Trump’s Potential Impact on Cryptocurrency: The Bitcoin Act
By Will Canny | Edited by Sheldon Reback
Published November 7, 2024, 9:48 AM UTC | Updated November 7, 2024, 9:51 AM UTC
In a recent report by CoinShares, the asset management company has presented a compelling case for how a potential administration led by Donald Trump could benefit the cryptocurrency industry, particularly through the adoption of a proposed Bitcoin Act. The report posits that the passage of this legislation could significantly enhance the status of Bitcoin (BTC), aligning it more closely with traditional reserve assets like gold.
The Proposal of the Bitcoin Act
CoinShares articulated that the Bitcoin Act would recognize Bitcoin as a strategic reserve asset, allowing the U.S. government to purchase up to 5% of the total Bitcoin supply. This recognition would not only confer legitimacy to the cryptocurrency but also create an environment within which institutional and governmental interest in Bitcoin could flourish.
James Butterfill, Head of Research at CoinShares, remarked, “If enacted, the Bitcoin Act could potentially stimulate considerable institutional and governmental interest in Bitcoin, accelerating its growth and escalating its value to new heights.” The report emphasizes how similar legislation could pave the way for greater governmental investment in Bitcoin, replicating a practice often seen with gold reserves.
Legislative Support and Historical Context
The proposal has gained momentum with the introduction of legislation by U.S. Senator Cynthia Lummis (R-Wyo.) earlier this year, which aimed for the establishment of a strategic Bitcoin reserve. This legislation, titled “Stimulating Innovation, Technology, and Competitiveness through National Investment Optimization,” calls for the purchase of 1 million Bitcoins over five years to help reduce the national debt.
Trump’s administration – if he were to be re-elected – has hinted at the establishment of a Bitcoin reserve as part of his campaign strategy. Lummis echoed this objective on social media following the election, showcasing bipartisan support for the initiative.
Regulatory Environment Under Trump
Beyond the direct implications of the Bitcoin Act, CoinShares noted that Trump’s administration might also promote a more favorable regulatory environment for cryptocurrencies. Trump has previously criticized the U.S. Securities and Exchange Commission (SEC) and its chair Gary Gensler regarding their stringent approach to cryptocurrency regulation. This critique signals the possibility of future SEC leadership appointments that could accommodate more lenient regulations for digital assets.
Research from Canaccord also echoed this sentiment, noting that changes in SEC posture, paired with the adoption of a clear regulatory framework, could markedly increase the integration of digital assets within traditional financial markets. While the sitting president cannot directly dismiss SEC commissioners, a reshuffle could lead to more favorable figures, such as Hester Peirce, being appointed.
Implications for the Crypto Market
Should these regulatory shifts occur, they would likely benefit the broader cryptocurrency sector, particularly firms like Coinbase and Galaxy Digital. According to Canaccord, a supportive regulatory backdrop would facilitate a more widespread adoption of cryptocurrencies by financial institutions, ushering in new levels of acceptance and legitimacy.
In conclusion, while the notion of a Bitcoin Act and a pro-crypto regulatory framework under Trump remains speculative, analysts suggest that such developments could create significant ripples within the cryptocurrency space, fostering a more robust and legally recognized market for digital assets.
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Note: CoinDesk operates in accordance with strict editorial policies to ensure integrity, independence, and impartiality in its reporting. This article reflects current discussions and should be viewed in that context.
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