President-elect Donald Trump hasn’t taken office yet and already his presence is creating a sea-change in the world of innovation, blockchain and crypto. Outside of the obvious price action – BTC reaching a new high of $108K (before recent corrections) and Alt-Coins prepping for a breakout — there are some big moves happening that will shape the crypto landscape for years to come. Importantly, for the first time in history, we will have a crypto-friendly US Government. I can’t overstate the importance of this – unlike most other countries in the world, the US has been a boat anchor, limiting access, stifling advancement, attacking innovators and, candidly, pushing our talent away. Now, we have a chance to not only really participate, but to perhaps even lead the way. Let’s take a look at how this is shaping up.
Gone, Gone Gensler
Gary Gensler. His very name strikes fear into the heart of crypto enthusiasts. Well, maybe not fear. Maybe a better word is loathing. The reason for this is that during his tenure, which began April 2021 and will be ending January 2025, he led an almost one-man war against crypto. He demonstrated virtually no interest in collaborating with companies to create clear and proper rules of engagement. While industry leading companies like Coinbase did everything possible to operate in a compliant way, guidelines were simply not given. Instead, Gensler led the SEC on a crusade of regulation by enforcement, culminating in 30 new enforcement actions that began in 2022, and a staggering 46 in 2023, the highest single year total in over a decade. Let’s dumb this down a bit. Imagine telling your child to clean their room but then not telling them what you expect and then punishing them for putting the fire truck on the wrong shelf and the socks in the underwear drawer. Of course that makes no sense. You can’t meet expectations if expectations have not been set. And he didn’t.
His goal, it seems, was to bend existing securities laws to encompass crypto which – let’s just put this out directly – in almost all cases are not securities. His actions included Well’s notices to Robinhood, Uniswap, Consensys, Crypto.com and even OpenSea. The latter really belies his intention. OpenSea was a marketplace for tradable NFTs (unique crypto assets). If those are securities, then I would expect an equally vigorous program of enforcement against any baseball card marketplaces because it’s basically the same thing. He didn’t. Which, I believe, elegantly illustrates my point. Don’t get me wrong. If there’s fraudulent activity (FTX anyone) they absolutely should be pursued. But going after an industry in a blanket fashion just because you don’t like it is, well, just not very American.
His basis seems to be his expansive interpretation of securities laws and wedging these new and distinct digital assets into system where they didn’t fit. The Howey test, a virtually 100 years old regulatory framework, states that something is a security if it is sold with the expectation of future profits as a function of the efforts of others via a common enterprise. There is no company behind almost all blockchains. So, we should have just stopped there. Instead, he went after just about every company that provided people access to crypto assets claiming they were unlawful securities exchanges, and did his darndest to attack many of the assets themselves.
But he didn’t stop there. If you follow my blog at all you know that the approved Bitcoin (and Ethereum) ETFs were groundbreaking and transformational, opening the door for institutional investment. Strangely, he takes credit for approving the Bitcoin Spot ETFs as if this was a demonstration of proactive leadership. Nope. The reality is that he did this only because the judicial system ruled that he had to. He was forced to approve them because, well, he was unlawfully not approving them. He also claimed stablecoins (crypto assets backed by the dollar) were securities (which would imply then that dollars are securities.) You can’t make this stuff up.
The impact of this is simple. Companies explored overseas options, innovation was stifled, and taxpayer dollars were spent on a crusade with poor basis. It would have been so simple to create new frameworks and work with the industry, which is what the industry was asking for. It is no surprise then that this was one of the key factors that swept President-Elect Trump into office. People were sick of this nonsense.
A New Commissioner and a Czar
Well, Gensler is out and we now have a new nominee for SEC Commissioner, Paul Atkins. Atkins is pro innovation, pro crypto and has been a vocal critic of the outgoing Gensler. Currently CEO at regulatory consulting firm Patomak Global Partners, he is well known for his positions advocating reduced regulatory burdens that would promote innovation. He has consistently argued that excessive regulation can stifle technology and also drive innovation out of the US. Which, of course, is exactly what Gensler did. Importantly, he is also former chair of the token alliance, which is a group focused on promoting regulatory clarity for digital assets, providing clear guidelines while still ensuring investor protection. This role underscores his commitment to integrating crypto-assets into the broader financial system. Oh, he also has real experience as he served as SEC commissioner from 2002-2008 under President George W. Bush.
