President-elect Donald Trump's victory has brought a wave of celebration among cryptocurrency proponents. Bitcoin, the most renowned cryptocurrency, reached a new milestone by surpassing $100,000 for the second time ever. This surge was fueled by optimism that the Trump administration would be more favorable to the cryptocurrency industry. Eswar Prasad, a professor of trade policy at Cornell University, stated that if there was to be a Trump administration, it would create a more conducive regulatory environment for crypto.

Trump's Reelection: A Boon for the Cryptocurrency Industry

Advocates' Desire for Regulation

Gary Gensler, the Biden administration's SEC chair since 2021, has been skeptical of the cryptocurrency industry. However, Trump had promised to fire Gensler on "day one" of his administration. Under Gensler's leadership, the SEC has considered many cryptocurrencies to be securities and has sued several crypto exchanges. The industry celebrated the nomination of Paul Atkins, a former SEC board member and cryptocurrency lobbyist, but critics believe he will help crypto avoid regulation. At the same time, established players like Coinbase want some regulation to create predictability. As Faryar Shirzad said, "What we want … is to establish clear national rules around crypto markets."Cryptocurrency can be volatile, which means it can earn fast profits but can also lose value quickly. It has been the subject of fraud and was associated with illicit activities in the early days. But every industry, including cryptocurrency, wants government regulation as long as it is light-touch and doesn't get in the way of making profits.The cryptocurrency industry is also fighting to start trading on U.S. financial markets. In January, the SEC approved 11 exchange-traded-funds tied to the price of bitcoin, which sent Bitcoin's price to a previous record high and suggested new interest in cryptocurrency.

Creating a Crypto Strategic Reserve Fund

Some cryptocurrency supporters have proposed that the U.S. set aside strategic reserve funds of cryptocurrencies like bitcoin, which Trump has endorsed. A strategic bitcoin reserve would act like a rainy day fund and could stabilize the value of cryptocurrencies. Critics see the analogy to oil as faulty, but Brian Blank, an associate professor of finance at Mississippi State University, said that an organization as large as the U.S. federal government holding a significant amount of an asset is likely to stabilize it. A strategic bitcoin reserve would also benefit the cryptocurrency industry by giving it mainstream appeal.

Making the U.S. the 'Crypto Capital of the World'

At the July conference in Nashville, Trump said he wanted to make the United States "the crypto capital of the world." Eric Trump said his father would be the "most pro-crypto president in the history of America." If more favorable regulations emerge from his administration and his enthusiasm encourages more people to buy cryptocurrencies, this could become a reality.Shirzad accused regulators under the Biden administration of driving "huge parts" of the cryptocurrency industry out of the country. He believes the Trump administration would reverse this. More Americans investing in cryptocurrencies would mean more potential customers and growth for the industry, but it also brings more risk for new investors. As Prasad said, "The fact that the new president and his cronies support it to such an extent might lure them into thinking that this is really just like any other asset like stocks or bonds and so on. And that I think is very worrying."