2025 Will Be A Positive, But Volatile Year For Crypto

With the inauguration of President Trump occurring on January 20th the discussions around how the second Trump administration will effect the crypto sector as well as other emerging sectors such as the burgeoning AI space continue to dominate business headlines. In the aftermath of the crypto ball that was organized by David Sacks, and the label of the first crypto President being assigned to Trump the expectations for proactive and forward looking action are quite high. Over the coming days as the Trump team fully moves into roles, confirmation hearings continue, and changes at regulatory agencies are finalized, there are several actions that the market seems to expect to occur via executive order.

These include, but are not limited to executive orders addressing Operation Chokepoint 2.0 (the debanking of the crypto industry), the repealing of SAB 121 which would open the doors for banking institutions to hold crypto with less complexity and financial statement effect, and the establishment of a strategic bitcoin reserve using bitcoin that had been seized via U.S. government efforts. All of these potential actions have received substantial conversation and debate in U.S. policy circles over the last six (6) months, with Congress actually voting on a bipartisan basis to repeal SAB 121.

Despite the positive momentum and market sentiment, let’s take a look at why 2025 might be more volatile than some investors and policy advocates are expecting.

Executive Orders Versus Congress

The expectations for the Trump Administration to enact significant changes to crypto policy, accounting, and reporting via executive order have continued to escalate following election day. As mentioned above the market is expecting the newly installed Trump team to take swift, sweeping, and pro-crypto actions within the first few days in office. While these issues and measures are of high importance for the crypto lobby, there are any number of bigger picture issues that the administration will need to focus on, all of which have powerful lobbies and advocates pushing for attention.

In addition, and even admitting that crypto donations and education have been allocated to both sides of the political spectrum, the reality is that politization of virtually every topic and issue has continued to accelerate. It seems unlikely that executive orders undertaken by the Trump administration will remain unexamined or unchallenged; it is important to remember that Congress and the courts can challenge and ever overturn executive orders in certain situations.

Executive orders that are pro-crypto will certainly come out of the White House, but that is just one part of what the crypto sector needs to establish long-term stability and successful growth.

Agency Pivots Might Disappoint

The departure of Gary Gensler from the SEC has been viewed as a positive by the crypto sector, with even some hosts on mainstream financial media seeming to share in the excitement of chairperson Gensler’s tenure ending. Despite this justifiable excitement the road toward comprehensive and pro-growth crypto regulation remains an uphill endeavor for crypto investors and enthusiasts. It is important to remember that, prior to his appointment as head of the SEC, that Gary Gensler was seen by many as a well educated and pro-crypto regulator. In other words, it is important for the crypto investors and advocacy community to approach the potential of pro-crypto regulation with cautious optimism.

This is not even touching on the reality that the IRS, despite the change in sentiment, the White House, and Congress, seems unlikely to pivot in its position and pursuit of tax revenues from crypto transactions. Given the impact the influence that the IRS has on business at large, and especially the willingness to crypto investors to use crypto as a medium of exchange, investors and policy advocates might be disappointed with the pace of change from a regulatory perspective.

Policy changes take time, and for an industry sector used to moving quickly, this more staid pace of change could easily turn into frustration.

Crypto Might Not Be a Priority

As hard as it might be for the crypto sector and policy advocates to come to terms with, there is the reality that crypto might not be a priority for the new administration after the flurry of actions taken at the beginning of the administration. Despite statements and expectations of significant action to be taken across the board to make the U.S. more hospitable to cryptoassets, including the creation of a crypto advisory council, politics and international headlines might very well put these items on to the back burner.

In fact for every conversation that is being had between the Trump transition team and potential cabinet members there almost assuredly have been discussions as to how legal and legislative efforts can be used to frustrate theses efforts. On top of that, and as any businessperson and/or investor is aware of, the geo-political and economic landscape continues to become more volatile and complicated. The Trump White House and Congress will have plenty on to handle and deal with, and even with the best of intentions, crypto may find itself sidelined to a certain extent.

Crypto has been a priority of discussion and debate both during the 2024 election and run-up to the 2025 inauguration, and 2025 is set to be a positive year for crypto, but might have more bumps than some forecasters expect.