How Trump’s Election Victory Could Reshape the Crypto Industry

In November 2024, Bitcoin surged to an all-time high, coming in just short of $100,000 against the US dollar. Many other cryptocurrencies followed suit. 

The reason was Donald Trump’s election victory. Trump, an outspoken supporter of the crypto industry and decentralized finance (DeFi), has also pledged to create a crypto advisory council and a Bitcoin reserve. Several major crypto exchanges and other fintechs have also invested over $119 million backing pro-crypto congressional candidates.

The incoming administration is expected to see industry regulators loosen their grip, potentially paving the way for crypto startups to expand with reduced oversight and leaner taxation rules.

However, critics fear these changes could spell bad news for the US dollar as a global currency and have serious implications for global financial stability, particularly in the case of traditional financial services. Such changes could also lead to the undermining of regulatory standards, reduced investment in productive economic sectors, and ethical and security concerns. After all, the fact that crypto is a go-to for illegal transactions is still very much top of mind for many. 

Traditional BFSIs have been slow to adopt crypto as an alternative to fiat currencies, but they have been catching up in recent years. Increasing recognition of Bitcoin in particular has led to its acceptance among many traditional institutional investors, such as, for example, UK pension funds and asset managers.

In the US, the regulation of cryptocurrency has long been fragmented across multiple federal agencies, such as the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Internal Revenue Service (IRS). Each one provides its own rules and guidance on the use of digital assets. However, by adopting a more hands-off approach to regulatory oversight, the second Trump administration is expected to fuel further investment and innovation in the sector.

While many crypto enthusiasts have hailed Trump’s victory as a huge win for the industry, it’s also important to remember that trust in financial services is hanging in the balance. 63% of Americans aren’t confident in the safety and reliability of cryptocurrency; a figure that could rise without stricter regulatory oversight. Nonetheless, trust in traditional financial services is arguably even lower, especially given the lingering effects of the 2008 financial crisis.

These changes carry significant implications for fintech and financial services companies. On one hand, looser regulatory oversight could open the door for companies to experiment more aggressively with DeFi and cryptocurrency. However, traditional financial services providers will likely also face increased competition from fintechs, pushing them to integrate crypto into their core offerings to remain relevant.

To prepare for the inevitable disruptions ahead, fintechs and other financial organizations will need to invest in crypto expertise. They will also need to reevaluate how they approach risk-management, especially given that regulatory pressures in crypto vary dramatically between countries. The EU, for example, recently introduced new rules governing crypto assets.

Organizations must also focus on improving consumer education and trust, especially given that financial literacy is on the decline. Investing in hybrid financial products combining both traditional and digital assets, organizations can also proactively address these changes and help bridge the gap between consumer demands for trust and convenience.