【MICA RESEARCH】Trump fulfills 'campaign promise': to make the United States an encryption-friendly country

The 'regulatory expectations' brought about by Trump's inauguration are still fermenting, but many institutional analysts believe that Trump has not released specific policy measures after taking office. He has only signed executive orders to establish special groups or appointed encryption-friendly leaders, without the expected positive events of opening more encryption Spot ETF listings, which has disappointed the market.

But if you look closely, you will still find that Trump's fulfillment of campaign promises is quite thorough, at least from his perspective, he did indeed implement the 'encryption-friendly' policy at the time, the most representative of which is the signing of an executive order called 'Enhancing the United States' Leadership in Digital Financial Technology', a departure from the unfriendly policy of the Biden administration towards encryption currencies in the past, declaring that the United States officially embraces encryption currencies and digital assets from a national perspective.

The executive order establishes the 'Presidential Digital Asset Market Working Group', led by 'White House AI and encryption czar' David Sacks, and includes officials such as the Secretary of the Treasury, the Attorney General, the Chairman of the Securities and Exchange Commission (SEC), and the Chairman of the Commodity Futures Trading Commission (CFTC). The order requires relevant departments within the group, such as the Department of Justice, the Department of the Treasury, and the SEC, to submit all suggestions and policies related to encryption currencies within 30 days, and to propose whether to modify or retain them within 60 days.

Finally, the task force must submit a recommended report on encryption's monetary policy to the president within 180 days, in particular, it will propose a regulatory framework for the issuance and operation of encryption assets (including stablecoins) to achieve the "clear regulatory framework" promised by Trump, and the report will also assess the possibility of establishing a "national encryption asset reserve", which may be derived from encryption currency seized by the federal government in accordance with the law.

Not only that, the special group will also hold a public hearing to collect opinions from encryption industry leaders and experts, while also ordering federal agencies to prohibit the establishment, issuance, or promotion of central bank encryption currency (CBDC) within and outside the United States, in line with the consistent Republican opposition to CBDC. This is equivalent to ensuring the growth space of encryption payments, DeFi industry, and stablecoins in the future, and requiring banks not to discriminate against encryption companies, but to provide financial services to them. Trump can be said to have fulfilled many commitments to the Bitcoin community.

From a regulatory perspective, in the future, "DeFi" companies in the United States will have considerable room for innovation and more opportunities to cooperate with traditional financial institutions. The corresponding DeFi token prices may rise, and we are optimistic that in the near term, DeFi tokens will outperform the broader market. Next, let's discuss how the United States is moving towards an industry environment that is "encryption-friendly" from the government, departments to financial institutions.

Sources: MICA RESEARCH#### A. 01 月 21 日 比特幣資金利率飆升，投機氣氛濃厚

Bitcoin perpetual futures funding rate surged to a daily rate of 0.035%, equivalent to an annual interest rate of nearly 13%, the highest since December 5th, indicating a surge in market speculation. With Trump taking office as the president, the price of Bitcoin reached a new all-time high on Monday, briefly surpassing $109,000. This price increase is mostly driven by leveraged buying of contracts. We believe that the market has high expectations for Trump's speech, and investor sentiment has turned greedy.

According to Glassnode data, the Net Unrealized Profit/Loss (NUPL) indicator for long-term Bitcoin holders has surpassed 0.75, indicating that the market has entered the greed phase. At the same time, the Short-Term Holder MVRV (STH MVRV) has risen to 1.16, exceeding the 1.1 trend line for over 1 year, indicating that investors in the short, medium, and long term already have significant unrealized profits. The subsequent market outlook will depend on Trump's speech and comments on the encryption market, as well as the executive orders signed thereafter.

In addition to Bitcoin hitting new highs, this upward trend has also driven up other encryption currencies. The market is hotly debating the possibility of changes in US policies, and investors' optimistic sentiment about the long-term trend of the US economy has further boosted the market atmosphere. However, we believe that the market is too greedy, and it may quickly fall into a correction in the short term. It is not easy for this highly leveraged contract trading to maintain its upward trend, and Trump must give very clear bullish policy signals.

B. On January 22nd, Trump's first day in office, the SEC established a special regulatory task force

After the Trump administration took office on January 20, former SEC chairman Gary Gensler also stepped down. The next day, it was announced that a special team dedicated to the regulation of digital assets, led by Commissioner Hester Peirce, who is known as 'Crypto Mom' for supporting encryption currency regulation, will be established. In the future, they will focus on the formulation, rationalization, and relaxation of regulatory regulations. They plan to hold roundtable discussions to gather industry insights on regulatory challenges and collaborate with the Commodity Futures Trading Commission (CFTC) and state and international regulatory agencies.

