Seven Unresolved Issues Regarding Cryptocurrency Linked to Donald Trump

We are now one week into Donald Trump’s presidency — the very start of what promises to be a significant four years for the cryptocurrency industry.

The choices made by his administration will shape this sector for years to come, directly impacting millions of investors globally, and determining whether other major economies will implement pro-Bitcoin policies of their own.

With Silk Road founder Ross Ulbricht pardoned and a crypto-focused executive order now enacted, Trump has already fulfilled some of the commitments made during his campaign.

However, as Bitcoin’s bullish trend shows signs of slowing, numerous questions remain unanswered — as we are about to discover.

1. Will a Strategic Bitcoin Reserve Be Established?

Addressing an enthusiastic audience at the Bitcoin 2024 conference, Trump conveyed a straightforward message: if elected, his administration would “retain 100% of all the Bitcoin the U.S. government currently holds or acquires in the future.”

This was a substantial promise that could place BTC at the core of America’s economy, leaving other G20 nations with little choice but to follow suit.

However, there was disappointment when last week’s executive order indicated that the White House would only now “consider” this policy, diluting this commitment — and raising the possibility that it may never materialize.

Polymarket’s odds suggest that the outlook is not favorable. Only 16% of bettors currently believe this reserve is likely to occur within Trump’s first 100 days, while the chances of a reserve being established this year are effectively 50/50.

The hesitance to even convert BTC seized from criminals into a reserve suggests there may be legal complexities or a shift in focus, with AI currently dominating presidential priorities. This does not bode well for Senator Cynthia Lummis’s goal of acquiring a million Bitcoin over a five-year span.

2. Will Banks Embrace Bitcoin?

The Securities and Exchange Commission’s repeal of SAB 121, which prevented banks from holding Bitcoin on behalf of clients, is a significant development.

With this barrier now removed, it will be intriguing to observe how financial institutions respond and adapt — and whether traditional entities might become competitors to established crypto exchanges… or even potential acquisition targets.

USDC’s market cap over the past year. Source: CoinMarketCap

3. Will Stablecoins Take Center Stage?

Trump’s executive order effectively marked the end for a U.S. central bank digital currency, with skeptics arguing it could be used to monitor users and control their spending.

However, it also paved the way for assets like USDC and USDT to serve as alternatives, with initiatives “to promote the development and growth of lawful and legitimate dollar-backed stablecoins globally.”

There are expectations that such digital assets could reinforce the dollar’s dominance in the global economy, but this will not be without obstacles.

Specific regulations regarding stablecoins have yet to progress through Congress — and careful scrutiny must be applied to the reserves backing them.

4. Will Trump’s Cryptocurrency Face Investigation?

It has been a tumultuous week for $TRUMP, the meme coin that was launched just days before the inauguration.

After experiencing a 50% drop in value over the past week — and now trading 65% below its all-time highs — some Democrats are calling for an investigation into the “unprecedented concerns” it raises.

Trump’s main opponent Elizabeth Warren (whom he derogatorily refers to as “Pocahontas”) has urged the SEC and CFTC to investigate the circumstances surrounding this token’s launch — citing issues such as “consumer fraud, corruption and foreign influence, and conflicts of interest.”

Given that both agencies are now being populated with pro-crypto commissioners — and a clause in $TRUMP’s terms and conditions includes a waiver against class actions — it is unlikely that this backlash will significantly trouble the president.

Source: Polymarket

5. Will Altcoin-Focused ETFs Be Introduced?

Exchange-traded funds based on the spot prices of Bitcoin and Ether proved to be extremely popular in 2024, and were approved despite hesitation from the Securities and Exchange Commission.

However, there is now widespread anticipation that asset management firms will be granted permission to launch products tracking smaller cryptocurrencies including XRP, Solana… and even $TRUMP.

It will be interesting to see whether such products attract interest from institutions, especially considering that inflows into ETH ETFs have been relatively disappointing thus far.

While the total net assets held by 12 Bitcoin spot ETFs now amount to $123 billion, the nine focusing on Ether lag behind with $12 billion.

6. Will Elon Musk Turn to Blockchain?

Recent reports indicated that the Department of Government Efficiency (commonly referred to as DOGE) is investigating whether federal spending could be tracked using blockchain technology.

This move has the potential to enhance transparency, streamline payments, and even transform the management of government structures.

However, a larger question remains: which blockchain project would be deemed capable of handling this task? Would its native token experience a surge in value? And could this raise security concerns?

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7. Will ‘Trumponomics’ Disrupt the Bull Run?

Trump’s commitment to impose tariffs on foreign goods is just one economic policy that could send shockwaves through the markets, intensifying inflation while hindering growth.

The president has already urged the Federal Reserve to begin lowering interest rates — asserting that he possesses a better understanding of economic policy than the central bank.

All this unpredictability could lead to increased volatility in the stock market — and given Bitcoin’s close correlation to the tech-heavy Nasdaq 100, pullbacks could be costly.

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