When it comes to the crypto industry, one of the most critical factors to consider is not just market dynamics, but also the political landscape.
The attention-grabbing pro-crypto stance of former President Trump made headlines, but the real game-changer for banks and financial institutions could lie in a potential Republican sweep in Congress. Many of Trump’s promises in this regard would require legislative approval, and with strong Republican support and growing bipartisan backing, the chances of crypto-friendly legislation being passed are higher.
There are two key developments driving this potential shift: the revocation of the SEC’s SAB 121 and the proposal of the Bitcoin Act 2024.
Revocation of SAB 121
SAB 121, an accounting bulletin, has been a major hurdle for banks looking to offer crypto custody services. By dismantling SAB 121, banks would be able to enter the crypto custody space, expanding their product offerings and catering to the increasing demand for such services.
This move could also enable banks to attract a new generation of customers interested in crypto, as well as enhance their asset management capabilities and client retention.
Bitcoin Act 2024
The proposed Bitcoin Act 2024, supported by Trump, seeks to establish a national bitcoin stockpile as part of the U.S. Treasury reserves. This initiative could solidify bitcoin’s status as a safe haven asset and have significant implications for how central banks and corporate treasurers approach their investment strategies.
Political figures like Senator Cynthia Lummis have even suggested reallocating some of the Federal Reserve’s gold reserves to bitcoin, potentially bridging the gap between bitcoin’s market cap and that of gold.
Additional pledges
In addition to the aforementioned initiatives, Trump’s agenda includes addressing banking restrictions related to Operation Choke Point 2.0 and opposing the issuance of a Fed-issued central bank digital currency (CBDC). These efforts align with Republican moves to safeguard privacy and ensure congressional oversight on CBDC implementation.
The U.S. has the potential to transition from a regulatory follower to a legislative leader in the crypto space, given its position as the world’s largest financial market. This shift could bring about significant changes and advancements in the crypto economy.