Donald Trump Could Bring Massive Changes in The Existing Crypto Policies

President-elect Donald Trump is going to change most crypto policies that have remained active under the current Joe Biden administration. The current crypto policies are perceived as strict and have many provisions that demand reporting from cryptocurrency firms. Many argue that they are suppressing innovation and compelling enterprises to choose relocation abroad. 

Donald Trump, throughout his Presidential campaign, promised positive changes for the crypto industry. He even declared Bitcoin the US’s strategic reserve. Now, in all likelihood, he is going to appoint pro-crypto figures to improve the cryptocurrency sector. For example, he wants to nominate Paul Atkins to head the Securities and Exchange Commission (SEC). Here are some of the possible changes that Trump can introduce from the first day of his office.

Executive Orders of Donald Trump on Crypto Policies

Many experts hope that Donald Trump will issue executive orders to repeal controversial accounting policies. For example, there are crypto accounting policies that require banks to count as liabilities in the balance sheet. This policy could be scrapped. Many crypto enthusiasts believe once the policy is scrapped then it can lead to broader adoption of digital currencies. 

There are also controversies surrounding Staff Accounting Bulletin No. 121 (SAB 121). It provides interpretive guidance for reporting entities that operate a platform that allows users to deal with crypto-assets and engage in activities in which it must safeguard the crypto-assets of customers. It was passed by the US Congress but is very contentious. The allies of Donald Trump are eager to repeal these provisions and often allege that it is stifling innovation in the digital currency sector. 

• Alliances With Pro-Crypto Figures

Donald Trump’s team is forging alliances with several pro-crypto figures with the aim to encourage more innovations and cooperation. For example, the Trump team is allying with venture capitalists and blockchain entrepreneurs. There will also be an inaugural Crypto Ball in which his allies will present the US as not just a stronghold of cryptocurrency users, but also as a global leader in innovating digital assets and blockchain technology. 

• Deregulation Will Become The Norm

Trump wants to deregulate the cryptocurrency industry. In simpler words, he is going to relax the rules and regulations to ensure wider usage. The current regulations under the Biden administration apply to debt and equity securities. However, investment contracts that may include cryptocurrencies are not included. There are also registration and disclosure requirements from the SEC. These ambiguities may change as Trump relaxes the rules.

• Non-fungible Tokens (NFTs) 

Non-fungible Tokens do not fulfill the criteria of the Howey test for investment contracts. The Trump administration clarified the regulations surrounding NFTs since they are classified as security when transacted. 

• Enforcement Strategy May Change

The main demand of the crypto industry is they want the SEC to take action against fraud and Ponzi schemes that involve the use of cryptocurrencies. However, they do not want the institution to target legitimate players who want to tread into novel territory. SEC has to resolve some puzzling questions. For example, can airdropping to specific wallets be treated as primary sales or not? While playing games, many win tokens but should the law treat it as a purchase or not? Handling secondary trading of crypto assets is also cumbersome right now for the SEC. Therefore, many questions and issues require a resolution by the SEC. 

Conclusion

Donald Trump is now a beacon of hope for many crypto users and companies. He has indeed promised a lot to change the sector and widen its prospects by bringing in new crypto policies or modifying the existing ones. However, these proposed changes require proper consultations and there are key legal ambiguities that need to be clarified to ensure cryptos do not face legal problems. Nevertheless, the hopes are high and the media indeed believes that Trump’s Second Presidency may well turn out to be a transformative moment for the industry.