The second term of Donald Trump began on January 20, and, with a little over a month in duration, it is already promoting a profound reconfiguration in the economic policies of the United States. The new guidelines of the president in international trade relations have impacted global investments, increasing volatility in stock exchanges around the world. The so-called “Trump effect” has been redefining how markets react to regulatory changes and new strategies implemented by the American government.
This reconfiguration is not limited to just international trade or macroeconomic policies. The crypto ecosystem is one of the most impacted sectors, undergoing significant transformation. The approach of the previous administration, marked by restrictions and caution regarding digital assets, is being replaced by a vision that prioritizes technological innovation and financial freedom. This change in stance not only reflects the growing influence of the crypto sector in the global economy but also signals an alignment with the fundamental principles of decentralization and privacy important 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 impose a 10% surcharge on items imported from China and 25% for all steel and aluminum imports destined for the US. These protectionist measures have generated a scenario of uncertainty in global markets, particularly impacting risky assets. The increase in commercial costs tends to push inflation and discourage investments, creating a challenging environment.
“Bitcoin has been standing out as a reliable asset amid this volatility. While exchanges around the world accumulate significant losses, Bitcoin has remained virtually stable, reinforcing its role as a store of value in times of economic instability. This resilience demonstrates the increasing maturity of the digital asset and its ability to attract investors seeking protection against uncertainties in the traditional market,” says Luiz Parreira, CEO of Bipa.
Given 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 existing 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 industry, which now benefits from a more favorable environment for the development of decentralized financial technologies and the participation of large institutional investors.
Executive Orders and Regulatory Reform
Donald Trump’s second term brought a profound reconfiguration in the regulatory policy of the United States 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 significantly affecting the cryptocurrency and Bitcoin sector signed by Trump in January represent the first concrete steps of this change. The first one 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 prohibiting the creation of CBDCs and creating a ‘Presidential Working Group on Digital Asset Markets.’ Additionally, 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 the repeal of SAB 121, eliminating the requirement for banks and financial institutions to include custody crypto assets on their balance sheets. This measure removes one of the main obstacles to traditional financial institutions entering the crypto market, allowing a greater offering of custody services and products related to digital assets.
Prohibition of CBDCs
Trump’s decision to explicitly prohibit the development of CBDCs marks a drastic break with 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 project related to these state digital currencies.
This measure has been widely celebrated by the crypto community, which sees CBDCs as a tool for state surveillance and governmental control over individual financial transactions. The ban 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 reached a combined volume of 4.5 billion dollars on the first day of trading. In just 11 months, IBIT accumulated an impressive 50 billion dollars in assets, breaking records and highlighting the growing demand for regulated products in the Bitcoin ecosystem.
In the Brazilian market for exchange-traded funds, of the top ten ETFs with the highest investor return in 2024, seven are related to crypto assets and blockchain networks, according to a Quantum Finance survey.
“ETFs play a crucial role in popularizing the crypto market by simplifying access to these assets. They remove the complexity of cryptocurrency custody, allowing exposure to appreciation without concerns about security and storage, making investment more accessible and appealing. ETFs are an interesting initial step, but it is always worth remembering that they do not provide access to a fundamental characteristic of Bitcoin: the ability for individuals to perform their own custody. It is through self-custody that individuals can ensure their financial sovereignty.” states Caio Leta, head of research at Bipa.
The ‘Bitcoinization’ of the Financial System
The growth of Bitcoin ETFs represents not only a co-optation by the traditional financial system but also a ‘Bitcoinization’ of that system. Products such as BTC-denominated ETFs, ETFs of companies that have adopted the ‘Bitcoin standard,’ and debt securities aimed at buying 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.
