Trump administration signals shift towards pro-crypto regulations amid concerns
With Donald Trump appointing top regulators with cryptocurrency ties and promising to make the US the "crypto capital of the planet," experts warn that the industry's growth may lead to laxer oversight, posing risks for investors and potential criminal abuses.
Trump's support for cryptocurrency has coincided with his outreach to crypto companies for campaign contributions to bolster his bid for the White House. Despite previously calling Bitcoin a "scam" in 2021, he and his sons announced plans for their own crypto business, World Liberty Financial.
In a move reflecting his connections to the crypto industry, Trump revealed the creation of a personal meme coin known as $Trump, drawing criticism for potential self-enrichment as he takes office.
Experts, such as Cornell’s economics professor Eswar Prasad, express concerns that the administration's pro-crypto stance may encourage speculation and expose unsophisticated investors to risks. Under Trump, regulatory agencies may lend legitimacy to highly speculative crypto investments.
Crypto industry leaders have significantly contributed to Trump's campaigns, hosting events like a "crypto ball" and lobbying for favourable regulations. Notably, Trump appointed Paul Atkins, a pro-crypto advocate, as chair of the Securities and Exchange Commission, signalling a shift towards more lenient oversight.
Moreover, an executive order issued by Trump to foster cryptocurrency growth proposes a new working group to explore the establishment of a national crypto stockpile and new regulations.
Trump's administration has been celebrated by crypto firms, particularly for appointing David Sacks, a venture capitalist with ties to crypto pioneer Elon Musk, as the crypto and AI czar.
Critics, including Democratic senator Elizabeth Warren, voice serious concerns, stating that instead of enhancing regulatory oversight, Trump prioritises personal gain through the crypto market, as evidenced by family initiatives surrounding cryptocurrency.
Warnings also emerge regarding the economic risks of a proposed US Bitcoin reserve, which some believe could expose taxpayers to significant price volatility.
Despite the growing concerns over criminal activity tied to cryptocurrencies, Trump’s administration continues to advocate for fewer regulations, further entrenching the influence of industry lobbyists who contribute substantially to campaign efforts.
Recent studies have indicated that cryptocurrency is being exploited for illegal activities, including ties to North Korean hacking groups and fraudulent schemes leading to massive financial losses for US citizens.
As calls for stronger regulations increase, the ongoing pro-crypto momentum from Trump's administration raises fears of a potential financial crisis stemming from inflated cryptocurrency values.
