Daniel Walker
As Bitcoin hits an all-time high of $93,500, JPMorgan analysts have identified six potential regulatory and market changes that could redefine the crypto landscape under Donald Trump’s administration and the Republican-led Congress.
1. Progress on Stalled Crypto Legislation
Pending crypto-focused bills could see rapid approval.
- The Financial Innovation and Technology for the 21st Century Act (FIT21) aims to clarify regulatory authority between the SEC and CFTC.
- The Clarity for Payment Stablecoins Act of 2023 seeks to establish stablecoin regulations, excluding them from securities classification.
- The Central Bank Digital Currency (CBDC) Anti-Surveillance State Act could halt U.S. CBDC development, bolstering private stablecoin adoption in the financial system.
2. A Shift to Collaborative Regulation
JPMorgan analysts predict a softer regulatory stance, potentially reducing the SEC’s litigation-heavy approach.
- High-profile lawsuits against firms like Coinbase may be settled or dropped.
- Notices issued to platforms like Robinhood and Uniswap could also be revisited, easing risks for the broader crypto ecosystem.
3. Increased Bank Participation in Crypto Custody
The analysts anticipate the repeal of SAB 121, which restricts banks from holding digital assets.
- Currently, SAB 121 forces banks to treat customer crypto holdings as liabilities.
- Its repeal could streamline bank engagement with digital assets, especially under expected leadership changes at the FDIC and OCC.
This shift could unlock significant growth for the crypto industry as traditional financial institutions expand their services.
4. Spot ETFs Beyond Bitcoin
While spot Bitcoin ETFs have made strides, the analysts foresee hurdles for spot ETFs focused on assets like XRP and Solana.
- The SEC may demand resolution of securities lawsuits or futures-based ETF launches before granting approval.
- Multi-token spot ETFs could gain traction, especially as demand for Ether spot ETFs lags behind Bitcoin’s.
5. Growth in Venture Capital and M&A Activity
A clearer regulatory framework could ignite venture capital investments, IPOs, and mergers in the crypto space.
- Greater collaboration on token issuance, asset tokenization, and decentralized autonomous organizations (DAOs) is expected.
- Wyoming’s Decentralized Unincorporated Nonprofit Association Act serves as a model for DAO-friendly legislation, granting DAOs legal recognition while preserving decentralization.
6. Low Likelihood of U.S. Bitcoin Reserve Adoption
The BITCOIN Act proposes making Bitcoin a strategic reserve asset, allocating 5% of its total supply over five years.
- At current prices, this would require $90 billion in inflows.
- JPMorgan sees the bill’s passage as unlikely but acknowledges that it could legitimize Bitcoin as a reserve asset if adopted.
JPMorgan analysts highlight that Trump’s presidency may usher in a more favorable environment for crypto, driven by regulatory clarity, institutional involvement, and venture capital growth. However, the pace of these changes and their full impact will depend on political will and market dynamics in the coming years.
