It has only been a few weeks since Donald Trump’s inauguration as the 47th President of the United States. Nonetheless, the new administration has launched several initiatives that are targeted specifically at the crypto industry, reinforcing Trump’s campaign pledge to support the crypto industry.

SEC Chair Gary Gensler announced his resignation before Trump took office, paving the way for a more crypto-friendly regulator. Trump has since nominated Paul Atkins, a former SEC commissioner and co-chair of the Token Alliance—a cryptocurrency advocacy group under the Chamber of Digital Commerce. Atkins’ nomination is currently awaiting Senate confirmation, but his track record suggests a more constructive regulatory approach toward digital assets. Mark T Ueda has been appointed as the acting Chairman of the SEC. He has launched a crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets with pro-crypto Commissioner Hester Pierce leading the task force. Due to the changes at the SEC, more ETFs expected to be approved this year, including Solana, Litecoin, Hedera Hashgraph, and potentially Polkadot ETFs. The Ethereum ETF is also expected to convert to allow ETF shareholders to earn the underlying Ethereum staking yield. These developments further solidify the United States' position as a major hub for institutional crypto investment.

In one of his earliest executive orders, Trump fulfilled another campaign promise by banning the issuance of a U.S. Central Bank Digital Currencies (CBDC). This move aligns with concerns from privacy advocates who fear government overreach through programmable money. The executive order has been well received by many in the crypto industry, reinforcing the administration’s stance against centralized control over digital assets.

One of the most intriguing proposals from the Trump administration is the establishment of a strategic national digital asset reserve. Trump has appointed David Sacks, former COO of PayPal and a member of the so-called “PayPal Mafia,” to lead a special council on AI and cryptocurrency. This council has been tasked with conducting a feasibility study on creating a digital asset reserve, with a deadline of 180 days. The announcement of a strategic digital asset reserve has triggered a geopolitical domino effect. Nation-states are now faced with a dilemma—whether to accumulate BTC early, at potentially lower prices, or wait and risk being left behind. Countries that accumulate too late may find themselves paying a premium, while those that act early could inadvertently accelerate capital outflows from their own national currencies into BTC. Countries like El Salvador have been directly purchasing BTC, while Bhutan and Iran have opted to accumulate BTC through mining operations. To date, at least nine countries have begun acquiring digital assets, and several others have gained exposure through sovereign wealth funds and crypto venture investments. Regardless of the varied approaches, the growing institutional and governmental interest in BTC strengthens its position as a long-term store of value.

In another major move, the controversial SEC accounting guidance known as SAB 121 has been rescinded. SAB 121 has been viewed as a significant obstacle preventing banks from providing custody services relating to crypto assets. While assets held under a custodial or trust arrangement are generally not reported on the balance sheet of the custodian, SAB 121 indicated that SEC staff expected crypto assets to be recorded as assets and liabilities on the balance sheet of the safeguarding entity. In rescinding SAB 121, this restores the prior status quo that crypto asset safeguarding activities can be conducted consistent with the treatment of other types of client assets. We expect that there will be increased flexibility for traditional custodians and trustees to safeguard their customers’ crypto assets without straining their balance sheets, hence making it easier for traditional financial institutions to enter the crypto industry.

Beyond policy, Trump and his administration have been actively engaged in the crypto markets. In mid-September, Trump announced the launch of World Liberty Financial (World LibertyFi), a decentralized finance (DeFi) lending protocol forked from Aave. The protocol is expected to go live on Ethereum and select Layer 2 networks. Notably, Trump and three of his children serve as ambassadors for the project. World LibertyFi has already raised $500 million in two funding rounds, valuing the project at $5 billion. The team has used these funds to acquire a portfolio of digital assets, including ETH, BTC, LINK, AAVE, ENA, ONDO, TRX, and MOVE. Their current holdings exceed $265 million, with ETH making up more than 65% of the portfolio. Market participants are closely watching whether Trump’s policies will favor these assets.

World LibertyFi token holdings as of 29th January

Source: Lookonchain

Additionally, on January 17, Trump’s team launched a memecoin, TRUMP, which took the market by storm. The token skyrocketed from a sub-$100 million market capitalization to $73 billion within just 30 hours—a staggering 730x increase. The memecoin’s meteoric rise drained liquidity from other altcoins, causing a broad market correction. A day later, another memecoin, MELANIA was launched. While it didn’t achieve the same valuation as TRUMP, it also had a big spike and was valued at $13 billion at its peak. While this event boosted the legitimacy of celebrity-endorsed tokens, it also highlighted concerns around insider trading, with early participants benefiting disproportionately from the rapid price appreciation. Meanwhile, the implications of what Trump-backed memecoins represent for the industry was the subject of much debate within crypto circles. Those who have taken a dim view of the launches believe that they reflect poorly on the reputation of crypto, while arguments in favor of their creation highlight how this is attracting new users to this space. Beyond the controversy sparked by these tokens, we believe they represent a signal to the market that crypto remains relatively high on the new administration’s agenda, which not only lends market support but helps foster innovation in this sector.

Finally, Trump has also said that he wants the US to become the crypto capital of the world. In a way, the US is already the de-facto crypto leader as many of the major infrastructure projects and some of the biggest dApps originate from the US. It also has the biggest licensed crypto exchange, the biggest crypto investment bank and the largest pool of Web3 VC capital. The US is also home to about 40% of the global BTC mining capacity (vs 17% in 2021) making it the biggest hub for BTC mining. Most of the world's crypto trading is also USD denominated and the major stablecoins are all USD pegged. So, in many ways, the US is already the crypto capital of the world but if the US government intends to cement or further extend its dominant position, what does it mean for other governments, especially other major financial centers such as London, Tokyo, Dubai and Hong Kong? Trump has signaled that he would favor crypto projects housed in the United States. Multiple projects have shifted focus to the US by opening offices in various states.

Trump’s presidency has already had a profound impact on the digital asset space, and the coming months will be crucial in determining the extent of his administration’s influence. From regulatory shifts and the potential accumulation of a national Bitcoin reserve to DeFi initiatives and memecoin phenomena, the Trump era is reshaping the crypto landscape in unprecedented ways.