Trump administration to relax cryptocurrency regulation: How big is the gap between promise and reality?

With seven days left until U.S. President-elect Donald Trump takes office, many in the cryptocurrency industry are watching his future personnel choices and policy announcements.

Since Trump went from calling Bitcoin a “scam” in 2021 to embracing the technology during his 2024 presidential campaign, he has made a number of promises to the digital asset industry that could impact regulation and enforcement. While it’s impossible to know if he intends to prioritize fulfilling those promises once in office — or if he’ll follow through on them at all — there are already some changes in the regulatory landscape ahead of his scheduled inauguration.

Gary Gensler fired on "Day 1"

At the Bitcoin 2024 conference, Trump promised to fire SEC Chairman Gary Gensler on his first day in office on January 20. Many speculate that although the SEC chairman's term ends in June 2026, it is more likely that Gensler will announce his resignation before Trump takes office.

On Nov. 22, about two weeks after the U.S. presidential election, Gensler announced he would resign on the day of Trump’s inauguration, paving the way for the Senate to confirm another SEC chairman. The president-elect will have the power to appoint an acting head of the regulatory agency until the Senate confirms Gensler’s full-time successor.

On Dec. 4, Trump announced his intention to nominate former SEC Commissioner Paul Atkins to serve as commission chairman in 2025. Whoever chairs the SEC will have the power to change regulatory policy and related enforcement actions regarding digital assets as securities — something that cryptocurrency users have heavily criticized Gensler for.

Will financial regulators take a different direction from 2025?

Aside from a general promise to change the SEC’s stance on “vilifying” the cryptocurrency industry and “preventing average Americans” from moving funds to exchanges, it’s unclear what plans Trump might have for the commission in a second term.

If confirmed as SEC chairman, Atkins would have the power to chart his own path. If Trump disagrees with a decision, he could name the potential commission head on social media or apply other political pressure.

Some members of the 119th Congress have suggested supporting the passage of the Financial Innovation and Technology for the 21st Century Act (FIT21), which would clarify the roles of the SEC and the Commodity Futures Trading Commission (CFTC) with respect to digital assets. However, even without this bill, there are reports that Trump intends to appoint a CFTC chairman who supports crypto regulation that is favorable to the industry.

According to “Project 2025” — a conservative policy framework that the Trump transition team rejected during the campaign but reportedly pivoted to hiring decisions after Election Day — lawmakers should “modernize the definition of a commodity […] and clarify how digital assets are treated.” The framework also recommends that any administration “eliminate regulatory barriers” at the Securities and Exchange Commission.

“The SEC and CFTC should clarify the treatment of digital assets [by issuing] joint regulations to provide that a digital asset holder shall not be treated as a party to an investment contract [and] amend the definition of a commodity to include digital assets that are not securities.”

The Trump-Vance transition website did not mention the SEC or CFTC in its policies when it was published.

Presidential Advisory Commission on Bitcoin and Cryptocurrencies

At the Bitcoin 2024 conference, Trump also stated his intention to form a commission focused on issues related to digital assets:

“Their task is to design transparent regulatory guidelines that benefit the entire industry, and they will do that in 100 days. We will write the regulations, but from now on, the rules will be written by people who love your industry, not those who hate your industry.”

As of January 13, the president-elect has appointed former PayPal COO David Sacks as his “crypto and AI czar” to lead the commission and former House Republican candidate Bo Hines as executive director.

Trump said Hines and Sacks would work to “foster innovation and growth in the digital asset sector while ensuring industry leaders have the resources they need to succeed,” but at the time of publication he had not provided further details on the committee’s activities and whether they might include favorable regulations.

Stopping the Fed from developing a CBDC

“The creation of a central bank digital currency is over,” Trump said at the Bitcoin 2024 conference. “There will never be a CBDC as long as I am President of the United States.”

Rep. Tom Emmer (R-Iowa) said the Fed has been exploring the development of a digital dollar for years, including making a CBDC one of its “primary responsibilities” in March 2024. To date, the central bank has not proposed any timeline for a possible digital dollar, but many U.S. lawmakers and political candidates in the 2024 campaign are against CBDCs.

While U.S. presidents do have the power to appoint and potentially fire the Fed chair, their power to influence central bank policy is somewhat limited.

Trump can make public statements to put political pressure on the Fed to make certain decisions, and may even remove a chairman who disagrees with him, but he does not necessarily order the Fed to take actions such as raising or lowering interest rates.

During his first term, Trump appointed Jerome Powell as Fed chair. Although the president-elect has criticized interest rates as being too high, he has publicly said he will not try to fire Powell, allowing the Fed chair to stay in office until at least the end of his term in May 2026.