The price of bitcoin surged beyond $109,000 early Monday, mere hours before President-elect Donald Trump’s inauguration, as an invigorated cryptocurrency industry anticipates swift action upon his return to the White House, reports AP.
Previously a skeptic who once described bitcoin as “seeming like a scam,” Trump has recently embraced digital currencies with newfound enthusiasm. He has launched a cryptocurrency venture and pledged during his campaign to position the U.S. as the “crypto capital” of the world early in his presidency.
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Trump’s promises include establishing a U.S. crypto stockpile, introducing industry-friendly regulations, and appointing a crypto “czar” to his administration.
“You’re going to be very happy with me,” Trump assured crypto enthusiasts at a bitcoin conference last summer.
Bitcoin, the world’s most prominent cryptocurrency, was created in 2009 as a decentralised form of electronic cash, free from control by banks or governments. Cryptocurrencies, including bitcoin, have moved from financial fringes to mainstream prominence in dramatic bursts of growth.
While the volatile nature of cryptocurrencies and their associations with criminal activity and scams have drawn criticism, their resilience against multiple price drops has surprised detractors. Many in the crypto industry, feeling targeted by the Biden administration, supported Trump’s campaign financially, contributing to his victory in November. Bitcoin has steadily risen in value since then, breaking $100,000 for the first time last month before briefly falling to about $90,000. It climbed approximately 5% on Friday and surged more than $9,000 early Monday, according to CoinDesk.
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Just two years ago, bitcoin was trading at about $20,000.
Trump’s key cabinet and regulatory appointments include several crypto advocates, such as his choices for the Treasury and Commerce departments and the Securities and Exchange Commission (SEC).
A landmark “Crypto Ball” was held on Friday, celebrating Trump as the first “crypto president.” Tickets for the sold-out event cost several thousand dollars.
Early Actions Trump May Take on Crypto
Crypto Council
During his campaign, Trump vowed to create a special advisory council within his first 100 days to provide guidance on developing “clear” and “straightforward” cryptocurrency regulations.
While specific details about the council remain unclear, Trump appointed tech executive and venture capitalist David Sacks as the administration’s crypto “czar” following his election. Former North Carolina congressional candidate Bo Hines was also named the executive director of the “Presidential Council of Advisers for Digital Assets.”
At last year’s bitcoin conference, Trump assured supporters that new regulations would be crafted by individuals who support the industry. His pick to lead the SEC, Paul Atkins, has been a strong proponent of cryptocurrencies.
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Crypto advocates have expressed frustration with what they perceived as hostile policies under the Biden administration, including strict enforcement actions and stifling accounting practices. Outgoing SEC Chairman Gary Gensler has defended these measures, asserting that the industry is “rife with bad actors.”
“As far as general expectations from the Trump Administration, I think one of the best things to bet on is a tone change at the SEC,” said Peter Van Valkenburgh, executive director of advocacy group Coin Center.
Strategic Bitcoin Reserve
Trump has also promised that his administration will stockpile bitcoin, similar to how the U.S. holds gold reserves. At a bitcoin conference last summer, he stated that the government would retain the billions of dollars in bitcoin seized through law enforcement actions instead of auctioning them off.
A draft executive order, shared online by crypto advocates, proposes establishing a “Strategic Bitcoin Reserve” as a permanent national asset managed by the Treasury Department through its Exchange Stabilization Fund. The proposal suggests the Treasury eventually hold at least $21 billion in bitcoin.
Republican Sen. Cynthia Lummis of Wyoming has introduced legislation to mandate a bitcoin stockpile, arguing it would diversify government holdings and hedge against financial risks. Critics, however, cite bitcoin’s volatility as a drawback for its use as a reserve asset.
Creating such a reserve, proponents argue, would further legitimise bitcoin. “This would be a giant step toward normalising bitcoin in the eyes of people who don’t yet see it as legitimate,” said Zack Shapiro, policy head at the Bitcoin Policy Institute.
Ross Ulbricht
Trump received enthusiastic applause at a bitcoin conference earlier this year when he reiterated his promise to commute the life sentence of Ross Ulbricht, the founder of the Silk Road drug marketplace that used crypto for transactions.
Ulbricht’s case has become a rallying point for some crypto advocates and Libertarian activists, who argue that government investigators overstepped their bounds in prosecuting him.