With a Republican sweep in the recent election, a significant shift is anticipated in U.S. cryptocurrency policy under the incoming Trump administration. While pro-crypto legislation is expected to flow from Congress, concerns linger regarding the relative lack of attention paid to cybersecurity aspects crucial for fostering public trust and safety in this rapidly evolving market. The existing lukewarm public perception of cryptocurrency, combined with a regulatory environment yet to fully address critical issues like protection against cybercrime, casts a shadow on the otherwise optimistic vision painted by proponents.
Trump’s Crypto Agenda: A Regulatory Focus with Cybersecurity Concerns
Key Takeaways:
- A Pro-Crypto Congress and Presidency: The incoming Trump administration, backed by a Congress largely supportive of crypto, is poised to prioritize the development of a favorable regulatory framework for the cryptocurrency industry.
- Cybersecurity Concerns Overshadowed: While pro-crypto legislation is expected, the focus remains heavily on industry regulation, potentially neglecting crucial cybersecurity measures necessary to protect consumers and build public confidence.
- Public Trust Remains Low: Despite a significant number of Americans (17%) having traded crypto, a substantial majority (63%) express low confidence in its reliability and safety, according to Pew Research Center data.
- Industry Influence on Policy: Substantial crypto industry donations to the election cycle, particularly towards lawmakers with industry-friendly stances, will likely continue to shape the development of crypto policy.
- Potential Ramifications of Under-Regulation: Insufficient regulatory focus on cybersecurity poses risks, potentially increasing the vulnerability of the industry to cybercrime and fostering a negative perception among the wary American public.
A Pro-Crypto Legislative Push
The incoming Trump administration’s strong stance on supporting the cryptocurrency industry is evident. Rep. Dusty Johnson (R-South Dakota), a key architect of the Financial Innovation and Technology for the 21st Century Act (FIT21), highlights the industry’s primary need: “**The No. 1 most important priority for the industry is to make sure they have a regulatory framework so that they can do business.**” FIT21, although passing the House with bipartisan support, has yet to gain Senate traction. However, Rep. Glenn “GT” Thompson (R-Pennsylvania), a co-author and Chairman of the House Committee on Agriculture, emphasizes the bill’s crucial cybersecurity provisions: “**FIT21 requires important cybersecurity safeguards for financial intermediaries engaging with digital assets.**” He stresses that FIT21 includes “**explicit provisions to ensure that regulated firms take steps to evaluate and mitigate cyber vulnerabilities to protect both the services they offer and assets they hold on behalf of their customers.**”
Industry’s Role in Shaping the Narrative
The cryptocurrency industry’s extensive financial contributions to the 2024 election, although not exclusively supporting the Republican party, have significantly influenced the political landscape. This trend suggests ongoing influence on legislative decisions. The bipartisan super PAC Fairshake, its affiliates, and crypto giants such as Coinbase and Andreessen Horowitz, have already amassed over $100 million for the 2026 midterm elections. The appointment of top Andreessen Horowitz executives to Trump’s administration further strengthens this industry-political nexus. Coinbase’s chief policy officer, Faryar Shirzad, aptly summarizes this shift: “**We have the most pro-crypto Congress ever in history, we have an extraordinarily pro-crypto president coming into office.**”
Concerns Over Cybersecurity Neglect
Despite the pro-crypto exuberance, concerns arise regarding cybersecurity. Industry insiders and experts express doubts over the administration’s commitment to addressing cybersecurity, pointing towards potential imbalances in resource allocation. Jeff Le, vice president of global government affairs at Security Scorecard, underscores this concern: “**Personnel is policy.**” He emphasizes that Trump’s appointments, including SEC Chair-designate Paul Atkins, Commerce Secretary Howard Lutnick, and Treasury Secretary-designate Scott Bessent, “**have had a track record of supporting cryptocurrencies,**” which may translate into a stronger focus on industry development rather than consumer protection.
The appointment of venture capitalist David Sacks as AI and crypto “czar” further strengthens this perception among critics. This raises cautionary flags among cybersecurity experts who claim that an unwavering emphasis on the industry’s immediate needs might overshadow critical improvements with respect to digital asset security.
The Disconnect Between Pro-Crypto Stance and Cybersecurity Needs
Jason Baker, a senior threat intelligence consultant at GuidePoint Security, points out a significant discrepancy: “**It is rare to see cryptocurrency proponents advocate for increased regulation in the space, regardless of reason.**” He argues that the core appeal of cryptocurrencies, namely their anonymity and decentralized nature, is precisely what makes them difficult to regulate in a traditional manner. Such a challenge creates a dangerous scenario for the consumer who is relying on the promise of improved security with the advent of more mature regulatory bodies. Baker predicts: “**Given current signaling from the incoming administration and the interests of cryptocurrency proponents influential to the administration, we do not anticipate significant advances in cryptocurrency regulation within the next four years.**”
He further highlights the inherent risk: “**Cybercrime is often driven by benefits from increasing cryptocurrency value. In ransomware, for example, ransoms are commonly demanded in USD, but payments are made most frequently in bitcoin. When the value of bitcoin increases, cybercriminals will benefit.**” This underscores the urgent need for stronger cybersecurity measures, especially given this connection between value appreciation and the incentives for cybercriminals.
Ransomware and the Need for Targeted Regulation
Baker suggests a more targeted regulatory approach, focusing on entities making cryptocurrency payments, regardless of the reason. He points to the feasibility of “**increased requirements for reporting ransom payments when made, a policy which has been floated without gaining substantial traction in recent years.**” This approach circumvents directly regulating cryptocurrencies while addressing the significant cybersecurity threats posed by ransomware attacks.
Balancing Transparency and Security Risks
Steve McNew, global leader of blockchain and digital assets at FTI Consulting, highlights the delicate balance between transparency and security. He notes that mandatory public disclosure of ransomware payments, while seemingly promoting accountability, could paradoxically increase future attacks: “**There’s more than just public policy at issue…If a company has been compromised in a cyberattack and is required to make public disclosure of the ransoms it paid out, it can result in the company becoming a bigger future target for other criminal enterprises.**” McNew emphasizes the need for “**balancing the need for transparency around the use of cryptocurrency in criminal matters alongside the risks such transparency might exacerbate.**”
The Broader Governance Challenges
McNew points out fundamental challenges hindering effective legislation, even measures intended to promote innovation. He highlights that lacking properly defined roles and responsibilities for regulating digital assets, a major cause of friction during the Biden administration, is paramount. He emphasizes the critical need to: “**U.S. lawmakers have work to do in determining roles, responsibilities, and basic parameters for how the industry will be governed before any meaningful legislation can take hold.**” This includes determining which regulatory body (SEC, CFTC, or another) will oversee digital assets, addressing tax implications, and clarifying broker-dealer definitions for these markets.
In conclusion, while the incoming Trump administration’s pro-crypto stance promises a wave of supportive legislation, a notable gap in attention towards cybersecurity raises concerns. Unless effectively addressed, this imbalance could undermine the positive momentum, hindering the broader adoption of cryptocurrencies among the American public and potentially exacerbating vulnerabilities to cybercrime. The challenge lies in creating a regulatory environment that fosters innovation while robustly safeguarding consumers and the nation’s financial integrity.