Source: Cointelegraph Original: "{title}"
In the turbulent world of cryptocurrency, political events have long been one of the main driving forces affecting market fluctuations. This was particularly evident last year when Bitcoin's price soared after Trump won the election, breaking through the long-anticipated $100,000 mark and setting a new historical high.
Investors and market analysts have now recognized that the cryptocurrency market is no longer isolated from global political dynamics but is closely interconnected with them.
Biden Administration: Constraints on Cryptocurrency Industry Development
Overall, the Biden administration's attitude towards the cryptocurrency industry is somewhat ambiguous; it has neither explicitly opposed nor fully supported it. The policy focus is primarily on strengthening regulation, mitigating risks, and ensuring that the rapid development of the cryptocurrency industry does not threaten the stability of the financial system and consumer rights.
For instance, an executive order signed in 2022 directed the U.S. Treasury to assess the risks and benefits that cryptocurrencies may bring, formulate policy recommendations regarding cryptocurrencies, and urge the Federal Reserve to consider the possibility of creating a "digital dollar." Although this news was seen as the government recognizing the growing importance of cryptocurrencies and their potential impact on the U.S. and global financial systems, Bitcoin's price did experience a significant increase following the announcement of the executive order.
However, the subsequent regulatory measures from agencies such as the U.S. Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve have imposed significant constraints on the development of the cryptocurrency industry.
In June 2023, the SEC filed a lawsuit against Binance and its CEO Changpeng Zhao (CZ), accusing them of providing unregistered securities trading services and involving issues of customer fund commingling. Subsequently, Coinbase was also accused of operating an unregistered securities exchange and failing to properly register its cryptocurrency staking program.
According to a report released by consulting firm Cornerstone Research, the number of cryptocurrency-related enforcement actions initiated by the SEC in 2022 reached a record high of 30, an increase of about 50% from 2021. The most direct result of this was the migration of cryptocurrency companies, including Binance and Kraken, out of the U.S.
Trump Administration's Cryptocurrency Strategic Reserve Plan: From Skepticism to Embrace
During his first term, Trump held a skeptical and critical attitude towards the cryptocurrency industry. In July 2019, he stated on social media platform X that he was not a fan of Bitcoin and other cryptocurrencies, believing they were not currencies, that their value was highly volatile, and that they lacked a substantial basis. He also pointed out that crypto assets could facilitate illegal activities, including drug trafficking. Additionally, Trump expressed dissatisfaction with Facebook's proposed cryptocurrency project, Libra, stating that if companies like Facebook wanted to become banks, they must seek new banking licenses and comply with all banking regulations.
However, during his campaign for a second term, he received strong support from cryptocurrency lobbying groups. After taking office, he first appointed Paul Atkins, seen as a strong ally of the cryptocurrency industry, as the chairman of the SEC, and then advanced the cryptocurrency strategic reserve plan.
Although the cryptocurrency industry did not "take off" as expected during his tenure, some market voices believe that his policies laid the groundwork for future growth in the industry.
In addition to appointments, Trump also established the World Liberty Financial platform to engage in cryptocurrency trading and issued a meme coin of the same name. Recent data shows that the total amount of tokens sold on the platform has reached $550 million since its launch.
However, this cryptocurrency has experienced a rollercoaster ride. After its launch on January 17 of this year, its price quickly soared, reaching a peak market capitalization of $14.5 billion the day before Trump's inauguration. But as the market cooled, its market cap fell back to about $2.2 billion.
Despite this, given Trump's historically variable stance on economic issues and his tendency to be guided by personal opinions, the market still finds it difficult to determine how long his support for cryptocurrencies will last.
Other Political Figures' Influence on the Cryptocurrency Industry
In February of this year, Argentine President Javier Milei sparked controversy by promoting a cryptocurrency called $LIBRA, leading to multiple investigations and accusations. Milei initially posted on platform X to promote the new cryptocurrency $LIBRA, claiming it aimed to "incentivize economic growth and provide funding for small businesses and startups." Under his promotion, the price of $LIBRA once soared to $4,978 but then quickly plummeted to $0.99, causing significant losses for many investors. After the collapse of the $LIBRA price, Milei deleted his previous promotional posts and stated that he was not aware of the specific details of the cryptocurrency plan.
This incident not only caused turmoil in the cryptocurrency market but also had a significant impact on Milei's reputation and the political situation in Argentina, with related investigations still ongoing.
Additionally, Russian President Putin has also influenced the cryptocurrency market through his economic policies, particularly advocating for Russia to adopt blockchain technology and seek alternative markets to escape Western sanctions. He has stated that Bitcoin might be better than foreign exchange reserves, questioning the necessity of holding foreign exchange reserves. Furthermore, Russian companies have begun using Bitcoin and other digital currencies in international trade to cope with the challenges posed by Western sanctions.
As cryptocurrencies continue to develop, a key question becomes increasingly prominent: can they continue to serve as a symbol of financial freedom, or will they be manipulated by political and economic powers?
Related: SEC Acting Chair Indicates Possible Withdrawal of Cryptocurrency Custody Rules Proposed During Biden Era
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