Bitcoin, the world’s largest cryptocurrency, neared its record high in volatile trading on Tuesday after the top US market regulator unveiled plans to reform the sector’s regulatory framework.
On Monday, Bitcoin hit a record high of $109,071 as Donald Trump, who has pledged to be a “crypto president,” was sworn into office. However, the cryptocurrency dipped after it was excluded from a series of Day One executive orders. By Tuesday, Bitcoin had rebounded, rising 3.8%, while Ethereum, the second-largest cryptocurrency, gained 1.4%, signaling some recovery from market disappointment.
The Securities and Exchange Commission (SEC) announced the creation of a task force on Tuesday to design a regulatory framework for digital assets, marking the Trump administration’s first significant move to reshape crypto policy.
“The president has wasted no time in advancing his agenda,” Coinbase Chief Legal Officer Paul Grewal said in a phone interview. “The SEC’s announcement underscores their commitment to being an active part of this policy shift.”
Volatility Amid Regulatory Uncertainty
While optimism around regulation drove prices higher, analysts cautioned about continued volatility until specific rules are announced. Geoffrey Kendrick, Standard Chartered’s global head of digital assets research, noted the market’s initial disappointment with the absence of digital assets in Trump’s inauguration speech and executive actions.
“Without concrete announcements from Trump regarding digital assets, Bitcoin may face a correction,” Kendrick said. “A drop below $100,000 seems likely in the near term.”
Adding to the market’s turbulence, Trump’s own $TRUMP-branded “meme coin,” launched on Friday, plummeted on Tuesday, according to CoinMarketCap. Meanwhile, another Trump-linked crypto initiative, World Liberty Financial, disclosed on Monday that it had raised $300 million in an initial token sale and plans to issue more tokens. Ethics experts have criticized Trump’s cryptocurrency ventures, citing potential conflicts of interest and the risk of fueling speculation in a volatile market.
SEC’s Crypto Task Force
Acting SEC Chair Mark Uyeda announced that the newly formed task force will focus on establishing clear regulatory guidelines for digital assets. Its objectives include creating pathways for registration, developing disclosure standards, and enhancing enforcement measures. Earlier this month, Uyeda and fellow Republican Commissioner Hester Peirce had been preparing this cryptocurrency policy initiative.
Anticipated Executive Orders
Trump is reportedly expected to issue executive orders in the coming days aimed at promoting Bitcoin adoption, according to Reuters and other media outlets. These measures are likely to include directives allowing banks to trade cryptocurrency, offer crypto investments to high-net-worth clients, and hold digital assets in portfolios.
Speaking at the World Economic Forum in Davos, Jeremy Allaire, CEO of stablecoin issuer Circle, expressed optimism about the anticipated policy shifts. “I expect imminent executive orders that will provide banks with the regulatory clarity they need to actively engage with cryptocurrency,” Allaire told the Reuters Global Markets Forum.
As the administration’s crypto agenda unfolds, the market remains poised for potential announcements that could significantly impact the trajectory of Bitcoin and other digital assets.
