The recent victory of Donald Trump in the 2024 elections is being met with mixed emotions in the cryptocurrency community, particularly among investors and developers. While many foresee a positive shift in the regulatory environment under a Trump administration, Coin Center has highlighted several concerns that could deter innovation in the U.S. crypto landscape.
In a detailed analysis, Coin Center’s research director, Van Valkenburgh, identified three critical threats that may pose challenges to crypto users and developers in the United States as we move into 2025.
- Surveillance and Reporting Requirements: The first major concern involves the onerous crypto reporting requirements under Section 6050I of the U.S. tax code. This law mandates warrantless reporting to the IRS for anyone who receives more than $10,000 in cryptocurrency. Coin Center has argued that these requirements are unconstitutional and could stifle the growth of the industry.
- Sanctions and Legal Precedents: The second and third threats stem from the legal sanctions against the crypto mixing service Tornado Cash. The ongoing criminal charges against its founder, Roman Storm, alongside similar issues affecting services like Samourai Wallet, may set a worrying precedent for developers of non-custodial crypto services. Valkenburgh emphasizes that such prosecutions have the potential to chill innovation and drive developers to less regulated jurisdictions.
- Ongoing Regulation Issues: Despite expected support from the Trump administration for the crypto sector, Valkenburgh warns that the Department of Justice may remain staunch in its enforcement of existing rules. The hope is that, with a friendlier Securities and Exchange Commission (SEC), there would be a push for more reasonable regulations.
Even with a possible shift in sentiment towards crypto under Trump, Valkenburgh cautions that overzealous Anti-Money Laundering (AML) policies and sanctions may persist. He states, “The Department of Justice may change under a Trump administration, but it rightly guards its political independence and may therefore be unlikely to abandon these prosecutions due to a change in administration.”
As the crypto industry anticipates the new administration’s policies, there is hope that progress could be made concerning regulatory challenges that threaten to drive innovation out of the United States. Valkenburgh concludes, “If it becomes increasingly clear that even with a friendlier SEC, draconian surveillance and control policies will continue, many innovators may seek opportunities elsewhere, potentially restricting ordinary Americans from accessing the full benefits of blockchain technology.”
The overarching message from this analysis suggests that while the political climate may appear favorable, key issues remain that could shape the future trajectory of cryptocurrency in America.
