Donald Trump’s second stint as United States president is under a week away, but his impact on the digital asset sector is already proving seismic.
The BTC token’s fiat value briefly dipped below US$90,000 earlier this week, despite what is now the routine late-night impulse buys by MicroStrategy (NASDAQ: MSTR) founder Michael Saylor. But BTC’s decline was arrested by reports of the ‘Day One’ pro-crypto executive orders Trump is rumored to be planning.
While nothing has been confirmed, the Washington Post reported that these orders are said to include the repeal of SAB 121, the controversial Securities and Exchange Commission (SEC) bulletin that imposed tough accounting standards for financial firms looking to custody digital assets. Crypto bros hated SAB 121, which they saw as an impediment to the wider adoption of digital assets.
Trump is also said to be planning an order to address the crypto sector’s complaints about traditional banks giving them the cold shoulder, allegedly in the direction of outgoing President Joe Biden’s administration.
These ‘debanking’ complaints have been accepted as dogma by the crypto crowd despite an utter lack of hard evidence that federal regulators did anything more than ask banks to pause their direct-to-consumer crypto plans until the banks could supply regulators with more details.
Trump is also expected to elaborate on his plans to establish a presidential ‘crypto council’ comprised of around two dozen industry leaders. In December, Trump appointed Bo Hines the executive director of the Presidential Council of Advisers for Digital Assets, which will be chaired by Trump’s ‘A.I. & Crypto Czar’ David Sacks.
Interestingly, Hines was one of the individuals behind the Restoring the Republic (RTR) token launched last August. Donald Trump Jr. almost immediately denied any link between the Trump family and RTR, which preceded the launch of the Trump-approved World Liberty Financial project by a few months.
Marc Andreessen, co-founder of the Andreessen Horowitz (a16z) (NASDAQ: ZADIHX) crypto-friendly venture capital group, is said to be huddling with Trump regarding a number of appointments, not only for crypto and AI but also military and intelligence roles. Andreessen has described himself as “an unpaid volunteer” for the new Department of Government Efficiency (D.O.G.E.) that Trump has tasked with purging government waste.
a16z was among the largest campaign finance contributors in the 2024 election cycle, along with the Coinbase (NASDAQ: COIN) digital asset exchange and XRP token issuer Ripple Labs. On January 14, Politico quoted Coinbase president/COO Emilie Choi calling on Trump to quickly pass a law designating the Commodity Futures Trading Commission (CFTC) as the primary regulator of digital assets and ending the “dumb turf war” with the SEC.
Senate prioritizing digital assets
Choi may get her wish, as Sen. Tim Scott (R-SC), the new chair of the Senate Banking Committee, issued a statement on January 15 detailing his priorities for the coming session. Among these priorities is ‘Developing a Framework for Digital Assets.’
Specifically, the Committee plans to “build a regulatory framework that establishes a tailored pathway for the trading and custody of digital assets that will promote consumer choice, education, and protection and ensure compliance with any appropriate Bank Secrecy Act requirements. The Committee will also foster an open-minded environment for new, innovative financial technologies and digital asset products, like stablecoins, that promote financial inclusivity.”
Last week, Fox Business reported that the Committee plans to establish a subcommittee devoted to digital assets, reportedly to be chaired by Sen. Cynthia Lummis (R-WY), a vocal ‘crypto’ advocate.
This move echoes the subcommittee established by the House of Representatives Financial Services Committee. Rep. Tom Emmer (R-MN) has now been appointed vice-chair of that House subcommittee, playing second fiddle to Rep. Bryan Steil (R-WI). Emmer, if you’ll recall, tried to shut down the SEC’s investigation of Sam Bankman-Fried’s FTX exchange before its fraud-related implosion. Nothing like failing upward.
The Senate subcommittee will also include Sen. Bernie Moreno (R-OH), who defeated former committee chair (and crypto critic) Sherrod Brown in November thanks to an unprecedented $40+ million cash injection from Fairshake, the Coinbase/a16z/Ripple-backed political action committee (PAC).
Tether custodian’s past comes back to haunt him
The Senate Banking Committee’s new ranking member is Sen. Elizabeth Warren (D-MA), a renowned crypto critic. On January 12, Warren sent a long list of questions to Scott Bessent, Trump’s nominee to be Secretary of the Treasury. Bessent is set to be grilled by the Finance committee—on which Warren also serves—on January 16.
Some of Warren’s questions are crypto-related, including asking whether the Treasury should be granted certain additional tools, including “a secondary sanctions tool that would allow it to sever fintech and crypto operators from U.S. relationships.” Warren also wants to know if the Treasury’s Office of Foreign Assets Control (OFAC) should have jurisdiction over dollar-denominated stablecoins.
Those questions could cut a little close to home for Howard Lutnick, boss of Wall Street financial services firm Cantor Fitzgerald (NASDAQ: ZCFITX). Cantor (allegedly) acts as custodian for the ~$100 billion worth of Treasury bills (allegedly) owned by Tether, the controversial issuer of the largest stablecoin by market cap. Cantor reportedly owns a 5% stake in Tether, although Lutnick has yet to acknowledge those reports.
Lutnick is Trump’s nominee to head the Commerce Department, but he originally wanted the Treasury job. As part of Trump’s transition team, Lutnick interviewed Bessent for the Treasury role while reportedly slagging him off behind the scenes and declaring himself the best man for the gig. Bessent reportedly told Lutnick to go f*ck himself, so how Bessent answers Warren’s stablecoin question could prove very interesting indeed.
Would you pay $50,000 to hang with Justin Sun?
Another Fairshake contributor, USDC stablecoin issuer Circle, recently announced that it had donated $1 million to Trump’s inaugural Committee. Circle joins a list of crypto donors that includes Circle’s USDC partner Coinbase ($1M); the Kraken exchange ($1M); Ethereum asset manager Ondo Finance ($1M); online brokerage Robinhood (NASDAQ: HOOD) ($2M) and Ripple ($5M).
