A detailed explanation of Trump's "love affair" with encryption and future prospects.

The elected president Donald Trump, who once questioned the value of cryptocurrency, has changed his stance during the election process and become a supporter of crypto. With expectations of a future lenient regulatory environment and other factors, Bitcoin broke through a new high of over $100,000 in December last year. The market is closely watching Trump's role in the development of cryptocurrencies and his impact on the future. Elected president Donald Trump had expressed skepticism towards digital assets in the past, calling Bitcoin "seems like a scam" and stating that the value of cryptocurrencies is "built on thin air". However, in his recent presidential campaign, Trump has become a cheerleader for cryptocurrency: a speech he made at the Bitcoin 2024 conference in July made his complete transformation possible. Since his re-election, the market has expected the incoming Trump administration to implement an agenda supportive of cryptocurrencies, leading to a surge in cryptocurrency prices, especially Bitcoin reaching a historic high of over $108,000 in December last year. Trump promised to be a "president supporting Bitcoin." In a speech in Nashville in July last year, he praised the largest cryptocurrency by market value, saying "Bitcoin represents freedom, sovereignty, and independence from government, coercion, and control." He said he wanted to make America "the cryptocurrency capital of the earth and the Bitcoin superpower of the world." In December last year, he posted on his social media platform Truth Social under the Trump Media & Technology Group, stating that cryptocurrency is "crucial to America's future competitiveness." Trump's embrace of the industry has helped him gain the support of prominent cryptocurrency supporters, such as venture capitalist Marc Andreessen, Ben Horowitz, as well as billionaire twins Tyler and Cameron Winklevoss. Frequently associated with meme coin speculation, Elon Musk talked about cryptocurrency on Saturday Night Live and donated $238.5 million to America PAC, a super PAC supporting Trump. Andreessen and Horowitz each donated $2.5 million to an ultra-right super PAC pro-Trump. The crypto industry also spent $135 million mainly through Fairshake PAC to support candidates in the November elections, most of whom won. Which crypto projects is Trump personally involved in? Trump and some of his family members are founders and beneficiaries of a crypto project "World Liberty Financial" with its own token WLFI. As of the end of October, over 16,000 people hold World Liberty Financial tokens, and just a few weeks ago, this project supported by Trump and his sons started selling cryptocurrencies to accredited investors on its platform. In November last year, crypto entrepreneur Justin Sun announced that he would invest $30 million in WLFI tokens, with the Trump family expected to receive at least $15 million. Trump has also ventured into other digital assets. He has released four series of non-fungible tokens (NFTs), featuring his hero image in different outfits and scenes. He called the latest NFT series digital trading cards, selling on the primary market in August at $99 per card. Why did cryptocurrency prices surge? Last year, from the election to mid-December, the price of the largest token by market value, Bitcoin, rose by over 50%, and other cryptocurrencies also surged, mainly because people believed that Trump and the incoming Republican government would create a more friendly regulatory environment. Investors in the crypto industry stated that this is expected to lead to more individuals and institutions investing in the field while also reducing the risk of enforcement actions by the U.S. Securities and Exchange Commission (SEC). Trump also hired crypto advocates for important roles. For example, Musk and Vivek Ramaswamy will head a consultancy group called the Department of Government Efficiency (DOGE). DOGE is named after Dogecoin, and Musk is often associated with Dogecoin. Demand for Bitcoin exchange-traded funds also helped boost cryptocurrency prices. As of January 8, U.S. Bitcoin ETFs invested $110 billion, just a year after their debut. What does Trump support in the crypto space? Trump pledged to fire U.S. Securities and Exchange Commission chairman Gary Gensler on his first day as president; Gensler announced his resignation before Trump took office, preempting the attempt. During Gensler's tenure, the SEC brought legal actions against cryptocurrency companies such as Coinbase Global and Binance Holdings Ltd., accusing them of selling so-called unregistered securities. Trump nominated crypto supporter Paul Atkins to replace Gensler, and this announcement helped Bitcoin break through $100,000 for the first time. He also nominated David Sacks to the newly established position of Crypto Czar. Trump also created a crypto advisory group consisting of industry supporters. In a post on Truth Social in December, Trump stated that Bo Hines would serve as the Executive Director of the President's Digital Assets Advisory Committee, reporting to Sacks. Trump stated that he plans to have the U.S. government retain rather than sell confiscated Bitcoin assets by law enforcement, which will serve as the strategic Bitcoin reserve foundation. Trump also stated that he wants all Bitcoin to be mined in the U.S., although this commitment may be difficult to achieve due to the decentralized nature of the network and cheaper energy costs in other parts of the world. How is the regulatory environment? Under Gensler's leadership, the SEC clearly stated that it considers most digital assets as securities, which brings a range of extensive requirements. The U.S.'s top banking regulator issued a comprehensive statement on the dangers of cryptocurrency in early 2023. In November 2022, the cryptocurrency exchange FTX collapsed, leaving global customers facing potential losses of billions of dollars. The strengthening of U.S. supervision of cryptocurrencies proposed in 2022, and the growing influence of crypto-supported political groups, have helped create a more favorable environment for cryptocurrency.Legislation governing in the Senate Banking Committee is stalled, facing an uncertain future. The bill would grant the Commodity Futures Trading Commission (CFTC) additional authority to regulate digital currencies considered to be commodities, which could allow regulators to directly oversee Bitcoin and the second largest token by market value, Ethereum. Currently, the agency's jurisdiction is mainly limited to crypto derivatives. Under the bill, the SEC would regulate digital currencies used for fundraising from the public, providing similar oversight as it does for stock offerings.What does the encryption industry want from Trump? Many industry insiders hope for a less intrusive regulatory approach and approval for more encryption ETFs. The encryption industry is also looking for specific legal language to define what encryption is, and how the industry should operate legally, which may reduce concerns about government agencies filing lawsuits. Supporters will also be pleased to categorize encryption assets as commodities rather than securities, which would fall under the jurisdiction of the CFTC. Many in the encryption industry believe that the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency have pressured banks to restrict access to their services for the industry, and they hope to see Trump end this stance. Some in the encryption industry also hope to see Trump not only implement his plan to introduce a strategic reserve of Bitcoin in the United States, but also hope the government purchases more tokens as reserves. U.S. Senator Cynthia Lummis has drafted a bill requiring the Federal Reserve to sell some gold certificates to provide funding for purchasing gold. According to betting results on the popular prediction platform Polymarket among the cryptocurrency community, people are currently betting with only about a 30% chance that Trump will establish reserves within 100 days of taking office.