Crypto Assets Become the New Darling of American Politics

The Crypto Assets industry has rapidly risen in the U.S. political arena recently, becoming the core of policy-making. This is mainly attributed to the investments of the Trump family, friendly regulators, and generous election spending.

In late April, a logistics company in Texas announced it would invest up to $20 million to purchase TRUMP Meme coin, a Crypto Asset launched by Trump before starting his second presidential term. The company's CEO stated that this move is to advocate for favorable trade policies. In the same week, in Lahore, Pakistan, the government reached a partnership with Trump family's World Liberty Financial to jointly develop blockchain products.

These events mark a significant transformation happening in Washington. The Crypto Assets industry is in a rising phase, promoted by the president and his family. Regulators are more lenient in their attitudes, and investors are flocking in. Large lobbying groups are forming to support political candidates who advocate for Crypto Assets. This emerging industry has suddenly become the focal point of public life in the United States.

For many years, many industries have had close ties with the political arena. However, no industry has been able to leap from the margins to the status of an official darling as quickly as Crypto Assets. At the beginning of Trump's first term, the total market value of global Crypto Assets was less than $20 billion, and now it has exceeded $3 trillion.

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Since Trump's return to the White House, financial regulators have suddenly become keen on supporting Crypto Assets. This is because Trump appointed staunch supporters of the industry to lead these agencies. The policy of the U.S. Securities and Exchange Commission (SEC) has undergone a significant shift, adopting a more lenient attitude towards Crypto Assets. Many enforcement actions against crypto companies have been halted, boosting industry confidence.

Unusually, the president and his family are deeply involved in industries that benefit from deregulation. The Trump family holds a 60% stake in World Liberty Financial, whose recently launched stablecoin USD1 has a market value of over $2 billion. Trump himself is the "chief crypto advocate," and his children are also involved. In addition, Trump owns other crypto assets, including the TRUMP Meme coin.

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In addition to the Trump family, large election pressure groups are also making significant investments to promote the interests of the industry. Super PACs like Fairshake spent huge amounts of money in the last election, becoming one of the highest spending groups.

The crypto industry hopes that Congress can clarify the legal status of crypto assets to prevent regulatory policies from being erratic in future elections. They prefer to classify most crypto assets as commodities, regulated by the Commodity Futures Trading Commission (CFTC), rather than by the SEC.

However, the Trump family's crypto frenzy is making it harder for the industry to win enough support in Congress. Trump's obvious conflicts of interest have drawn criticism from Democratic lawmakers. They accuse Trump of leveraging his presidential position to sell influence. Some lawmakers who originally supported crypto-friendly policies are also beginning to hesitate.

Concerns about regulation of Crypto Assets are not limited to the president's connections to the industry. Some analysts believe that the rapidly growing but loosely regulated Crypto Assets industry could pose risks to financial stability. They point out that Crypto Assets were one of the core factors in the U.S. banking crisis of 2023.

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In public, Crypto Assets advocates remain optimistic about gaining supportive legislation. However, privately, some industry leaders are critical of the president's encryption ventures. They worry that the industry becoming a facade for the president to peddle influence will make it difficult for lawmakers to support favorable policies.

Overall, the sudden rise of the Crypto Assets industry in the U.S. political arena has created a situation where opportunities and risks coexist. Balancing innovation, regulation, and political influence will be an important topic in the coming period.

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