The crypto contributions are part of what’s already a record amount raised by any presidential inaugural fund, to the point that the incoming administration has run out of seats on the dais to offer its deep-pocketed supplicants.
While crypto bros may not get their faces on television during Trump’s oath of office, they will be throwing their own ‘Crypto Ball’ in D.C. three days before the ceremony. Sponsored by many of the usual crypto suspects, the shindig will welcome 800 guests willing to pay $2,500 apiece for a ticket (plus fees). But in a move that says pretty much all you need to know about crypto’s lack of utility, you have to pay cash for those tickets.
Meanwhile, the Republic of Liberland micronation/vaporware invites crypto fans to join their “delegation” to the inaugural festivities. Liberland’s prime minister, aka Tron founder Justin Sun, is also offering a ‘Special VIP package’ organized in conjunction with Trump’s inaugural Committee that can be yours for the low, low price of $50,000.
Sun made headlines last November when he bought $30 million worth of WLFI, the ‘governance’ token of Trump’s WLF project. Sun’s purchase pushed total WLFI sales over the level where a Trump-owned entity collects 75% of surplus revenue, putting roughly $15 million directly in Trump’s pocket.
Sun just announced the launch of his new algorithmic stablecoin project (USDD 2.0) that will offer users a 20% annual yield, “fully subsidized by” the Tron decentralized autonomous organization (aka Justin). Sun’s announcement included the phrase “stop asking me questions like ‘where does the yield come from,’” so we suspect it won’t be long before Sun calls on Trump in the hopes of getting out of a legal jam.
SEC not waiting for new chair to start work
Justin Sun is just one of the many crypto individuals/entities that have been the subject of SEC civil complaints. In 2023, Sun was charged with market manipulation and offering unregistered securities to the public, a legal matter that remains ongoing. But possibly for not much longer.
On January 15, Reuters reported that the SEC plans a major shake-up that could include “reviewing some crypto enforcement cases pending in the courts.” Paul Atkins, Trump’s crypto-friendly nominee to succeed outgoing SEC chair Gary Gensler, has yet to be confirmed by the Senate, but crypto-friendly commissioners Hester’ Crypto Mom’ Peirce and Mark Uyeda are said to be itching to get the ball rolling before Atkins’ arrival.
Peirce and Uyeda worked as aides during Atkins’ previous SEC stint between 2002 and 2008, and the trio have reportedly discussed potential crypto policy changes. These could include issuing specifics on what would trigger the SEC to declare a digital asset as a security, something crypto operators have been demanding for years.
Following Trump’s election, Gensler and SEC commissioner Jamie Lizárraga both announced plans to resign before Trump took office. In December, the Senate Banking Committee declined to hold a vote on renominating crypto critic Caroline Crenshaw, the only other Democrat-appointed commissioner, after the crypto sector objected. Unless Trump renominates Crenshaw, her time at the SEC will end once Trump appoints her replacement.
The SEC may not be able to unilaterally dismiss all of its pending crypto suits, as judges handling the suits could object. However, the SEC could also negotiate settlements with defendants who were not charged with fraud or other harmful activities.
A new SEC suit filed this week could test how pliable Atkins will be when dealing with Trump friends and/or donors. The SEC has accused D.O.G.E. co-lead Elon Musk of failing to disclose his purchases of Twitter (now X) shares within the required timeframe. Musk and the SEC have butted heads on numerous occasions, and Musk has already rubbished the SEC’s latest suit as “lawfare” and labeled the SEC a “[t]otally broken organization.”
But the SEC’s allegations appear pretty cut-and-dried, leading some to suspect Atkins will find it hard to justify ditching this suit just because Musk is now a semi-permanent resident at Mar-a-Lago. As for the rest of us, grab your popcorn and wait to see whether Trump’s pals are now truly immune from prosecution.
Release the Kraken lawyer
Meanwhile, we might know who will be replacing outgoing CFTC chair Rostin Behnam, who’s also stepping down on January 20. While Trump hasn’t revealed who he’ll nominate to head the agency that will take point on regulating digital assets, one of the names on his shortlist may have tipped his hand.
Last week, Fox Business reported on Trump’s transition team interviewing various CFTC candidates, including Kraken’s chief legal officer, Marco Santori. On January 15, Santori announced he was leaving the exchange after five years. Santori didn’t specify where he was going, but he said he wanted to be “a bigger part of” the digital asset ecosystem.
‘Crypto guys are just blowing it out’
Finally, Trump’s transition team has raised so much money that it decided to forego public funding, which allows them to ignore public disclosure rules on who’s giving what—and who’s getting what in return.
On January 15, Axios reported that Trump’s various committees, super PACs, presidential library fund, the ‘non-profit’ group Securing American Greatness and other entities are expected to have raised around $500 million by summer. Bear in mind that Trump is barred from seeking a third presidential term, making these donations a pure influence play by those seeking Trump’s favor.
While the funds are coming from all sectors, Axios quoted an unidentified Trump adviser who said, “the crypto guys are just blowing it out. It used to be $1 million was a big number. Now we’re looking at some folks giving like $10 [million] or $20 million.”
Trump is reportedly quoting corporate balance sheets to his visitors to his Mar-a-Lago, saying, “you guys made this amount of money last year and you’re gonna make so much more now because of me.” This is all the more applicable to the crypto sector, which is expecting an unprecedented bull market once Trump loosens the regulatory guardrails.
David Frum, editor at The Atlantic, tweeted the Axios story and opined that it’s “like the sub prime bubble, only nobody gets a house (except the crypto guys themselves, of course).”
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