Atkins will be a breath of fresh air – or maybe even more like water given to one who has been in a desert for 1,358 days – to the industry. He is expected to continue to promote and foster innovation by working with the digital asset industry and creating clear regulatory guidelines. He’s also expected to abandon the current regime’s “keep it vague and sue” posture. It remains to be seen what he will do with the open cases and obviously, cases with fraud should not be dismissed. However it would not surprise me if the ones that seem to be pure “witch hunts” are abandoned… or at least settled out with a path forward.
We also have a newly minted advisory position, the “AI and Crypto Czar.” The appointee for this is hedge fund manager and all-around bull David Sacks. He’ll be doing something that was sorely lacking in the last administration, which is educating and advising on these technologies. This is yet another breath of fresh air as the previous administration, including congress and officials, were seemingly operating from fear rather than knowledge. And look, I am full time in this space and it’s almost impossible to keep up with the amount of change and speed of advancement. The creation of this new post demonstrates the incoming administration’s desire to embrace and understand this industry. What is interesting about this also is that it acknowledges that Crypto and AI are in the same bucket – the innovation bucket – and will work hand in hand. This speaks to the “Age of Autonomy” thesis that we’ve been promoting since 2018, which is that blockchain innovation is valuable, but particularly so when working hand-in-hand with AI, Robotics and IoT (sensor data). I suppose then this makes Sacks more like the “Innovation Czar”, which works for me.
Last but not least, all of this is empowered by the fact that we have the most crypto friendly congress in US history. Prior to this election we had some inklings of a tide change with both houses passing House Joint Resolution 109, which ultimately got vetoed by President Biden. This demonstrated movement, but not a mandate. Now, with approximately 220 newly elected crypto-friendly representatives and 15 newly elected crypto friendly senators, we have a congress that is poised to support the industry and pass measures that will provide clarity, growth, and opportunity.
Market Musings
So, lets end this year with a final look at the markets and what is in front of us in 2025. Certainly Jerome Powell scared everyone this past week. On the heels of a 0.25% rate cut, he then proceeded with a hawkish stance by reducing predictions from an expected four to a projected two rate cuts next year, seemingly in anticipation of a potentially negatively impactful fiscal policy from the incoming Trump administration (this remains to be seen).
Ultimately, we’ll have to see how this plays out and, in the short term, this could result in a slightly slower start to the year. But, at the end of the day, we see this as just a blip. There are just waaayyy too many factors lining up in our favor for 2025.
- Bitcoin ETFs have amassed $129B in AUM in less than a year. By way of comparison, it took 30 years for Gold ETFs to amass $128B, which now trail the BTC ETFs in AUM. (This is projected to be just the beginning, as we still don’t have mass acceptance of our markets yet.)
- We’re positioned perfectly in the general crypto four-year cycle – historically, we have 12-14 bull months to go
- Global M2 still projected to expand through early 2026 – a strong indicator for us
- We have a friendly USA (that’s never happened)
- US Strategic Reserve is potentially on the horizon
- Alt-season is upon us
The last point is critical. Consistently, after bitcoin makes its big moves we see a rotation into alternative assets, and everyone knows the big moves bitcoin has made. This is the harbinger, and while all of the above points us to a base case of $200K BTC through early 2026, we would expect alternative assets – the innovation stack – to significantly outperform over the coming 14 or so months, as it has done in every other cycle to date. This, my friends, is what we have been waiting for, and the tailwinds are lining up very, very well.
In Closing
Look, our country was originally founded on Life, Liberty, and the Pursuit of Happiness. This includes being innovative and, historically, one can see that we always have been. From manufacturing to the moon landing, the internet to investment in capital markets, the US has always moved the world forward. In this industry we just haven’t. Yet. Now, it looks like we will. And that, my friends, sets the stage for a Happy New Year.
That’s all for now. Until next time be well, have a safe and Happy Holiday season. We’ll see you all in 2025 when I’ll keep Decrypting Crypto for you!