Financial Institutions Ready for Crypto Craze

The cryptocurrency industry has unabashedly celebrated the start of President Donald Trump’s second term in office as a watershed moment for the sector. With Trump promising to deliver a friendlier regulatory climate for digital assets, it now appears financial firms are ready to get in on the action.

While dour skepticism seemed to be a default setting during the Biden administration, Wall Street is preparing for a flurry of deregulation under Trump’s watch. Clarity on crypto rules and an end to the Securities and Exchange Commission’s previous regulation-by-enforcement approach appear to be at the top of Wall Street’s wish list for the near future.

In line with a vow that he’ll be the most “pro-crypto president in the history of America,” Trump picked former SEC commissioner and crypto supporter Paul Atkins to lead the agency. Atkins generally opposes government regulation, and his conservative bona fides fit with Trump’s well-publicized plans to pave the way for cryptocurrency to play a greater role in the economy. In fact, the SEC has already taken steps to revisit the agency’s regulatory policy on crypto. Acting SEC chair Mark T. Uyeda announced in January that the agency had formed a task force to develop a clear regulatory framework for crypto assets.

Meanwhile, Trump signed a slew of executive orders in his first few days in office to promote crypto and develop a digital asset stockpile for the federal government. Support for the crypto industry is also growing on Capitol Hill. Several lawmakers – particularly Republican members of the GOP-controlled Senate – have indicated that they support a favorable regulatory regime for exchanges, investors and other institutions dealing with digital currencies. Lawmakers could grant authority to the Commodity Futures Trading Commission to regulate tokens as commodities instead of the SEC having jurisdiction and treating crypto like securities, according to Reuters.

Of course, history has taught us that economic crises are borne from frothy enthusiasm for assets that investors may not fully understand. Regulations guard against that kind of thing. Naturally, some analysts and regulatory experts fear the current actions of the government are seeding a crypto-fueled disaster to come.

In particular, the evolving relationship between banks and the crypto industry will shape the potential risks posed to the economy at large. Crypto supporters – including the richest person on the planet, Tesla chief executive Elon Musk – have voiced complaints in the past about bank supervisors marking down financial institutions that dabble in digital assets. Given the amount of political influence the crypto industry acquired during the 2024 election cycle, it stands to reason that lawmakers will turn up the volume on such complaints. The supervisors making those calls for markdowns may soon find themselves pressured to reverse their decisions.

Finally, let’s not forget that Trump himself and others in his family are now profiting from the sale of their own crypto tokens. What are the chances regulations for such an industry won’t bend to the will of the leader of the free world?