The establishment of this group was announced by acting SEC chairman Mark Uyeda, who will subsequently nominate former SEC commissioner Paul Atkins to take over the interim chairmanship. The new chairman is also encryption-friendly, and investors expect him to further relax regulation, in contrast to the past reliance of the SEC mainly on enforcement actions to regulate the encryption industry. Trump's second term is expected to propose a clearer path for the regulation of encryption currencies, including the classification of tokens as securities and federal regulatory scope.

After Trump took office, he has not expressed his position on encryption currencies, but the market expects his executive orders, such as the possibility of establishing a federal Bitcoin reserve. On the first day, the SEC special group was established as the first step in relaxing encryption policies. However, it still needs to be observed to what extent it can be relaxed. We still believe that market investors are too optimistic about the current atmosphere.

C. On January 24th, Trump signed an executive order to establish an encryption currency working group

US President Trump signed an executive order on Thursday, instructing an encryption currency working group to propose new digital asset regulations and explore the possibility of establishing a national encryption currency reserve. This fulfills his commitment to rapidly reform US encryption regulatory policies and to position Bitcoin as a strategic reserve asset during his campaign. Trump also called for the protection of banking services for encryption currency companies and prohibited the establishment of central bank digital currencies (CBDC) that could compete with existing encryption currencies.

The working group, including the Minister of Finance, the Chairman of the Securities and Exchange Commission (SEC), and the Chairman of the Commodity Futures Trading Commission, will develop a regulatory framework for digital assets such as stablecoins. In addition, the working group will evaluate the possibility of establishing a national encryption asset reserve, which includes legally confiscated encryption currencies from law enforcement agencies, such as bitcoin assets confiscated from the dark web. In the future, they will no longer be auctioned, but will be seized by the U.S. government. Market analysts believe that this move may require congressional authorization beyond the existing regulatory framework.

President Trump appointed risk investor and former PayPal executive David Sacks as head of encryption and artificial intelligence, responsible for leading the working group. This measure is similar to the previously established working group within the SEC system, but is currently only at the stage of "establishing an organization" and there are no clear regulatory relaxations yet. Bitcoin reached a historical high of 109,000 US dollars under the expectation of the new policy, but fell back to about 103,000 US dollars on Thursday afternoon.

**How far can the "Trump-themed" go? Market sentiment is pulling.

First is the legislative body, the encryption assets committee of the US Senate is also promoting the establishment of the "Bitcoin National Sovereign Fund," the so-called "strategic national reserve," the idea of establishing a national Bitcoin reserve is not only popular at the federal level, several states are also considering setting up state-level reserves, it can be seen that the entire United States is rapidly embracing encryption currency, realizing the market's previous expectations of the "encryption currency" adoption mechanism.

In addition to the White House special working group and the SEC, the leadership of the Commodity Futures Trading Commission (CFTC) in the United States also welcomes a supervisor friendly to encryption, Acting Chairman Caroline Pham actively promotes multiple digital asset initiatives, including the creation of an encryption asset market subcommittee and the proposal to establish a regulatory sandbox to promote the development of new technological frameworks. It can be said that the US government has fully embraced encryption currencies from the departmental level.

With policy and regulatory guidance, we expect the financial industry to quickly catch up. First of all, this week's banking law briefing, many financial institutions have expressed their intention to expand their business into the encryption currency field under clear regulation. For example, Bank of America has already stated its position, and another well-known bank, Morgan Stanley, represented at the World Economic Forum in Davos, Switzerland, told CNBC that the bank is working with US regulatory agencies to explore ways to enter the encryption currency market.

In the past, large US banks like Morgan Stanley disregarded Bitcoin and other encryption assets, even ridiculing their impracticality or involvement in crime. But this week, several major financial institutions, including investment management giant BlackRock and Morgan Stanley, have expressed their intention to expand their cryptocurrency business.

Under such circumstances, we believe it is normal for Bitcoin to fall after Trump took office, but the current Bitcoin price almost fluctuates with 'who Trump appointed', with each swing reaching about 5%, indicating that investors' emotions are indeed at play, all betting on whether Trump's new policies are in line with previous 'high expectations'.

From these measures, we believe that Trump has indeed implemented the previous policy commitments. However, now every institution is calling for Bitcoin to be bullish. If the time is extended to the medium and long term, it is expected that such sentiment will quickly disappear. In the short term, it is still waiting for a larger pullback before entering the market. From past experience, a 10-15% overheated pullback would be a better entry point.

Last week review👉🏻👉🏻👉🏻 [MICA RESEARCH] Bitcoin sell-off ignites Trump's 'National Priority Strategic Reserve' theme

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