Trump's crypto call: India can't be on the losing side

“I will make the United States the crypto capital of the planet, a bitcoin superpower.”

As early as July this year, Donald Trump laid out his cryptocurrency plans at a Bitcoin conference, saying that he would use bitcoins as reserve currency in the Federal Reserve – if he gets elected for a second term.

In October, he launched his Bitcoin, and his campaign took donations in crypto. Once a crypto-sceptic, Trump was now being hailed as the “crypto-president”.

He’s now won his second term and cryptocurrency has gone a celebratory run. According to cryptocurrency market watcher Coindesk, the “Trump bump” for crypto’s market capitalisation sent it to $2.5 trillion.

On the day of Trump’s win, bitcoin hit a historic high of $75,000 per coin. Elon Musk-backed Dogecoin shot up by 18%, as did ether, which floated up 8%, taking crypto exchanges up with them.

A large part of the soaring value of cryptocurrency comes as a payback of the industry’s support to candidates in the hotly contested US election. A New York Times report says that the industry spent as much as $130 million on candidates who were willing to take favourable positions on crypto. It quoted experts saying this was “The same NYT report says that Ohio’s Republican candidate Bernie Moreno got as much as $40 million from the crypto industry to run his campaign, mostly spent on political ads. He won by a fair margin.

The pay-off for the crypto industry is quantified. Data from the crypto advocacy group Stand With Crypto (https://www.standwithcrypto.org/) shows that in the House of Representatives, 261 pro-crypto candidates won their races and 116 anti-crypto ones lost. In the Senate, the number for each is 17 and 12. Its website shows that more than $200 million were donated to the industry to support candidates.

The industry’s triumphant note sounds even louder since it expects that the outgoing Biden administration’s regulatory wariness about crypto will also ease up. There is an expectation that the Securities and Exchanges Commission (SEC) – the main weapon used by this administration to go after crypto – will lose some of its bite. It is also largely expected that SEC chairman Gary Gensler will resign sooner than later. Trump has said earlier that he will fire Gensler, among several other measures that he has promised in his campaign, most of which add up to one thing: defang regulations.

Though it isn’t without its risks, if Trump can pull off even half of what he has promised, there will be a tectonic change in the crypto industry, which had been badly burnt by the Sam Bankman-Fried fiasco (which was also linked to political funding).

The Indian Context

These developments have had an immediate echo in India, where the industry is having a Biden-esquely adversarial relationship with the government, which is very combative with regulation. Already lamenting a heavy tax on crypto transactions without clear regulations, there is a deepening fear that Trump’s policies will suck out users from Indian exchanges. Within hours of Trump winning the election, CoinDCX CEO Sumit Gupta put out a string of tweets, essentially hoping that the Indian government will take note of the changes in the global crypto environment." 

The Indian crypto market is valued currently at more than $6 billion and is expected to cross the 100 million user mark by 2025. Despite some major setbacks, the Indian crypto industry and exchanges have shown resilience, best shown by Binance restarting its operations despite facing very tough regulatory opposition. The government now needs to take Trump’s policy moves as a wake-up call and find the balance between rules and free enterprise. Otherwise, analysts say, it could be India’s loss in a game that it is already well ahead.