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Crypto Lobbying Risks Regulatory Capture, South African Central Bank Head Says at Davos

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During a panel at the World Economic Forum in Davos, South Africa’s central bank governor Lesetja Kganyago criticized the growing influence of the cryptocurrency industry on U.S. financial regulation. He warned that crypto lobbying risks “regulatory capture,” a situation where regulations are shaped to benefit powerful industry players at the expense of broader public interest.

Key Points:

  • Regulatory Capture Concerns: Kganyago expressed concerns that the push for government-held bitcoin reserves and other crypto-friendly regulations were being heavily influenced by the industry’s lobbyists, pointing out the dangers of letting money dictate regulatory decisions.
  • Criticism of Bitcoin as a Reserve Asset: He likened the idea of holding bitcoin as a reserve asset to holding assets like beef or apples, arguing that it lacked the historical and economic grounding of assets like gold.
  • Trump’s Crypto Policies: The panel also discussed the potential effects of President Trump’s crypto-friendly policies, including the creation of a U.S. government bitcoin stockpile. Proponents like Coinbase’s CEO, Brian Armstrong, argued that Trump’s presidency could be a major boon for the industry, pointing to the initial rise in bitcoin’s price after his election.
  • Lobbying Influence: The crypto sector has spent heavily on lobbying, with major firms like Coinbase and Ripple backing pro-crypto congressional candidates, which Kganyago believes could lead to skewed regulatory outcomes.
  • Need for Regulation: Jennifer Johnson, CEO of Franklin Templeton, noted that institutional investors were hesitant to enter the crypto market without clear regulatory guidance, which she described as crucial for enabling large-scale investment in the sector.

Crypto Industry Celebrates Trump Inauguration with Snoop Dogg and Promises of Policy Changes

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The cryptocurrency industry marked the inauguration of President-elect Donald Trump with a lavish celebration at the historic Andrew W. Mellon Auditorium on Friday night. Dubbed the “crypto inauguration ball,” the event reflected optimism within the crypto community, anticipating significant policy changes under Trump’s administration.

A Gala to Remember

The event featured rap superstar Snoop Dogg, along with performances by Rick Ross and Soulja Boy, entertaining over 1,500 guests dressed in formal attire. Attendees enjoyed a mix of gourmet offerings, including miniature lobster rolls and McDonald’s burgers—Trump’s favorite. Swag included “Make Bitcoin Great Again” hats and Gemini-branded American flag pins, celebrating one of the gala sponsors.

The ball was co-hosted by leading crypto companies such as Crypto.com, Exodus, and the Winklevoss twins’ Gemini exchange. Tickets sold out quickly, with general admission priced at $2,500, while VIP packages at $100,000 offered face time with David Sacks, the incoming “crypto czar” in the Trump administration.

Crypto’s Political Turnaround

The gala marked a striking shift for an industry that had faced significant regulatory hurdles under the Biden administration. Trump, who campaigned as a “crypto president,” is expected to issue executive orders promoting the widespread adoption of digital assets and reducing regulatory barriers.

Jonathan Jachym, Kraken’s global head of policy, highlighted the significance of the event: “The crypto voter showed up in the election, and this event signifies a turning point for crypto policy in the United States.”

Industry Optimism and Policy Changes Ahead

Crypto executives expressed hope for the future under Trump’s leadership. Les Borsai, co-founder of Wave Digital Assets, noted, “If this signifies what the future looks like … I think that’s the optimism we’ve been waiting for.”

Trump’s crypto-friendly policy team is shaping up, with Paul Atkins, a pro-crypto advocate, expected to lead the Securities and Exchange Commission. Bitcoin prices have surged on anticipation of these changes, reaching record highs of over $107,000 in December.

Sponsors like Crypto.com and MicroStrategy emphasized their commitment to working with the new administration to advance innovation in digital assets. Meanwhile, Robinhood and other major players showed their support through sponsorships and participation.

A New Era for Cryptocurrency?

Trump, though absent from the event, expanded his cryptocurrency ventures with the launch of a “meme coin” branded with imagery from his attempted assassination, which quickly reached a market capitalization of $5.5 billion.

As the industry revels in newfound political support, Trump’s administration promises to usher in a new era for digital assets in the United States, fostering innovation and growth in the crypto space.

 

Next Wave of US Crypto ETFs Set to Launch with Trump’s Inauguration

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The crypto asset-management industry is gearing up for the next wave of exchange-traded funds (ETFs) following the launch of spot bitcoin ETFs in early 2024, which exceeded expectations by pulling in $65 billion. These new products have driven the price of Bitcoin up from $43,000 to over $100,000, with BlackRock’s iShares Bitcoin Trust emerging as the most successful debut in ETF history.

Cryptocurrency advocates are optimistic about the future, particularly with President-elect Donald Trump’s inauguration, which is seen as a potential catalyst for a crypto-friendly environment. Several companies, including VanEck, 21Shares, and Canary Capital, have already filed applications for ETFs that would track various cryptocurrencies, including Solana, Ripple’s XRP, and Litecoin.

The push for new products began months before the election, with many issuers anticipating lighter regulatory oversight under a potential Trump administration. The hope is that Trump’s appointee, Paul Atkins, will take a supportive stance on digital assets, contrasting with current SEC chair Gary Gensler’s cautious approach.

Several new crypto ETF products are expected to launch soon, including derivative-based funds designed to protect investors from losses on bitcoin itself. Options on some bitcoin ETFs were approved late last year, and more options will debut shortly after Trump takes office. Innovative new multi-asset funds, such as those that combine cryptocurrencies and gold, are also in the works.

While bitcoin ETFs have seen success, other products, such as those tied to ether, have experienced slower growth. The volatility of less widely-held coins like Solana and XRP raises concerns about their long-term performance, but the industry remains hopeful, citing the growth potential of these emerging assets.

Despite regulatory uncertainty and debates over the classification of certain cryptocurrencies, industry insiders believe the sky is the limit for innovation in the crypto ETF space.