporate crypto customers.

Given the free rein that some of these crypto bros appear to believe Trump’s victory will afford them, this is precisely the wrong time for banks to be unnecessarily exposing themselves to this type of risk. A ‘moral hazard’ only applies to people with morals, and this sector has amply demonstrated its bottomless amorality time and time again.

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