After years of regulatory “harassment” under the Biden administration — as one notable investor described it to NYNext — the cryptocurrency community is celebrating Donald Trump’s inauguration as the end to a four-year “terror,” and heralding significant policy reversal aimed at legitimizing the industry.
This shift is marked by the appointment of crypto-friendly officials like David Sacks as AI and crypto czar and the nomination of Paul Atkins for SEC Chair, plus the promise of day-one executive orders that will create a Bitcoin reserve and end debanking.
“The entire market is relieved … we have a seismic shift in the approach and tone of the government and regulatory agencies,” Frank Chaparro, an early Bitcoin investor and director of special projects at crypto news site The Block, said. “What this means practically is, banks will be able to touch crypto — for the last four years they’ve been told they can’t.”
Simply ending debanking — or refusing to work with clients because of their crypto connection — could be enough to help the industry flourish, sources say.
“All those banks who worked with cryptocurrencies faced regulatory harassment,” Nic Carter, a crypto investor at Castle Island Ventures who raised alarm bells about Biden’s debanking efforts told NYNext.
Carter has labeled Biden’s so-called debanking efforts “Operation Chokepoint 2.0” — a reference to the Obama Administration’s Operation Chokepoint, which aimed to crack down on illicit activity, like drug sales, but ended up going after legal businesses like firearms dealers.
Under the Biden administration, banks were told by regulators at the FDIC (Federal Deposit Insurance Corporation) not to work with cryptocurrency companies, which handicapped the industry. Venture capitalist Marc Andreessen described the administration’s action as “terrorizing” startups — and said in an interview with Joe Rogan last month that banks were pushed to debank 30 startups in which he invested.
“It’s a privatized sanctions regime,” Andreesen said.
“Banks never tell you why they’re debanking you,” Carter adds. “They may communicate verbally that there are reputational risks, but the conversation is so obscure.”
This situation resulted in crypto startups moving offshore or never launching in the first place.
With just that change alone, Carter predicts a crypto startup renaissance: “All the startups that left are coming back [to the US] … this was the number one thing crypto people wanted to change.”
And there are already some early signs of that happening, sources add.
Dennis Dinkelmeyer, the founder and CEO of European-based cryptocurrency investment firm Midas, told NYNext that he is considering launching in the US this year.
“Founders across the market are looking to make a comeback or expand into the US for the first time in four years,” Dinkelmeyer said. “Excitement is returning and you see this in recent news of big projects such as TON [Midas’ crypto bank on the blockchain] pushing into the stateside market for the first time.”
During his administration, Biden appointed officials who tried to crack down on the industry — passing laws that make it difficult for traditional institutions to hold cryptocurrency. Lawmakers and regulators saw the industry, which remains wildly speculative, as something to be tamped down rather than grown carefully, sources explain.
While they acknowledge there is risk involved, these people want to see rules that at least make it possible for crypto companies to operate and grow in the US.
On Friday, Sacks will host the first-ever Crypto Ball in Washington, DC, kicking off a weekend of celebrations ahead of Trump’s inauguration on January 20. The black-tie event, with tickets ranging from $2,500 (and already sold out) to $1 million — which includes a private dinner with the president-elect — includes such sponsors as Coinbase, Solana, MicroStrategy, Kraken, Galaxy Digital and more.
Anthony Pompliano, Founder & CEO of Professional Capital Management, explains that, in the coming months, he is optimistic the Trump Administration will get into the minutiae of regulations and change accounting rules to make it easier to transact in Bitcoin.
While many in the cryptocurrency community have been cheering on the pro-crypto executive orders Trump is expected to issue, one idea is causing more controversy: the idea of an America-first strategic reserve that would prioritize digital coins founded in the US, like Solana, USD Coin and Ripple.
In recent weeks, Trump has met with the founders of these coins and, sources said, is receptive to the idea.
Insiders, who spoke on the condition of anonymity, shared concerns that it could delegitimize efforts to promote Bitcoin, which is the asset they want to prioritize.
But sources also told The Post that those fissures take a back seat to what they believe will become a crypto golden age.
Chaparro, for one, thinks Trump has already set a new tone for the industry: “It’s a radical shift — America is so back in business for crypto founders.”
This story is part of NYNext, a new editorial series that highlights New York City innovation across industries, as well as the personalities leading the way.
This story originally appeared on NYPost
