Is Biden’s crypto legacy good for Trump?

Author: Alex O'Donnell, CoinTelegraph; Compiler: Tao Zhu, Golden Finance

Former U.S. President Joe Biden leaves office with a complicated cryptocurrency resume that ranges from a tough regulatory crackdown to huge gains in institutional adoption.

On January 20, crypto-supporting President Donald Trump began his presidential term. While Trump has declared plans to make the United States the “cryptocurrency capital of the world,” Biden’s stance on cryptocurrencies is more ambivalent.

Under Democrat Joe Biden, U.S. financial regulators have filed dozens of lawsuits against industry companies for allegedly breaking the law. On the other hand, they have also paved the way for institutional adoption, approving many regulated crypto products and custodians.

Cryptocurrency’s four years of development have been uneven. Decentralized finance (DeFi) is effectively banned from the U.S. market, and exchanges are struggling. Meanwhile, spot crypto exchange-traded funds (ETFs), tokenized U.S. Treasuries and dollar-backed stablecoins have surged.

Biden versus Trump on encryption policy. Source: Galaxy Research

regulatory crackdown

In 2021, Biden appointed Gary Gensler to serve as chairman of the Securities and Exchange Commission, the nation's top financial regulator. Gensler resigned as SEC chairman on January 20, the start of Trump's presidential term.

Under Gensler's leadership, the SEC and its sister agency, the Commodity Futures Trading Commission (CFTC), filed more than 100 legal actions against cryptocurrency companies. Targets include cryptocurrency exchange Coinbase, DeFi protocol Uniswap and infrastructure provider Consensys.

Gensler accuses the companies of failing to register as securities brokers or exchanges, claiming this "denies investors important protections, including SEC inspections, recordkeeping requirements and safeguards to prevent conflicts of interest."

Industry executives say the agency’s approach has “hampered our industry for years, limiting potential technological innovation and services,” Coinbase chief legal officer Paul Grewal said in a Jan. 17 article on the X platform.

In 2024, about 30 cryptocurrency executives accused the Biden administration of restricting cryptocurrency companies ' access to banking services through regulators such as the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC).

Galaxy Research believes Trump is more pro-cryptocurrency than Biden and his Vice President Kamala Harris, who is running against Trump in 2024.

Spot Bitcoin ETF assets exceeded US$100 billion in November. Source: Eric Balchunas

Institutional Adoption

While the Biden administration has taken a tough enforcement stance, he has also presided over key developments in institutional cryptocurrency adoption and the tokenization of real-world assets (RWA).

In January and July this year, the U.S. Securities and Exchange Commission approved a dozen spot Bitcoin and Ethereum ETFs to be listed on the U.S. market.

Cryptocurrency ETFs have dominated the ETF space since then, with net assets of spot Bitcoin ETFs surpassing $100 billion in November. BlackRock, the world’s largest asset manager, now recommends allocating up to 2% of your portfolio to Bitcoin.

“The availability of digital assets in ETF wrappers is an absolute game changer,” Will McGough, investment director at Prime Capital Financial, a $24 billion registered investment company headquartered in Overland Park, Kan., noted in July. consultant.

“The ability to access these investments through conventional investment channels may lead to broader adoption over time.”

Meanwhile, the number of regulated digital asset custodians in the United States has proliferated during Biden’s term, with companies including Coinbase Custody Trust, Fidelity Digital Asset Services, and Anchorage Digital Bank now authorized to custody assets for U.S. clients .

Dozens of other crypto products have also joined the fray, from options contracts on spot Bitcoin ETFs to swaps and futures pegged to meme coins like Dogecoin and Bonk.

Tokenized U.S. Treasury debt TVL has expanded during the Biden administration. Source: RWA.xyz

Tokenization

Advances are not limited to traditional financial products. In 2021, asset management firm Franklin Templeton launched the Franklin OnChain U.S. Government Currency Fund (FOBXX), a tokenized currency fund initially launched on the Stellar network.

This is the first time the U.S. Securities and Exchange Commission has allowed investment vehicles to rely on blockchain networks’ distributed ledger technology for record-keeping.

U.S. tokenized money funds, including the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), currently have a total value locked (TVL) of more than $3.5 billion, according to data services firm RWA.xyz.

Meanwhile, total holdings of USDC, a U.S. dollar-backed stablecoin regulated by the U.S. Treasury Department, surged to about $45 billion during the Biden administration.

In 2024, the U.S. Treasury Department recognized that tokenization “has the potential to unlock new economic arrangements and increase efficiencies” and is currently considering tokenizing U.S. Treasury securities.

At the same time, the CFTC began exploring the use of cryptocurrencies as trading collateral on derivatives exchanges.