Trump promises mountains of gold for the crypto world: what are his plans?

This article was last updated on November 28, 2024

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Trump promises mountains of gold for the crypto world: what are his plans?

Not only Donald Trump emerged victorious after the American presidential elections, cryptocurrency owners also celebrated. After Trump’s re-election, Bitcoin’s price reached one record value of almost $100,000.

Why did that happen and what are Trump’s plans for cryptocurrencies?

“This is a big win for crypto,” said Kristin Smith, director of crypto lobby group Blockchain Association, a day after the US presidential election. And while Trump was outspokenly negative about crypto in his previous term.

He said he was a fan of the US dollar and called cryptocurrencies “a disaster waiting to happen” and “hot air”. As negative as he was then, so excited he is now. This year he promised to ensure “that the future of crypto and Bitcoin is in the United States.”

Strict rules for the crypto sector

According to experts, this change in tone has everything to do with the many campaign donations Trump received from people in the crypto industry: a total of around $120 million. “He received a lot of support from a number of people who think Bitcoin is very important,” says Marieke Blom, chief economist at ING. “Trump has completely changed his position since then.”

One of Trump’s election promises that crypto investors are interested in is the resignation of SEC boss Gary Gensler, the American stock exchange regulator. Upon taking office in 2021, Gensler promised to impose strict regulations on the crypto sector, which he compared to “the Wild West.” Since then, he has filed multiple lawsuits against crypto projects for alleged violations of securities laws.

Trump’s promise to fire him led to Gensler announcing last week that he would resign as soon as Trump takes office.

Bitcoin has no value in itself.

Marieke Blom, economist

“Trump says he wants to make buying cryptos easier for many people through deregulation,” says ING economist Blom. “Traditional banks sometimes still make it difficult to trade in crypto because this still has to be done on other platforms.”

The easier it becomes for people to buy cryptos, the greater the demand will be. “But for Bitcoin in particular, there is only a limited amount of it available. So this of course supports the price enormously.”

National reserve in Bitcoin

Crypto enthusiasts also hope that Trump will fulfill his election promise to create a national reserve in Bitcoin. The idea behind this is that the US can reduce the national debt and compensate for any weakening of the dollar. The US government would like to purchase 1 million Bitcoin, 5 percent of the total available Bitcoin.

Economist Blom is surprised by this idea. “Bitcoin has no value in itself. If a central bank has to hold reserves, you would say: do that in other currencies or in gold, which in any case has intrinsic value.”

With this plan, Trump guarantees the demand for Bitcoin for a longer period of time. “In addition, the US government may also be willing to intervene if the value falls.” There is currently no government guarantee about the value of Bitcoin.

Economist Mathijs Bouman: ‘Threat to the dollar’

“If the central bank is forced by politics to do this kind of antics and, for example, sell gold to invest in cryptos, it is proof for the financial markets that the central bank is no longer independent. That is a real threat for the dollar because we trust the dollar because we trust the US central bank.”

While Trump is focusing on fewer rules, rules are being added in Europe. The Netherlands Authority for the Financial Markets (AFM) will supervise crypto services in the Netherlands from January 1. “We are concerned about the fact that many new consumers are getting into crypto without properly understanding the risks,” says AFM director Hanzo van Beusekom. “Because there is no form of value underlying most cryptos, the price can go up very quickly, but it can also fall very quickly.”

An EU rule that will come into effect in the new year is a ban on so-called pump and dump. This is a tactic in which investors purchase large quantities of a low-value cryptocurrency and then promote that coin – for example in a popular crypto podcast – to drive up the price.

Van Beusekom: “When a lot of people have gotten in, you get out again and then you see the price drop again. This is actually a way to take money from unsuspecting consumers.”