Galaxy Report: Various exemptions that benefit the crypto industry may be introduced soon under the Trump administration

Alex Thorn, head of research at Galaxy, said in a report released recently that the following is what may happen to crypto policy under the Trump administration: -Bank regulators: Trump immediately appointed a new acting director of the Office of the Comptroller of the Currency and a new acting chairman of the Federal Deposit Insurance Corporation. Perhaps within a few days, bank regulators can issue guidance that explicitly prohibits unfair targeting of specific industries (Chokepoint 2.0) and revokes existing interpretive guidance or letters that are unfavorable to the industry. Within a few weeks or months, the Office of the Comptroller of the Currency may issue guidance that explicitly allows banks to custody digital assets and use, operate and interact with public blockchains and stablecoins; -Market regulators: Trump promoted current commissioners of the SEC and CFTC to acting chairmen. Although Trump promised to "fire Gary Gensler," most constitutional scholars believe that the president cannot fire a formally appointed commissioner of an independent agency. However, the president can immediately designate a current commissioner as the acting head of the agency. In the short term, some cryptocurrency enforcement will be suspended, some lawsuits will be suspended or withdrawn, no action letters will be issued on specific topics or specific projects, and the industry and regulators will have the opportunity to discuss a reasonable way forward. The CFTC’s position is similar; -Congressional Legislation: Congress’s largest crypto policy agenda items include market structure (clarifying the regulatory status and oversight of digital assets) and stablecoins (legalizing and licensing the issuance of stablecoins). Currently, the two parties are relatively close on stablecoin legislation. If Republicans control the House, these bills are less likely to advance quickly in 2025 and are expected to move to the second half of the 119th Congress; -Energy Policy: A Trump presidency, especially if Republicans control both houses of Congress, will be extremely beneficial to domestic energy and electricity production. This will be beneficial to Bitcoin miners, data centers, any entity with access to large amounts of electricity, and energy producers themselves. The easing of regulatory resistance, coupled with specific interpretive letters, no-action letters, or regulatory guidance, could significantly expand U.S. institutional investors’ access to cryptocurrencies. For example, relaxing the SEC’s Howey Rule applicability to digital assets, or expanding the scope of “crypto-asset securities” that can be traded within broker/dealers, would allow more participants to enter the exchange space, which could include traditional financial institutions such as banks, exchanges, or brokerage firms, and could also lead to more spot cryptocurrency ETFs in the United States. The report concludes that various forms of exemptions are expected to be introduced soon, while a stronger supportive regulatory framework will take more time to emerge. A relaxed enforcement environment coupled with progressive policy thinking will pave the way for traditional financial services companies and institutional investors to deepen their participation in this asset class. This will challenge the moats of existing crypto infrastructure players, but will also broadly support the expansion and maturity of the crypto asset class. In this environment, the price of Bitcoin and other digital assets is expected to be well above the current historical highs in the next 12-18 months.