Forward the original title: The Impact of Trump’s Presidency on Cryptocurrency: Analysis of the Growth of U.S. Cryptocurrency Holders and Regulatory Trends

Preface

On November 6, Trump won the U.S. presidential election, benefiting from his friendly stance towards the crypto industry, with BTC reaching new all-time highs and pushing towards the $90,000 mark. Trump’s re-election has sparked market attention on financial policies, particularly regarding the cryptocurrency sector.

On November 13, according to The Verge, President-elect Donald Trump appointed Elon Musk and Vivek Ramaswamy to lead the government efficiency department DOGE, paving the way for his administration to “cut government bureaucracy, reduce excessive regulation, eliminate wasteful spending, and reorganize federal agencies.”

According to a statement posted on Truth Social, the department will operate in a way that is “detached from the government” and work in collaboration with the White House and the Office of Management and Budget. The statement also mentioned that Musk and Ramaswamy must complete their work by July 4, 2026.

Image source: Musk’s X account

It can be seen that Trump’s re-election and his active support for cryptocurrency may become a key catalyst for the development of the U.S. crypto market, which could have a profound impact on the global crypto market. This may not only alter the policy environment of the crypto industry but also help attract institutional capital and innovative talent, positioning the U.S. as a leader in the global crypto economy.

1. Continued Growth of U.S. Cryptocurrency Holders

In recent years, the number of cryptocurrency holders in the U.S. has increased significantly. According to market research, more than 20% of U.S. adults owned some form of cryptocurrency in 2023, especially mainstream coins like Bitcoin and Ethereum. This growth trend is driven by several factors, including economic uncertainty, fiat currency inflation, and the gradual integration of blockchain technology into the financial sector. The market’s optimistic outlook following Trump’s re-election may further drive the increase in holders in the short term.

Cryptocurrency holders include not only retail investors but also a growing number of institutional investors. Banks, hedge funds, and pension funds have gradually entered the cryptocurrency asset management space, making the market more diversified. At the same time, the entry of institutional investors has contributed positively to market stability and liquidity, further driving the normalization of the cryptocurrency market.

According to data, in September, there were 220 million addresses that had interacted with the blockchain at least once, a number that has more than doubled since the end of 2023.

Image source: https://a16zcrypto.com/posts/article/state-of-crypto-report-2024/

The surge in active addresses is largely attributed to Solana, which has around 100 million active addresses. Following Solana are NEAR (31 million active addresses), Coinbase’s popular L2 network Base (22 million), Tron (14 million), and Bitcoin (11 million). Among Ethereum Virtual Machine (EVM) chains, Binance’s BNB chain (10 million) is the second most active chain, following Base, with Ethereum having 6 million active addresses.

Meanwhile, in June 2024, the number of monthly active crypto wallet users hit a historic high of 29 million. While the U.S. still holds the largest share of monthly mobile wallet users at 12%, in recent years, as cryptocurrency adoption has grown globally and more projects have excluded the U.S. through geofencing to seek regulatory compliance, the U.S.’s share of the overall mobile wallet user base has declined.

Image source: https://a16zcrypto.com/posts/article/state-of-crypto-report-2024/

2. Regulatory Policy Changes Under the Trump Administration

In 2022, the collapse of the trading platform FTX led the Biden administration to intensify its crackdown on cryptocurrency, causing dissatisfaction among executives and investors in the crypto industry. Since then, federal regulators have focused on combating fraud, taxing cryptocurrency investment gains, and attempting to classify more digital tokens as securities to strengthen regulation.

As a result, the U.S. Securities and Exchange Commission (SEC) has become the primary regulatory body, with its chairman, Gary Gensler, filing significant lawsuits against major platforms like Coinbase, Ripple, and Binance in recent years, accusing them of violating investor protection laws. All the companies have denied these allegations.

Before the election, many politicians anticipated that momentum would build with the passage of bipartisan crypto legislation, and an increasing number of policymakers and politicians have adopted a positive stance toward cryptocurrency.

Image source: https://a16zcrypto.com/posts/article/state-of-crypto-report-2024/

This year, the industry has also sparked other significant policy initiatives. At the federal level, the House of Representatives, with bipartisan support, approved the “21st Century Financial Innovation and Technology Act” (FIT21), with 208 Republicans and 71 Democrats voting in favor. The bill is awaiting review and approval by the Senate, and it could provide much-needed regulatory clarity for cryptocurrency entrepreneurs.

Also significant, at the state level, Wyoming passed the “Decentralized Noncorporate Unincorporated Nonprofit Association (DUNA) Act,” which grants legal recognition to Decentralized Autonomous Organizations (DAOs) and allows blockchain networks to operate legally without compromising decentralization.

Image source: https://a16zcrypto.com/posts/article/state-of-crypto-report-2024/

At the 2024 Bitcoin Conference in Nashville, Trump promised to establish a committee of industry experts and implement cryptocurrency-friendly policies. He also committed to making Bitcoin a “national strategic reserve” and firing SEC Chairman Gary Gensler. These promises have sparked renewed enthusiasm following Trump’s victory.

Cameron Winklevoss passionately wrote on social media: “Imagine if the crypto industry no longer had to spend billions fighting the SEC, but instead invested that money in the future of the currency. We could accomplish so much in the next four years. Amazing things are coming.”

