Cryptocurrency Regulation: Security Considerations Under the Trump Administration

The Pro-Crypto Push

With Republicans assuming control, pro-crypto legislation is expected. However, experts express concerns about the lack of focus on cybersecurity, a critical issue for an industry plagued by cyberattacks.

Public Perception and Confidence

Despite growing interest in cryptocurrency, a significant portion of Americans remain skeptical, with only 17% owning or trading crypto.

The Trump administration has prioritized the needs of the crypto industry over consumer safety, with legislation primarily focused on providing a favorable regulatory framework.

Cybersecurity Safeguards

Experts predict that the incoming administration will expand on the cybersecurity provisions of the Financial Innovation and Technology for the 21st Century Act (FIT21). Glenn "GT" Thompson, Chairman of the House Committee on Agriculture, emphasizes the importance of cybersecurity safeguards to protect digital asset markets and participants.

Political Influence and Industry Involvement

The crypto industry's significant campaign contributions have influenced policy calculations. Some experts doubt that there will be substantial action on the security front, citing the close ties between crypto proponents and the Trump administration.

The appointment of David Sacks as "czar" for AI and crypto further indicates the industry's strong influence.

Lawmakers' Pro-Crypto Stance

According to Faryar Shirzad of Coinbase, the current Congress and the incoming president are the most pro-crypto in history.

Regulatory Implications for Cybersecurity

Jason Baker of GuidePoint Security warns that the lack of regulation on cryptocurrency may lead to increased cybercrime and bullish bets on digital assets. Cybercriminals often demand ransoms in bitcoin, whose value benefits from rising investment.

Future de-emphasis on regulation may incentivize cybercriminals to operate in bitcoin.

Potential Regulation on Cryptocurrency Payments

Baker anticipates that regulation focused on organizations making cryptocurrency payments (e.g., ransoms) is more likely to be achieved in the current environment. This approach would target end users rather than the cryptocurrency itself.

Steve McNew of FTI Consulting believes that the future Congress may prioritize legislation governing cryptocurrency payments made to ransomware attackers.

Disclosure of Cryptocurrency Payments

McNew highlights the need to balance transparency in disclosing cryptocurrency payments in ransomware attacks with the potential security risks to the victimized company. FIT21 did not address this issue specifically.

Bitcoin Governance Challenges

McNew emphasizes the ongoing challenges in defining core aspects of cryptocurrency, which hinder the development of meaningful legislation.

The Biden administration's inability to establish a clear governance structure for digital assets and the SEC's contentious role under Chair Gary Gensler underscore the complexities of this issue.