Key Insights:
Donald Trump had earlier promised to create Strategic Bitcoin Reserves to buy Bitcoins.
He also vowed to end the SEC's anti-crypto crusade and provide free and fair regulations.
Trump had also said that he wanted most of the remaining Bitcoins to be mined in the USA.
His vision also includes making the United States a global crypto hub in the future.
Trump's action on government spending also would help cut down on inflation and interest rates.
Trump's goal to create a Bitcoin Strategic Reserve would hit multiple goals at once.
The Bitcoin Reserve would first back the US Dollar, which is the textbook definition and usage of a reserve asset. In addition to backing the US Dollar, the government would also benefit from Bitcoin's price appreciation.
In the long run, the factor of price appreciation comes down to its second usage. A study by VanEck shows that the Bitcoin Strategic Reserve would limit the US debt by as much as 36% in 2049.
The third benefit of a Bitcoin Strategic Reserve would be that an additional source of demand for Bitcoin would take its price even higher, giving incentives to current holders.
However, their latest action, Biden's sale of $6.5 billion worth of Bitcoin seized from the Silk Road, could provide some hurdles.
One of the main grounds of conflict between the Biden administration and the crypto community was SEC's penalizing behavior. Under Gary Gensler, the SEC is reported to have filed more than a hundred cases, including ones against top companies like Ripple, MetaMask, Coinbase, and Uniswap.
Further, even after the end of the XRP case and an unbiased judgment by the court of SDNY, it still went ahead with filing an appeal. SEC chief further commented that the lower courts were stopping it from exercising its powers.
This led to Trump's proclamation that he would fire the SEC Chief. When Donald Trump won the US elections, Gary Gensler tendered his resignation.
Finally, upon Trump's inauguration, SEC Commissioner Mark Uyeda became the acting chief of the SEC, with the possibility of Paul Atkins being the chief later. Trump had also appointed Brian Quintez as CFTC chair, one of the two organizations that will shape crypto regulations in the USA, as per the FIT-21 Act.
Trump also declared his support for Bitcoin mining companies and shared his vision that he wishes all the unmined Bitcoins to be mined in the USA.
This vision means that Trump would definitely act on the current regulatory troubles faced by US blockchain mining platforms like Riot Blockchain. Lately, blockchain mining firms saw their input costs rise due to Biden's order to raise electricity rates for these companies.
Further, several city councils have also imposed noise regulations, making it impossible to mine Bitcoin near a city despite other businesses generating a higher level of noise.
Reduced electricity costs and local government action on anti-mining policies could boost these companies' revenue and improve their hash rate.
Trump's vision of creating a global crypto hub within the USA would benefit many crypto-native companies financially and morally. This would help new entrepreneurs take advantage of the already developed fintech and technology environment like Silicon Valley.
However, high interest rates remain a bone in the crypto ecosystem's neck. Low interest rates are necessary for business ecosystems to develop, and this requires the US Fed to cut its policy rates from the current 4% to 4.25% levels to below 2%.
The Department of Government Efficiency(DOGE) would play a critical role in limiting government spending, which would then reduce inflation faster. All of these ultimately result in a lower interest rate.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.