Cryptocurrencies will benefit from the acceptance by new regulatory agencies and Congress

Key Points

• A Republican president and Congress are expected to be more supportive of digital assets than the current administration.

• Legislation establishing a regulatory framework for cryptocurrencies is likely to advance.

• Under the leadership of SEC Chair nominee Paul Atkins, enforcement in the crypto space is expected to ease, with a more strategic regulatory approach.

• Banking regulators may reverse Biden-era policies that restricted banks from offering custody and other services to crypto participants.

• A more relaxed regulatory environment could lead to increased capital markets activity in the digital asset sector.

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The incoming Trump administration and a Republican-controlled Congress may bring significant changes to the digital asset space—changes that are likely to be welcomed by industry participants.

In this election cycle, crypto-related political efforts were well-organized and well-funded, with cryptocurrency Super PACs contributing record-breaking amounts to political campaigns. These efforts focused on Republican and key Democratic candidates to garner broader legislative support and achieve much-needed regulatory clarity for digital assets.

Many expect the new administration to introduce crypto-friendly policies and adopt a more lenient enforcement approach.

These political efforts appear to be bearing fruit. Reports show that nearly 300 pro-crypto candidates from both parties were elected to the House and Senate. Meanwhile, Bitcoin prices surged to all-time highs following the election—signaling that many anticipate pro-crypto policies and reduced regulatory pressure from the new government.

During his campaign, President-elect Donald Trump branded himself as a supporter of crypto and announced plans to make the U.S. the “crypto capital of the world.” In December 2024, he nominated former SEC Commissioner Paul Atkins to replace current Chair Gary Gensler, whose enforcement agenda at the agency has often been seen as anti-crypto.

Many stakeholders—including crypto-native firms, traditional financial institutions, and others—are now closely watching what these political changes will mean. While it's too early to make definitive predictions, here are key areas expected to be most significantly impacted.

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Key Figures to Watch

Paul Atkins – Nominated by Trump as Chair of the U.S. Securities and Exchange Commission (SEC), Atkins previously served as a Republican commissioner from 2002 to 2008. He is known for his cautious stance before regulating new industries and is widely seen as crypto-friendly, due to:

• His recent work in the digital asset sector.

• His criticism of overregulation and enforcement-led oversight.

• His connection to current Republican commissioners Hester Peirce and Mark Uyeda, both of whom served as his legal advisers at the SEC and are vocal critics of the agency’s current approach to crypto.

While Atkins’ exact stance on crypto remains to be seen, many in the industry expect the SEC to emphasize clearer industry guidance and a more targeted, less aggressive enforcement strategy.

David Sacks – Also in December 2024, Trump appointed venture capitalist and former PayPal executive David Sacks as the White House "czar" for artificial intelligence (AI) and crypto. Though generally seen as a pro-innovation and pro-crypto figure, some industry members have expressed disappointment that the role combines AI and crypto, and that someone with a deeper background in digital assets wasn't selected.

It also remains unclear how Sacks will balance responsibilities between AI and crypto, and how much influence he will wield—whether he will shape policy or act mainly as a coordinator.

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New Legislative Momentum for Crypto

The new president is expected to reinvigorate efforts to resolve legal uncertainty surrounding digital assets through legislation.

In the previous Congress, the House passed the Financial Innovation and Technology for the 21st Century Act (FIT 21), which aimed to establish a regulatory framework for digital assets and delineate jurisdiction between the SEC and the Commodity Futures Trading Commission (CFTC). Although it didn’t meet all of the industry’s needs, FIT 21 was the most significant congressional effort to date.

Overall, the bill categorizes digital assets into:

• “Restricted digital assets” under SEC jurisdiction.

• “Digital commodities” regulated by the CFTC.

Classification depends partly on:

• The level of decentralization of the blockchain network or application.

• Whether the asset was acquired through fundraising or secondary market transactions.

• Whether the asset is held by the issuer or an unaffiliated third party.

The bill is seen as limiting the SEC’s authority. While initial offerings require disclosures and compliance, once a network is deemed decentralized and functional, the CFTC takes over regulatory responsibilities—including for trading activities.

With Republicans controlling both chambers of Congress, crypto-friendly legislation has a strong chance of passing.

Meanwhile, members of the House Financial Services Committee are working on bipartisan stablecoin legislation. With growing cross-party support, Congress is likely to enact such legislation during the next administration.

Lastly, interest is resurfacing in creating a Bitcoin strategic reserve. Wyoming Republican Senator Cynthia Lummis introduced the Bitcoin Reserve Act, which would establish a U.S. Bitcoin reserve and implement a structured Bitcoin purchasing plan. However, the idea faces criticism for Bitcoin’s volatility, non-interest-bearing nature, and potential to skew the broader crypto market by favoring Bitcoin over other assets. It’s too early to assess whether this proposal will gain meaningful traction.

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Reduced SEC Enforcement

President-elect Trump pledged to reform the SEC during his campaign. While enforcement is expected to relax, the extent will depend on leadership. For instance, during the previous Trump administration, the SEC strongly upheld registration requirements—even in cases without fraud allegations (see: “SEC Expected to Shift Focus from ESG to Crypto”).

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Increased Banking Activity

Federal banking and financial regulators are expected to revisit Biden-era policies and approaches toward digital assets. Since 2021, regulatory guidance requiring banks to obtain non-objection letters before engaging in crypto custody or services effectively froze bank activity in the sector. Critics labeled this a “Chokepoint 2.0” effort, accusing regulators of pressuring banks to “de-bank” controversial crypto businesses.

Rolling back this guidance—and potentially rescinding SEC Staff Accounting Bulletin No. 121, which requires crypto custodians to report assets and liabilities on balance sheets—would mark a significant regulatory shift. This could also signal broader pro-industry changes, in line with Trump’s vow to protect the sector from regulatory "persecution" (see: “Trump 2.0 May Signal a Friendlier Environment for Banks and Fintech”).

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Increased Capital Markets Activity

Greater regulatory clarity, combined with sustained investor interest, broader institutional adoption, and rising venture capital investment, is likely to drive a sharp increase in capital markets activity related to digital assets, including IPOs. As the crypto economy matures, the convergence of regulatory progress and market enthusiasm is expected to open new opportunities for public listings, strategic transactions, and deeper institutional engagement (see: “Betting on the Trump Trade: Making Capital Markets Great Again”).

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Rise in Private Litigation

Crypto-related securities litigation has surged in recent years, largely due to regulatory uncertainty and SEC enforcement actions.

If SEC enforcement eases, private securities lawsuits are expected to rise—led by plaintiffs’ firms with expertise in digital assets and ongoing involvement in numerous projects across the country. This trend is especially likely if regulatory clarity takes time to emerge and digital asset prices remain volatile—two historic drivers of private legal action.