Bitcoin on the Ballot
Selected Potential Impacts of the 2024 Election
President-elect Donald Trump has aggressively courted the support of bitcoin-aligned voters and interest groups over the course of his campaign with a variety of proposals friendly to the bitcoin ecosystem. Trump gave a lengthy keynote speech at the Bitcoin 2024 conference and has surrounded himself with advisors like Cantor Fitzgerald CEO Howard Lutnick, who recently announced a multi-billion dollar bitcoin-backed lending facility after having been adamantly pro-bitcoin for years. Meanwhile, Republicans appear poised to capture control of both chambers of Congress (a so-called “Red Wave”), likely reducing friction for Trump’s legislative agenda and approval of his appointees to key cabinet positions.
We acknowledge that campaign promises often diverge sharply from actual policy implementation and the President-elect may end up disappointing bitcoin enthusiasts in one way or another, particularly given his historical skepticism toward bitcoin. However, the combination of factors listed above could drive substantial tailwinds for bitcoin holders and the broader bitcoin technology ecosystem if the incoming administration approximately follows through on its proposals. The following is a brief summary of selected key impacts we see as most likely over the next four years if President-elect Trump’s campaign rhetoric translates to actual policymaking and cabinet appointments. In the optimistic case for bitcoin in President Trump’s second term, the tailwinds discussed here merit the serious attention of all individual investors, institutional allocators, and fiduciaries.
Strategic Bitcoin Reserve
At the Bitcoin Conference in July 2024, Wyoming Senator Cynthia Lummis proposed a bill that would direct the US Treasury to build a “strategic bitcoin reserve” of 1 million bitcoin to be acquired over 5 years and held for a minimum of 20 years. The same day, President-elect Trump endorsed the idea of the US building such a reserve, though he did not specify a target amount. While exact details behind the implementation of any such plan are still to be determined, this initiative would add a net new bid of up to ~550 bitcoin per day (relative to current daily new issuance of ~450 bitcoin) from a price-inelastic buyer with an infinite budget who has historically been a net seller of bitcoin.
To the extent the US does implement this plan, or is even thought to be seriously considering it, other large nations will likely be incentivized to make similar moves given bitcoin’s fixed supply. Several smaller nations including El Salvador and Bhutan have already been openly building their bitcoin reserves, but the world’s most powerful government doing so would materially raise the profile and credibility of this strategy, thus opening up a powerful new demand spigot for bitcoin (and consequently for the companies building the most successful bitcoin enabling technologies).
Reduction of Regulatory Risk
Given bitcoin’s well-established regulatory framework as a commodity (acknowledged repeatedly by both the SEC and CFTC across multiple administrations), the US government’s long history of open market sales of bitcoin, and the recent launch of spot bitcoin ETFs by massive institutions such as BlackRock and Fidelity, the left-tail risk of bitcoin ownership being “banned” in the US was already low and declining by the year. That said, the election of President Trump and a Red Wave in Congress further reduce the risk of adversarial regulatory action against key functions like bitcoin self-custody and bitcoin mining, both of which President-elect Trump has explicitly committed to protecting.
Given Trump’s rhetoric and campaign platform, his appointments for key cabinet and administrative positions — which a Republican-controlled Congress would likely approve without much friction — are all likely to be more friendly to bitcoin holders and technology companies than their predecessors, creating a clearer and more standardized regulatory environment for founders and developers in the space. In particular, new leadership at the Treasury Department, FDIC, and OCC (and potentially the Federal Reserve later in Trump’s second term) should solidify better access to legacy banking rails for bitcoin companies, which had become a notable sticking point under the previous administration. Meanwhile, a Trump-appointed Attorney General would be likely to overhaul the DOJ’s recent trend of regulation by enforcement of financial rules that are often poorly defined or inconsistently enforced.
