JPMorgan Analysts Predict Major Crypto Regulatory Shifts Under Trump

JPMorgan Outlines Crypto Market Changes Under Republican Leadership

JPMorgan– As crypto markets surged to new heights following the U.S. election, with Bitcoin reaching an all-time high of around $93,500 this week, JPMorgan analysts have outlined six critical regulatory and market shifts that could reshape the U.S. crypto industry under Donald Trump’s administration and a Republican-led Congress. These potential changes could provide the regulatory clarity and market conditions needed for the crypto sector to expand rapidly in the coming years.

Advancement of Pending Crypto Legislation

JPMorgan analysts, led by managing director Nikolaos Panigirtzoglou, anticipate that several stalled crypto bills could gain swift approval under the Trump administration. Key pieces of legislation include the Financial Innovation and Technology for the 21st Century Act (FIT21), which aims to establish clearer oversight roles for the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). This bill is expected to provide much-needed regulatory clarity to the crypto market.

Additionally, the Clarity for Payment Stablecoins Act of 2023 is poised to create a regulatory framework for payment stablecoins, ensuring they are not classified as securities under U.S. law. The Central Bank Digital Currency Anti-Surveillance State Act could also limit U.S. Central Bank Digital Currency (CBDC) development, paving the way for private stablecoins to play a more significant role in the financial system. These legislative developments could significantly alter the landscape for crypto businesses in the U.S., providing them with a clearer operating environment.

Shift Toward Collaborative Crypto Regulation

One of the most significant potential changes, according to JPMorgan analysts, is the shift toward a more cooperative regulatory environment. Under the Trump administration, the SEC’s previously enforcement-heavy approach could evolve into a more collaborative one, reducing the litigation risks for the broader crypto industry. High-profile lawsuits against companies like Coinbase and Uniswap may be settled, softened, or even dropped, according to the analysts.

This shift could also extend to regulatory notices issued to companies such as Robinhood. These companies may see a reduction in enforcement actions, easing the regulatory burden on crypto firms and encouraging broader industry participation. This more cooperative approach could foster a stronger relationship between regulators and the crypto industry, driving innovation and investment.

Surge in Crypto Venture Capital and M&A Activity

Clearer regulations and a more favorable political environment could lead to a significant surge in venture capital (VC) funding and merger and acquisition (M&A) activity within the crypto space. According to JPMorgan, clearer guidelines will open up new growth opportunities for the crypto sector, allowing for increased investment in blockchain startups and projects.

The analysts also foresee greater collaboration between regulators and the crypto industry on issues like token issuance, asset tokenization, and decentralized autonomous organizations (DAOs). They highlighted Wyoming’s Decentralized Unincorporated Nonprofit Association Act as an example of progressive DAO legislation, which grants DAOs legal entity status while preserving their decentralized nature. This type of legislation could serve as a model for other states to follow, encouraging further innovation in the crypto sector.

Low Probability of a U.S. Bitcoin Reserve

Despite the optimism surrounding crypto regulations, JPMorgan analysts note a low probability of the BITCOIN Act of 2024 being approved. This bill proposes establishing Bitcoin as a U.S. strategic reserve asset, similar to gold, by acquiring up to 5% of Bitcoin’s total supply over five years. This would amount to around $90 billion in inflows at current prices.

While such a move would legitimize Bitcoin and likely drive its price higher, the analysts suggest that the likelihood of the BITCOIN Act passing is slim. However, should the U.S. move forward with such an initiative, it could set a precedent for other nations to follow suit, further cementing Bitcoin’s status as a reserve asset on the global stage.