Compass Point Research Analyzes Improved Outlook for US Crypto Policy Under Trump

Donald Trump’s potential return to the White House is being viewed positively for the cryptocurrency and digital asset sector, according to a recent analysis by Compass Point Research & Trading. The firm noted that Trump has shown support for cryptocurrency, including accepting crypto donations for his campaign.

Last month, Trump engaged with a group of cryptocurrency miners to discuss how the industry could leverage U.S. energy production, distribution, artificial intelligence (AI) advancements, and data center development. He has expressed a preference for all Bitcoin mining to take place within the United States. His pro-cryptocurrency perspective has been integrated into the Republican National Committee’s 2024 Platform, which aims to halt restrictions on the crypto industry and prevent the establishment of a central bank digital currency (CBDC). Additionally, the platform endorses the self-custody of crypto assets and supports Bitcoin mining.

Furthermore, Trump has chosen Senator J.D. Vance from Ohio as his Vice-Presidential candidate. Vance, known for his pro-crypto stance, is currently working on draft legislation aimed at regulating cryptocurrency through the Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). This proposed bill is regarded as more favorable to the industry compared to the Financial Innovation and Technology for the 21st Century Act (FIT21), which has already received bipartisan support in the House. Notably, Vance also possesses between $100,000 and $250,000 in Bitcoin.

According to Compass Point, under a Trump-Vance administration, the chances of crypto legislation becoming law would increase significantly, with Trump potentially expediting the legislative process. Presently, stablecoin legislation is anticipated to lead crypto initiatives in Congress. However, the combination of Trump’s favorable stance on crypto and bipartisan support for FIT21 indicates that more extensive crypto legislation could be realized by 2025 or 2026.

The report emphasizes the importance of bipartisan support in enhancing the outlook for crypto policy. Senate Agriculture Committee Chair Debbie Stabenow of Michigan is in the process of drafting a bill that would grant the CFTC authority over digital assets. Although the specifics of the bill are not yet available, her intention is to push it out of committee before the August recess. This move is considered vital for the bill’s success. Stabenow’s partnership with House Financial Services Committee Chair Patrick McHenry, who played a pivotal role in advancing FIT21, highlights the potential for bipartisan collaboration in crypto regulation.

Looking ahead to 2025, should a Trump administration coincide with a Republican-controlled Congress, there would be a two-year opportunity to enact crypto legislation, as outlined by Compass Point. The progress of FIT21 and Stabenow’s ambition to advance a committee bill signify a shifting landscape that could favor comprehensive crypto regulations.

Compass analysts assess that the odds of such legislation passing in the current Congress have improved to over 60%, with plans to reassess this outlook following the upcoming November elections. Additionally, a change in administration is likely to bring a new SEC Chair, with Hester Peirce being a potential candidate who is known for her supportive stance on cryptocurrency. A new leadership at the SEC could reduce enforcement actions and expedite the resolution of ongoing cases, such as the SEC’s lawsuit against Coinbase, potentially clarifying when a digital asset is categorized as a security.