3. The Ongoing Importance of Anti-Money Laundering (AML) in the Crypto Market

Anti-Money Laundering (AML) is crucial in the cryptocurrency market. The decentralized and anonymous nature of cryptocurrencies provides a convenient avenue for money laundering by criminals. As the number of market holders increases, particularly with the entry of institutional players, AML requirements become even more important. The Trump administration may potentially adopt stricter AML policies in the future to curb illegal activities.

In 2014, the Financial Action Task Force (FATF) issued guidelines on cryptocurrency-related anti-money laundering, prompting policymakers in FATF member countries to act swiftly. The U.S. Financial Crimes Enforcement Network (FinCEN), the European Commission, and dozens of other regulators have incorporated most of FATF’s cryptocurrency AML recommendations into law.

The responsibility then falls on cryptocurrency exchanges, stablecoin issuers, and certain DeFi protocols and NFT markets (depending on the case). FATF defines these markets as Virtual Asset Service Providers (VASPs). In the future, VASP compliance officers will be required to conduct mandatory KYC checks and regularly monitor suspicious activities to prevent transactions related to money laundering and terrorist financing.

Additionally, VASPs must report suspicious activities to the relevant regulatory bodies, which are responsible for analyzing fund flows and using various tools, including blockchain analysis, to trace illegal activities to real-world identifiers.

Image source:https://notabene.id/crypto-travel-rule-101/aml-crypto

In recent years, the U.S. Treasury Department has introduced several policies to strengthen anti-money laundering (AML) regulations for cryptocurrencies. The Trump administration is likely to continue this policy trajectory, with expectations to further enhance AML compliance requirements for cryptocurrency exchanges. For example, exchanges may be required to implement stricter identity verification measures and submit more detailed transaction records to ensure compliance with regulations. Under this policy push, cryptocurrency exchanges in the U.S. are expected to focus more on user identification, and projects that meet AML standards are likely to gain market recognition.

Stricter AML policies may put some short-term pressure on market liquidity, but in the long run, they will help increase market transparency and trust, paving the way for further institutional investment. As regulatory policies are further implemented, exchanges and projects that meet compliance requirements may gain a greater competitive advantage in the market.

4. Potential Impact of Trump’s Policies on the Future Market

Trump’s re-election as president and his supportive stance towards cryptocurrency could have a profound impact on the future market. Here are some key potential effects:

(1) Regulatory Environment Shift

Trump has promised to fire current SEC Chairman Gary Gensler and replace him with a “crypto-friendly regulator.” This change could lead to a more relaxed and favorable regulatory environment for the U.S. crypto industry. Currently, the U.S. crypto market faces high compliance pressures, but if the regulatory policies become more open, it could help reduce compliance costs for businesses and attract more crypto projects to develop in the U.S. This could drive more capital and talent into the U.S. crypto market, further enhancing the competitiveness of the U.S. crypto industry.

(2) Enhanced Cryptocurrency Investment Sentiment

Trump’s public support for Bitcoin and cryptocurrencies, stating that he hopes the U.S. becomes a “Bitcoin superpower,” greatly boosts investor sentiment. In a policy environment filled with confidence, investors and businesses are more likely to invest in and innovate with crypto assets. Trump’s stance could spark a bullish sentiment, attracting capital to the crypto market and positively impacting the price of major crypto assets like Bitcoin, potentially even triggering a new bull market.

(3) Bitcoin Mining and Related Industries Returning to the U.S.

Trump’s vision of “Bitcoin made in America” suggests that he may push for the return of Bitcoin mining operations to the U.S., reducing dependence on other countries, particularly major mining nations like China. With more lenient energy policies and tax incentives, the U.S. could rapidly expand its mining infrastructure, becoming one of the global leaders in Bitcoin hash power. As mining activities increase, industries upstream, such as mining equipment and power infrastructure, will benefit, leading to growth in employment and technological innovation.

(4) Accelerating Traditional Financial Institutions’ Involvement in Crypto

If Trump implements crypto-friendly policies, banks, funds, and other traditional financial institutions may become more actively involved in the crypto market. The participation of traditional financial institutions will bring more liquidity, increase market maturity, and drive the compliance and credibility of crypto assets. Institutional investors entering the market can enhance market depth, reduce volatility, and attract more mainstream users to participate in crypto investments and usage.

(5) Changing the Global Crypto Industry Competitive Landscape

If Trump makes the crypto industry a part of his economic development strategy, U.S. policy could influence the stance of other countries. If the U.S. becomes a “Bitcoin superpower,” other countries may be forced to speed up their crypto policy development to avoid falling behind in the global crypto economy. This international competition will drive global policy reforms and could accelerate the overall development of the crypto and blockchain industry.

Summary

The direction of the financial markets under Trump’s leadership will directly impact the regulatory environment of the cryptocurrency market. As the number of cryptocurrency holders steadily increases, the demand for regulation and compliance in the market is also growing. This article aims to analyze the potential impact of the Trump administration on the U.S. cryptocurrency market, particularly in terms of regulatory enforcement and changes in anti-money laundering measures.

Disclaimer:

1. This article is reproduced from [ForesightNews]. Forward the original title “The Impact of Trump on Cryptocurrencies after He Came to Power: Analysis of the Growth of U.S. Cryptocurrency Holders and Regulatory Trends”. The copyright belongs to the original author [Beosin]. If you have any objections to the reprint, please contact Gate Learn Team, the team will handle it as soon as possible according to relevant procedures.
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