Trump, SEC move to legitimize crypto ‘within the realm of TradFi,’ but some market participants remain cautious
2025-01-25
Category: None

As the industry remained abuzz about the possibility of a strategic bitcoin reserve (SBR) in the United States, President Donald Trump’s administration made crypto a priority on his third day back in office. 
On Wednesday, President Trump signed an executive order creating a "Presidential Working Group on Digital Asset Markets” to develop a federal regulatory framework for digital assets, including stablecoins. The group will also evaluate the creation of a "strategic national digital assets stockpile " and will be chaired by AI and crypto czar David Sacks.
Later that afternoon, the U.S. Securities and Exchange Commission revoked Staff Accounting Bulletin 121, a controversial crypto accounting guidance that required firms that custody cryptocurrencies to record their customers' crypto holdings as liabilities on their balance sheets.
The double dose of news has been met with welcome, a celebrated time for the industry, but not without some reservations about what the U.S. government will do next.
“The Crypto Renaissance has officially begun,” said MicroStrategy Chairman Michael Saylor.
Legitimizing bitcoin within TradFi
On the surface, the moves are bullish for the crypto industry, with the repeal of SAB 121 being the “more meaningful game-changer” for both bitcoin and the entire crypto ecosystem, according to Benchmark.
“Crypto is an atypical asset class inasmuch as its initial adopters were retail investors, with institutional adoption lagging; the opposite has been the case with virtually every other asset class,” equity analyst Mark Palmer wrote to clients, noting that Wednesady’s moves “should help to legitimize bitcoin and other cryptocurrencies within the realm of traditional finance.”
While the rise in the price of bitcoin has been relatively modest over the past 24 hours, up about 1.3% according to The Block’s BTC price data, the outlook is bright.
“This administration is going to support crypto,” pro trader and equity market structure analyst Dennis Dick told The Block. “That's a good thing if you're a crypto bull. I'm long bitcoin and think there is a lot more upside in the next four years.”
Bitwise CEO Huntry Horsley said the crypto space is undeniably maturing, going so far as to say that “Bitcoin's famous” 60% drawdowns may be a thing of the past.
“The counterparties, previously a source of blow ups, are becoming mature and traditional institutions,” Horsley said in a post on X. “The ownership base is getting more diversified, no longer just individuals via an app, but also wealth managers, institutions, family offices, hedge funds, all with different views and time horizons. It is becoming more accepted as valuable.”
Show don’t tell
While it’s a step in the right direction, some need to see more.
"This is the easy stuff,” analysts at TD Cowen's Washington Research Group led by Jaret Seiberg wrote in a note. “Every President sets up commissions and task forces on key issues. It is symbolically important as it reflects how Team Trump prioritizes crypto, but it is not the same as rule changes.”
TD Cowen “remains dubious” as they say Trump's priority is the U.S. dollar, which could be at risk as a reserve currency if countries turn to Bitcoin. Of note, Goldman Sachs CEO David Solomon said bluntly this week he does not think bitcoin is a threat to the U.S. dollar.
“Traders were expecting concrete actions, not vague promises, and the market is now making it clear that hype alone isn’t enough to drive lasting impact,” said Nick Forster, founder of decentralized protocol Derive.xyz. “Without real, actionable steps, like the creation of a national reserve, the market isn’t buying in.”
In fact, expectations for a Strategic Bitcoin Reserve in the near term have plummeted, dropping from about 40% to 20% on Polymarket in the last 24 hours.
“Until the government shows tangible commitment, the market remains skeptical,” Forster said.
Crypto moving forward
Trump courted the crypto industry for most of 2024 and reiterated Wednesday he intends to make America the crypto capital of the world. That embrace may already be playing a role among big-money players. Andreessen Horowitz said Thursday it is closing its UK office, which was opened less than two years ago.
“As the US becomes more business-friendly again, other countries must work harder to retain its business attractiveness,” Binance co-founder Changpeng Zhao said about the news.
Nathan McCauley, the co-founder and CEO of institutional digit asset platform Anchorage Digital, is looking forward to working closely with the new administration.
“[Wednesday’s] crypto executive order marks a sea change in U.S. digital asset policy,” McCauley said in a statement. “By taking a whole-of-government approach to crypto, the Administration is making a significant first step toward writing clear, consistent rules of the road.”
Others have been more blunt.
 “And some people will still say digital assets are a scam,” ETF Store President Nte Geraci said on X. “Industry is moving forward with or without you.”
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.