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The cryptocurrency industry is entering a new phase of development amid a series of contentious events from high-profile political statements and promises to pardon certain ‘icons’ of the darknet community to the new administration’s discussed course on serious blockchain sector reforms.
In this article, I will share my opinion on how events related to Donald Trump’s inauguration will impact the crypto market, what initiatives might be implemented after February 20, 2025 and what lessons can be learned from years of interaction between the state and digital assets.
Trump and Republicans Monopolizing power and the risks of a split
According to some statements, a unique situation is currently unfolding in which Republicans have gained the majority in both Congress and the Senate, as well as in the House of Representatives.
This grants them the ability to pass laws more swiftly and confidently and to lobby initiatives, including those related to cryptocurrency regulation, Big Tech and more.
However, a monopoly on power carries the risk of internal division if parts of the party find the course too radical or dangerous for their constituents.
The role of Elon Musk and potential conflicts
Elon Musk is a prominent figure whose statements influence crypto markets, geopolitics and global business.
Some commentators suggest the following.
- Musk is engaging in political games By supporting Trump, Musk may be participating in political maneuvers that could lead to serious problems for him, including investigations or legal prosecutions from other nations and even the United States.
- Diverging interests f Musk’s and Trump’s interests diverge at some point, Musk risks becoming a target, which could severely impact all his projects.
- Market volatility The collapse of ‘Musk coins’ or a sudden shift in market sentiment could trigger a global wave of distrust in crypto, especially among retail and institutional investors.
Amnesty for the darknet network founder
President Donald Trump signed an executive order for the full and unconditional pardon of Ross Ulbricht, the creator of the darknet marketplace Silk Road, who was serving a double life sentence.
Many fear that such actions by the authorities could once again shape the media narrative to equate ‘cryptocurrency with illegal operations, fraud and scams.’
This reputation hindered the institutional recognition of Bitcoin and other cryptocurrencies in the early 2010s and could negatively affect them now.
As a result, here are the possibilities that could occur.
- Reputational damage to the crypto market The crypto market could suffer a reputational hit.
- Institutional investors pulling back Institutional investors, already wary due to volatility and past incidents, might retreat once more.
- User concerns Some users may fear that ongoing legal cases and repressive measures will ‘brand’ crypto as a national security threat (as seen in previous KYC/AML discussions).
Tornado Cash and mixers Double standards or necessary control
Tornado Cash allows transactions on the Ethereum network to be mixed, obscuring the trail between sender and receiver.
This increases privacy but also introduces risks, such as the following.
- Illicit use Such services are often used to launder funds obtained illegally, including from sanctioned jurisdictions.
- Sanctions by OFAC (The US Office of Foreign Assets Control) OFAC imposed sanctions on Tornado Cash, deeming it a tool for money laundering to circumvent sanctions.
Vitalik Buterin stated that after Ross Ulbricht’s release, the next targets might be Tornado Cash team members Alexey Pertsev and Roman Storm.
If similar leniency is shown as with the creator of the largest darknet marketplace, it will raise additional suspicions that the new authorities are encouraging gray schemes.
Risks for the crypto market and future scenarios
1. New wave of FUD (Fear, uncertainty and doubt)
- Potential amnesty for crypto market icons The possible pardon of key figures in underground crypto markets could trigger negative media reactions.
- Public perception Society might once again view cryptocurrency solely as a tool for criminal activities and money laundering.
2. Regulatory pressure
- Increased control With the strengthening of Republican power and societal disagreements, regulators may begin to enforce stricter controls over crypto operations.
- New legislation New laws could emerge that require the disclosure of user data.
3. Influence of major personalities
- Market volatility If major players continue to abruptly change their views, pump or dump certain assets, volatility could increase sharply.
- Political missteps An unsuccessful political maneuver could lead to lawsuits or impeachment, which would have immediate repercussions across the entire technology sector and further impact crypto.
4. Collapse or restructuring scenario
- Rebranding as a shadow economy If cryptocurrency is once again branded as part of the shadow economy, institutional capital might decrease, and the market could enter another crypto winter.
- Industry cleansing On the other hand, some analysts believe that after each such period, there is a cleansing of scam projects, and the industry becomes stronger in the new cycle.
Conclusion
The situation surrounding crypto remains contradictory.
On one hand, there are signs of the mass adoption of digital assets.
On the other hand, political factors, high-profile criminal cases and amnesties of scandalous figures could revert the market to a state of total distrust.
High stakes in the political arena toxic cases like Silk Road and Tornado Cash, as well as potential conflicts involving Elon Musk heighten caution.
It is not out of the question that in the coming months we will witness significant regulatory changes in the United States capable of affecting the global crypto market.
Yaroslav Kalynychenko is the head of marketing at Generis Web3 Agency and an expert in promoting crypto, fintech and innovative digital solutions.
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