Some insights into the encryption industry following Trump's inauguration.

After Trump took office, the development trend of the crypto world has been generally optimistic by the market, especially in terms of policy environment and market sentiment, it is expected to bring a series of Favourable Information changes. The following is an analysis of the development trend of the crypto world and possible policy implementations:

One, crypto world development trends

1. Regulatory Environment Shifts to Looser The Trump administration is expected to promote a more crypto-friendly regulatory policy and reduce excessive intervention in the industry. The current SEC chairman, Gary Gensler, is considered to be too strict on the crypto industry. Trump has promised to dismiss him and appoint regulators who have a better understanding of the crypto industry, such as Paul Atkins, which will bring a more relaxed regulatory environment to the industry213.
2. Bitcoin becomes a national strategic reserve Trump proposed to establish a “strategic Bitcoin reserve,” similar to the strategic oil reserve in the United States, aimed at elevating Bitcoin to a sovereign reserve asset. This move will not only enhance the legitimacy of Bitcoin, but may also push its price further up 61112.
3. Institutional funds are flowing in at an accelerated pace With the improvement of regulatory environment, more traditional financial institutions such as banks and pension funds may enter the crypto market, promoting market liquidity and maturity. The approval and inflow of funds for spot Bitcoin ETF has already shown the interest of institutional investors 810.
4. Bitcoin mining industry returns to the United States Trump plans to attract Bitcoin mining companies back to the United States through tax incentives and energy subsidies, and promote the development of green energy mining technology. This will consolidate the United States’ dominant position in the global Bitcoin network 1113.
5. Rapid Development of Stablecoins and DeFi Trump supports the development of stablecoins and opposes the issuance of central bank digital currency (CBDC) by the Federal Reserve. He plans to establish a clearer regulatory framework for stablecoins and allow them to access the Fed’s payment system, which will accelerate the application of stablecoins in payments and cross-border settlements1113.

Second, possible Favourable Information policies that may be implemented

1. “21st Century Financial Innovation and Technology Act” (FIT21) The bill aims to clarify the regulatory framework for cryptocurrencies, differentiate between digital commodities and securities, and reduce regulatory conflicts between the SEC and CFTC. After the bill is passed, it will promote the emergence of more compliant trading platforms and crypto financial products, and facilitate the development of DeFi and RWA (Real World Assets) 13.
2. Repeal of SAB 121 Accounting Bulletin SAB 121 requires companies to account for custodied crypto assets as liabilities, which increases the financial burden on companies. Trump promised to abolish this policy, which will reduce compliance costs for crypto custodians and attract more traditional financial institutions to enter the market1113.
3. Stablecoin Legislation The Trump administration plans to promote legislation related to stablecoins, clarify their compliance requirements, and allow stablecoin issuers to access the Fed’s payment system. This will accelerate the application of stablecoins in the field of payments and cross-border settlements 1113.
4. Bitcoin Strategic Reserve Act The Trump administration may push for legislation requiring the US government to gradually purchase Bitcoin as a strategic reserve. This policy will significantly enhance the legitimacy and market position of Bitcoin.
5. Support for green mining and energy innovation Trump plans to support Bitcoin mining companies that use renewable energy through tax incentives and subsidies, promote the development of green mining technology, and reduce dependence on overseas supply chains 1113.

Three, Potential Challenges and Risks

1. Market Volatility Although policies Favourable Information may drive up the price of Bitcoin, the high volatility of the crypto world still exists, and investors need to be cautious of the short-term pullback risk 12.
2. The Balance Between Decentralization and Regulation The policies of the Trump administration may promote the centralization of Bitcoin mining and computing power, which may raise concerns about its decentralized nature 11.
3. Global Policy Chain Reaction Changes in US policies may lead to emulation or countermeasures by other countries, potentially altering the competitive landscape of the global crypto market 1113.