Trump Ignites Crypto Boom with SEC Nomination

Recently, the cryptocurrency market has experienced a boon after Donald Trump announced the nomination of an avid crypto supporter, Paul Atkins, to chair the Securities and Exchange Commission (S.E.C.). This news catalyzed Bitcoin reaching an unprecedented value of one hundred thousand dollars, sparking festive atmosphere among crypto followers. This euphoria in the crypto market draws parallels to the dot-com boom of the turn of the century when the internet boasted and delivered similar investment prospects.

For denizens of the crypto-world – the investors, burgeoning enterprises, and affirming donors who generously contributed multi-millions to crypto-aligned representatives in the run-up to November’s election, there is ample reason to be exhilarated – Trump’s victory being one of them. Swift returns on their investments can also be credited to the falter of known crypto doubters, most notably Senator Sherrod Brown from Ohio.

The S.E.C., as the country’s lead agency safeguarding investor rights, had previously adopted a more assertive style of regulating the crypto industry under Gary Gensler, President Biden’s pick for chairman in 2021. During his tenure, Gensler asserted the industry was a hotbed of deceptive schemes and fraudulent deals, which led to an array of lawsuits against various crypto companies, including digital-payment network Ripple and crypto exchange Coinbase.

However, with Atkins at the helm, it is highly likely that the S.E.C.’s current litigations may be put on standby. Having served as an S.E.C. commissioner during George W. Bush’s presidency, Atkins, a conservative attorney who also co-chairs the Token Alliance, represents a pivotal lobbyist group advocating for crypto. This could potentially facilitate a softer approach toward issuers of crypto assets such as tokens and currencies, something critics of crypto find alarming.

Atkins’ appointment, as crypto advocates emphasize, is nothing short of a historic moment. It stands as a testimonial to the transformative nature of Bitcoin and the blockchain technology, a profoundly secure decentralized digital ledger. Social media’s growth and its increasing influence is another factor aiding the rise of crypto. However, the otherwise promising investment filled Wall Street and policymakers with scepticism, seemingly limiting it to a niche pursuit.

Previously, the crypto market underwent a significant downturn in 2022-23, when Bitcoin lost 70% of its value, causing the reigning crypto conglomerates to crash. Despite this, the general economy and wider stock market were unscathed. Now, following Trump’s win, the essential elements that can spur a larger bubble, inviting more participants, seem to be in place.

Continuing advances in blockchain technology, along with its champions tirelessly promoting it as a groundbreaking disruptor primed to revolutionize banking systems and international payment structures, add impetus to this shift. The most important change, perhaps, is that policy and Wall Street appear to be warming up to the idea of a crypto future.

With Atkins leading the way, the S.E.C.’s approach to determining if crypto assets are securities, akin to stocks and bonds, or more analogous to physical commodities like gold or silver is anticipating a significant rethink. During Gensler’s term, the S.E.C. made a case against many crypto assets, claiming they were securities subject to strict disclosure and registration rules. Coinbase was accused of managing an unregistered securities exchange, while Ripple was alleged to have conducted an unlawful security offering through its XRP cryptocurrency. These allegations, however, were denied by both companies.

Earlier in the year, the majority of the lawsuit against Coinbase moved forward, a move seen widely as a victory for the S.E.C. On the other hand, Ripple saw a positive ruling stating it did not breach securities law by selling XRP to retail investors on an electronic exchange.

The soon-to-assume Crypto Champion has already committed to transform the Unites States into the world’s cryptocurrency nucleus. Theoretically, an overly exuberant crypto gala could be tempered by the Federal Reserve by restricting fiscal leverage or hiking interest rates. However, such actions seem unlikely when speculation is rife and asset prices are on the rise.

A throwback to the late nineties illustrates a similar reluctance from the Fed to intervene in soaring markets. Alan Greenspan, then Fed chair, initially forewarned of ‘irrational exuberance’ but subsequently remained passive, observing the meteoric rise of the Nasdaq.

Today, deflating crypto assets through a Fed intervention appears to be a remote likelihood. In fact, the central bank is focused on reducing, not hiking, interest rates. Jerome Powell, current Fed chair, last week likened Bitcoin to gold from an investment standpoint – a claim long argued by a multitude of cryptocurrency evangelists.