Why Bitcoin and the crypto market could rally following Donald Trump's proposed regulatory reforms

• Donald Trump's transition team is working closely with top crypto heads to bring reforms to the industry's present regulatory system.
• Reports suggest that Trump is considering a crypto reserve specifically for US-native tokens such as XRP, Solana and USDC.
• Trump's new SEC is alleged to have begun tackling crypto regulations, including SAB 121 and de-banking policies, as his first day in office draws close.

Donald Trump's inauguration has generated significant optimism in the crypto market, fueled by promises of reforms to the industry's regulatory framework. Recently, reports indicate that Trump is planning to establish a strategic reserve for US-based cryptocurrencies such as Solana and XRP.

Donald Trump's administration set for pro-crypto reforms, altcoins begin early rally

Only four days away, Trump's presidential inauguration has become a beacon of hope for a fresh approach to crypto regulations.

The crypto market is buzzing with optimism as the incoming president's transition team continues to meet with industry leaders to discuss the best approaches to regulating digital assets.

According to the Washington Post, Trump is expected to begin issuing executive orders regarding Bitcoin and crypto reforms from his first day in office. Among the expected reforms is a relook at policies that have affected crypto under the outgoing government. 

These include the Staff Accounting Bulletin 121 (SAB 121), which requires entities holding digital assets to report them as liabilities on their balance sheets.

A Congress vote overruled the bill due to concerns about its implications. However, President Biden overturned the bipartisan decision after he vetoed their resolution.

Under Donald Trump's administration, the Securities & Exchange Commission (SEC) will likely repeal the controversial SAB 121. On the other hand, the Financial Innovation & Technology for the 21st Century Act (FIT21) may receive a green light from the new administration.

The bill offers a comprehensive regulatory framework for digital assets and provides clear guidelines on the roles of regulators in addressing crypto-related issues.

"Donald Trump will approve the FIT21 bill, accelerating the global legalization of the cryptocurrency market and intensifying the crackdown on non-compliant crypto businesses," Hashdex group stated in a report.

Likewise, a New York Post report suggested that Trump may be considering a first-ever strategic reserve for "American-made" cryptocurrencies.

This includes XRP, Solana and the USDC stablecoin. It states that the planning began several weeks ago. This sparked a rally among the altcoins as investors are shifting attention toward these tokens. XRP and SOL are currently up 15% and 7%, respectively.

However, the report mentions insider concerns about the potential impact this could hold for Bitcoin. This is largely due to the incoming president's initial promise of a Bitcoin strategic reserve.

There are also concerns about the president not holding up to his promises after being sworn in.

"The first 50 days of Trump's presidency will determine Bitcoin's trajectory in 2025," Gracy Chen, CEO of Bitget, told FXStreet. Delayed government actions toward Bitcoin and the digital asset industry could cause crypto prices to tumble.

"If significant steps are not taken during this period to begin implementing the promised changes and support the crypto market, Bitcoin could face a 15-20% drop, likely staying under the $80,000 - $90,000 range in the first quarter of 2025," Chen stated.

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