Donald Trump's second term began on January 20 and, with just over a month in duration, is already promoting a profound reconfiguration of the United States' economic policies. The president's new guidelines on international trade relations have impacted global investments, increasing volatility in stock markets around the world. The so-called "Trump effect" has been redefining the way markets react to regulatory changes and new strategies implemented by the American government.
This reconfiguration is not limited only to international trade or macroeconomic policies. The crypto ecosystem is one of the most impacted sectors, undergoing a significant transformation. The approach of the previous administration, characterized by restrictions and caution regarding digital assets, is being replaced by a vision that prioritizes technological innovation and financial freedom. This shift in stance not only reflects the growing influence of the crypto sector on the global economy but also signals an alignment with the principles of decentralization and privacy fundamental to the crypto community.
Bitcoin an alternative to the traditional system
In recent weeks, Trump threatened to impose a 25% tariff on products from Mexico and Canada, as well as a 10% surcharge on imported items from China and 25% on all steel and aluminum imports destined for the US. These protectionist measures have created an environment of uncertainty in global markets, especially impacting assets considered risky. The rise in commercial costs tends to pressure inflation and discourage investments, creating a challenging environment.
“Bitcoin has been standing out as a reliable asset amid this volatility. While stock markets around the world have accumulated significant losses, Bitcoin has remained virtually stable, reinforcing its role as a store of value in times of economic instability. This resilience demonstrates the growing maturity of the digital asset and its ability to attract investors seeking protection against the uncertainties of the traditional market,” says Luiz Parreira, CEO of Bipa.
In the face of this scenario of drastic changes in economic and regulatory policies, the new Trump administration has adopted a more favorable stance towards innovation in the crypto sector. The recent executive orders signed by the president reflect a clear effort to reshape current regulations and stimulate the growth of the digital asset market in the United States. This pro-crypto shift marks the beginning of a new phase for the sector, which now benefits from a more favorable environment for the development of decentralized financial technologies and the participation of major institutional investors.
Executive Orders and Regulatory Overhaul
Donald Trump's second term brought a profound reconfiguration of the United States' regulatory policy regarding the crypto ecosystem. This transformation marks a break from the restrictive approach of the Biden administration, establishing a new paradigm that prioritizes innovation and financial freedom in the sector.
Two executive orders that significantly impact the cryptocurrency and Bitcoin sector signed by Trump in January, representing the first concrete steps of this change. The first of them revoked Executive Order 14067 from the Biden administration, which imposed restrictions on the crypto sector and promoted the development of a Central Bank Digital Currency (CBDC). In its place, a pro-crypto policy was established, explicitly banning the creation of CBDCs and creating a "Presidential Working Group on Digital Asset Markets." Furthermore, Trump ordered all federal agencies to review their regulations on crypto assets within a period of 30 to 60 days. This order also protects the right to self-custody and Bitcoin mining.
The second executive order focused on revoking SAB 121, eliminating the requirement for banks and financial institutions to include custodial crypto assets in their balance sheets. This measure removes one of the main barriers to the entry of traditional financial institutions into the crypto market, enabling a greater supply of custody services and products related to digital assets.
CBDCs Ban
Trump's decision to explicitly ban the development of CBDCs marks a drastic break from the previous administration. The new executive order not only prohibits government agencies from promoting or issuing CBDCs but also mandates the immediate termination of any projects related to these state digital currencies.
This measure was widely celebrated by the crypto community, which views CBDCs as a tool for state surveillance and government control over individual financial transactions. The prohibition reflects a political view that values financial privacy, dollar sovereignty, and decentralization, principles aligned with the philosophy of Bitcoin and cryptocurrencies in general.
ETFs drive the market
The Bitcoin ETFs launched last year exceeded market expectations. BlackRock's IBIT and Fidelity's FBTC achieved a combined volume of $4.5 billion on their first day of trading. In just 11 months, IBIT accumulated an impressive $50 billion in assets, breaking records and highlighting the growing demand for regulated products in the Bitcoin ecosystem.
In the Brazilian exchange-traded index fund market, of the ten ETFs that had the highest return to investors in 2024, seven are related to crypto assets and blockchain networks, according tosurveyfrom Quantum Finance.
“ETFs play a crucial role in popularizing the crypto market by simplifying access to these assets. They eliminate the complexity of cryptocurrency custody, allowing exposure to appreciation without concerns about security and storage, making investment more accessible and attractive. ETFs are an interesting first step, but it is always worth remembering that they do not provide access to a key feature of Bitcoin: the possibility for individuals to perform their own custody. It is through self-custody that individuals can guarantee their financial sovereignty,” says Caio Leta, head of research at Bipa.
The “Bitcoinization” of the Financial System
The growth of Bitcoin ETFs not only represents a co-optation by the traditional financial system but also a "Bitcoinization" of that system. Products such as ETFs denominated in BTC, ETFs of companies that adopted the "Bitcoin standard," and debt securities aimed at purchasing Bitcoin are examples of this integration.
The market is adapting to the logic and principles of Bitcoin, transforming its traditional dynamics. This is just the initial phase of a change that could redefine the foundations of the global financial market.
