The outcome of the US presidential election is expected to bring about a significant shift in the regulatory landscape for digital assets. According to a recent report by Bernstein, the Securities and Exchange Commission (SEC) and Senate Banking Committee are likely to become more crypto-friendly under the new administration.
A New Era of Regulatory Clarity
The report highlights that the election result should improve regulatory clarity for digital assets, paving the way for faster progress on key bills such as stablecoin and market structure. This is positive news for stablecoin issuers like Circle and Paxos, leading US crypto exchanges, and broker/dealers.
Transformational Shift in Crypto Rule Making
Bernstein notes that a "new regime of crypto rule making" is expected to emerge, driven by the Republican party’s control of the Senate. This transformational shift is not yet priced into the market, according to the report.
Positive Implications for Stablecoin Issuers and Exchanges
The faster progress on stablecoin and market structure bills is expected to benefit stablecoin issuers such as Circle and Paxos, as well as leading US crypto exchanges and broker/dealers. The SEC’s legal battles with key industry participants like Coinbase, Robinhood, Binance, and decentralized finance (DeFi) companies are also expected to come to a close.
Medium-Term Expectations
In the medium-term, Bernstein expects clarity on the definition of digital assets versus securities and a progressive framework for registering digital asset securities with the SEC. Analysts led by Gautam Chhugani note that this would provide much-needed certainty for the industry and enable more investment in digital assets.
Rerating of Broader Crypto Assets
The broker expects a rerating of broader crypto assets, which have suffered from a lack of clarity on whether they qualify as securities. This is likely to lead to increased adoption of exchange-traded fund (ETF) products based on other cryptocurrency tokens by asset managers.
National Bitcoin Reserve and Mining Growth
Positive action is also expected toward setting up a national bitcoin reserve, in line with Trump’s pre-election promise. Furthermore, the report notes that there will be more focus on mining growth in the US.
Key Takeaways
- A crypto-friendly SEC and Senate Banking Committee are expected to emerge following the US election.
- Faster progress is anticipated for stablecoin and market structure bills, benefiting stablecoin issuers, exchanges, and broker/dealers.
- Clarity on digital asset definition versus securities and a progressive framework for registering digital asset securities with the SEC are expected in the medium-term.
- A rerating of broader crypto assets is predicted, driven by increased adoption of ETF products based on other cryptocurrency tokens.
- Positive action toward setting up a national bitcoin reserve and more focus on mining growth in the US are also anticipated.
