Ethereum Under Trump: Exploring 3 Pathways For Impact From New Crypto Policies

In a recent analysis by The Motley Fool, a private financial and investing advice company based in the US, the implications of President Donald Trump’s support for the cryptocurrency sector have come under scrutiny, particularly regarding Ethereum (ETH), the second-largest cryptocurrency by market capitalization. 

Trump has consistently advocated for the crypto industry, surrounding himself with pro-crypto advisors and advancing initiatives such as the establishment of a US Strategic Bitcoin Reserve. 

His administration is actively promoting legislation that would establish the United States as a global leader in cryptocurrency. The recent passage of the GENIUS Act, which establishes stablecoins as the foundation of this ongoing change in the country’s digital asset ecosystem, is a key part of this effort.

Trump’s Crypto Roadmap

One significant aspect of Trump’s crypto policy roadmap is the effort to clarify regulatory frameworks. The lack of clear regulations has long been a concern for businesses and financial institutions operating in the crypto space. 

Uncertainty about regulatory oversight has led to apprehension regarding enforcement actions, with many stakeholders worried about engaging with the sector. 

The current administration aims to eliminate these ambiguities by proposing legislation that would assign the Commodity Futures Trading Commission (CFTC) oversight of the cryptocurrency spot market. 

This shift would alleviate concerns that the Securities and Exchange Commission (SEC) might assert jurisdiction, imposing stringent securities regulations on crypto companies. 

Recently, the House of Representatives passed the Clarity Act, which seeks to establish a comprehensive regulatory framework, though it still requires Senate approval.

Ethereum At The Forefront

Another key element of Trump’s roadmap is the integration of decentralized finance (DeFi) into traditional financial systems. The administration is advocating for legislative measures that recognize the potential of DeFi technologies, which rely on decentralized applications (dApps) and smart contracts. 

Ethereum’s blockchain is at the forefront of this movement, according to the firm’s analysis, serving as the primary platform for decentralized finance (DeFi) applications. 

Smart contracts automate various processes, executing agreements when specific conditions are met. For instance, in real estate, a smart contract could streamline mortgage transactions by automatically executing terms once necessary documentation and payments are provided. 

With over half of all decentralized applications operating on the Ethereum blockchain, an expansion of decentralized finance could significantly boost the use and adoption of Ethereum itself.

Additionally, the administration is focusing on stablecoins, a crucial area within the cryptocurrency landscape. Recently signed into law, the GENIUS Act aims to establish a regulatory framework for the integration of stablecoins into broader payment systems. 

Their appeal lies in the ability to use US Treasury securities as a reserve pool, potentially increasing demand for Treasuries and aiding in the management of national debt. 

The White House’s fact sheet emphasizes that the widespread adoption of dollar-backed stablecoins could modernize payment infrastructure, moving the US away from outdated systems. 

Notably, a substantial portion of stablecoin transactions, especially from leading stablecoins like Tether (USDT) and Circle (USDC), occur on the Ethereum network, highlighting its central role in the ecosystem. 

Featured image from DALL-E, chart from TradingView.com