Reduction of Career Risk
The above points further reduce the “career risk” capital allocators naturally face when advocating for exposure to a new technology like bitcoin. In a scenario where the world’s most powerful government is acquiring bitcoin (or at least explicitly protecting and promoting its use), institutional investors, corporate treasurers, and fiduciaries of all stripes will increasingly have the air cover they need to leg into bitcoin positions with the conviction that a catastrophic regulatory outcome is largely off the table. To take it a step further, if the US government and competitive foreign treasuries begin openly and aggressively acquiring bitcoin, capital allocators will increasingly be required to develop a serious bitcoin strategy to avoid becoming laggards in the adoption of a geopolitically significant technology. In such an environment, career risk will come from ignoring bitcoin rather than embracing it.
Meanwhile, a clearer regulatory landscape and government-level adoption of bitcoin should help pave the way for more executives at legacy finance, technology, and energy companies to evaluate integrating bitcoin into their products and technology stacks across a variety of use cases.
Continuing / Accelerating Fiscal Deficits
The US has spent the past two Presidential terms running peacetime fiscal deficits of unprecedented size, driving the publicly held debt to GDP ratio to ~100% for the first time since the 1940s. The CBO and the Treasury Department both project substantial increases over the next decade, and recent estimates suggest President-elect Trump’s policy platform (which combines sustained high spending with new tax cuts) will boost this metric even further. An acceleration of this trend under the new administration (enabled by an accommodative Congress) would likely be stimulative and inflationary on the margin, particularly if paired with the aggressive tariff policies the President-elect has floated, driving both individuals and institutions to seek exposure to hard assets like bitcoin or gold that have historically performed well in such environments.
At the same time, the growing burden of federal interest expense – which recently surpassed defense spending and will potentially exceed Social Security spending next year – will only get heavier as deficits widen under President Trump and inflation threatens a resurgence, potentially driving the need for more accommodative monetary policy by the Federal Reserve, which would also tend to drive more flows toward assets like bitcoin that best resist dilution. All such adoption growth would also be a tailwind for companies building the tools and services that enable bitcoin onboarding and extend the asset’s utility.
Greater Integration into Traditional Financial Services
With greater regulatory clarity and a more neutral or accommodative set of financial regulators at the Treasury Department, SEC, FDIC, and elsewhere, traditional banks and asset managers will likely have more leeway to enter the bitcoin custody market and provide associated bitcoin-native financial services. Bitcoin — which is highly liquid, fungible, permissionless, and globally salable 24/7/365 — has already proven itself to be uniquely pristine collateral, as evidenced by Unchained Capital’s 7+ year track record of originating more than $700 million in bitcoin-backed loans without a single loan loss across multiple turbulent market cycles. With fewer regulatory complications to bitcoin custody and financial services, we expect this “super collateral” value proposition will become much clearer to traditional lenders during President Trump’s second term.
Specifically and most significantly, a bitcoin-friendly President and Congress will likely allow for the repeal of SAB-121, a piece of SEC accounting guidance that has historically made bitcoin custody cost-prohibitive for traditional financial institutions. This guidance was repealed by Congress earlier this year in a rare display of bipartisanship, but that legislation was subsequently vetoed by President Biden. While BNY Mellon was recently granted an exemption to this guideline, successful removal of the rule would help clear the way for broader bitcoin participation among a wide base of banks and custodians, driving incremental institutional demand for bitcoin. This development would also potentially represent a tailwind for existing custody providers and bitcoin infrastructure businesses that may become attractive takeout targets among this large acquirer universe of banks and asset managers.
Continuation of US Bitcoin Mining Infrastructure Buildout
President-elect Trump has worked closely with several large, publicly traded bitcoin miners during his campaign and has made a variety of positive public comments about supporting the mining industry in the US. While various states like Texas and Tennessee have been highly accommodating to bitcoin miners over the past few years, several federal overtures such as the proposed DAME tax and an invasive but ultimately aborted “emergency survey” targeting bitcoin miners have threatened to send the industry into other jurisdictions. A more pro-bitcoin administration and Congress would ensure the industry can continue to grow sustainably in the US, a tailwind for the miners themselves, the energy and power industries that are increasingly intertwined with bitcoin mining, and adjacent infrastructure providers.