In a year of elections all over the globe from Britain to Bangladesh and India to Ireland, none were ever going to have more global significance than the US election. The implications of Donald Trump’s return to the White House will be numerous.
Although some of the second Trump presidency will involve returning to the themes of the first, there is no doubt that policy on crypto matters will be one to watch. Having been dismissive of crypto in his first spell in office, Mr Trump’s 2024 campaign brought the zeal of a convert, promising a series of pro-crypto moves.
Trump’s Pro-Crypto Policies
Having promised to make the US the ‘Bitcoin capital of the world’ in his speech at the Bitcoin 2024 conference in Nashville, Tennessee earlier this year, Mr Trump produced a series of policy proposals to bring this about.
These included a strategic Bitcoin reserve, support for the Bitcoin mining industry and support for decentralised finance, or DeFi.
In addition, and perhaps most significantly for international traders, Mr Trump has promised to curb attempts to impose stringent regulations on crypto, with one step being to replace the pro-regulation chair of the Securities and Exchange Commission Gary Gensler, as well as ending the “persecution” of crypto by senior Democrats like Elizabeth Warren.
Election results will always bring about market reactions, often a positive one whoever wins just on the basis that a clear victory for anyone means an end to uncertainty. In this instance, however, it was very profound; Trump’s triumph has created a bull market and, after weeks of speculation, Bitcoin has finally burst through the $100,000 barrier.
How Can This Affect A Business Using Crypto?
So far, so good. But those using XrPaynet as a payment method they can use to make transactions from a crypto account for business will naturally want to ask some questions about what comes next.
The first, of course, is whether the bull market will continue, or whether this is a bubble likely to see a market correction. This, it should be noted, is not the same as saying there will be a huge bust at some stage; after all, a more crypto-friendly regulatory environment (or at least the absence of an unfriendly one) is bound to be positive.
Consequently, investors may well find that Bitcoin and other cryptocurrencies are overvalued to an extent, but that their current level in the market is still well above what it was before the election.
Secondly, there is also the question of how the wider economy and society will respond. Will more individuals start investing in crypto? And if your business uses it, will the range of business-to-business transactions you can undertake expand?
Part of the latter question depends on who you are making transactions with. For example, if you are a UK company whose trading arrangements are with UK customers and partners, the situation will not change much, unless there is a significant change to the regulation of crypto in the UK.
What Will Happen To UK Crypto Regulation?
This is a matter of speculation, but it cannot be ruled out. For example, if the US lead on this matter is seen in a positive light and the UK government sees benefit in it, less regulation may be the way to go.
On the other hand, if a deregulated US sector brings some problems, even if the overall benefit is positive, governments elsewhere may decide to regulate more. Indeed, some governments may even react on a visceral sentiment of ‘four legs good, two legs bad’ that opposes anything Trump does in principle.
What we do know is that the old Conservative government set out plans last year for more “robust” crypto regulation, with the stated aim being to provide “confidence and clarity to consumers and businesses alike”.
The question now is whether the Labour administration that replaced it will continue on the same track, or decide the new US approach offers an opportunity it dare not pass up.
Can Crypto Dodge Trump’s Tariffs?
Domestic approaches to regulation in different countries are one matter; but if your company trades with the US, there may be some tantalising possibilities.
For example, while Mr Trump is threatening higher tariffs against all manner of countries (not just for economic reasons, as Canada and Mexico have found out on the immigration issue), an exception may be made for crypto, just to ensure it stays strong.
Might it even be that trade in goods and services carried out in cryptocurrency avoids the tariffs cash payments are subjected to? We will have to wait and see.
In short, while Mr Trump’s election and his new policies promise to be a game-changer for Crypto, it remains to be seen just how much the opportunities for business users of crypto expand. It is hard, however, to imagine that there will not be some exciting possibilities.