With Donald Trump now in office as the President of the United States, the crypto world is preparing for a new chapter. The industry’s expectations go beyond immediate hype, memecoins, or even the exciting potential of a bitcoin reserve. The real focus for most in the space is now on advocating for clearer, pro-crypto legislation and possibly even reversal of some of the anti-crypto measures adopted previously.

Biden’s crypto legacy

Joe Biden’s administration left behind a complex legacy for the crypto space.

On one hand, financial regulators under Biden initiated numerous lawsuits against crypto companies, such as Coinbase, Kraken, and Binance. Furthermore, the broadened definition of “broker” in the Infrastructure Investment and Jobs Act of 2021 placed DeFi at significant risk by imposing stringent compliance requirements on decentralized entities—requirements they are fundamentally incapable of fulfilling. As a result, most DeFi services now forbid American citizens from using them. Developing on this law, at the end of last year, the Treasury officially imposed on DeFi frontends to perform background checks on customers and record their every transaction starting in 2027.

On the other hand, under the Biden administration, crypto institutional adoption got a huge boost after the approval of spot ETFs and other crypto-backed derivatives.

The net result was an uneven path for crypto in the U.S. While integrating crypto into traditional finance benefited the market, sidelining DeFi—the ideological and innovative core of crypto finance—has had profound and challenging consequences for the industry.

Trump’s crypto era

Throughout his campaign, Donald Trump expressed strong support for Bitcoin and crypto, notably promising to establish a strategic bitcoin reserve. However, upon assuming office, his early focus seemed to shift elsewhere. The "America First Priorities" announced on January 20 did not mention cryptocurrencies, defying market expectations. Nevertheless, Polymarket bettors still see a 36% chance that Trump might create a strategic Bitcoin reserve within his first 100 days.

Bitcoin reached an all-time high of over $109,000 just before Trump’s inauguration, only to correct back to around $104,000. The "Trump effect" appears to have already been priced in, as Bitcoin surged nearly 50% following his election on November 5.

While some disappointment lingered within the crypto community, there’s immediate positive news for the market. Trump's administration brought fresh leadership to key financial regulatory bodies directly affecting the crypto industry—namely, the SEC and the CFTC. The notoriously anti-crypto SEC Chair Gary Gensler was replaced by Mark Uyeda. Uyeda, a Republican, has been with the SEC since 2022 and is known for his outspoken criticism of the commission's aggressive stance on crypto. The crypto industry hopes that under Uyeda’s leadership, the SEC will finally address the long-standing issue of clearly defining which cryptoassets are considered securities and which are commodities—a key pain point during the Biden administration. Yesterday’s announcement about the SEC forming a task force to develop a regulatory framework for crypto assets was met with enthusiasm.

Additionally, the new interim head of the CFTC, Caroline Pham, a former Wall Street banker who worked on Citi’s crypto strategy, is seen as a positive development for the industry.

Other highly anticipated legislative developments from the Trump era include clearer regulations for stablecoins. Notably, the Lummis-Gillibrand Stablecoin Act of 2024 and McHenry’s Clarity for Payment Stablecoins Act of 2023 have yet to advance to a full vote in either the House or the Senate. Fortunately, a substantial number of newly elected members of Congress are considered crypto-friendly, with StandWithCrypto now identifying 247 supporters.

Memecoin frenzy

Trump’s inauguration was marked by the launch of two memecoins: TRUMP and MELANIA. The TRUMP token surged over 490% within 24 hours of its release on January 18, reaching a market capitalization of nearly $11 billion. However, its value quickly plummeted, especially after Trump admitted to having limited knowledge about it.

The volatility surrounding TRUMP and other family-related memecoins has drawn mixed reactions from the crypto community. A survey conducted on Jan. 20 revealed that 75% of participants believe the TRUMP memecoin harms the crypto market, and 55% suspect that the Trump family is manipulating the market. On the other hand, the same survey showed that 42% of TRUMP buyers were first-time crypto investors. This influx of new users, many of whom are exploring the crypto space for the first time, represents a significant onboarding opportunity and could help drive broader crypto adoption.