President Donald Trump's support for the crypto sector is no joke. Trump promised on the campaign trail to help the sector and has followed through by surrounding himself with pro-crypto advisors and cabinet members, and establishing a U.S. Strategic Bitcoin Reserve and digital asset stockpile. Trump also has begun to push crypto legislation through Congress.
Most recently, Trump unveiled a crypto policy roadmap to further bolster the sector in his push to make the U.S. the crypto capital of the world. Here are three ways this roadmap could affect Ethereum (ETH -2.16%), the world's second-largest cryptocurrency.
1. Removing regulatory gray areas
One of the big issues for crypto businesses and cryptocurrencies in general has been a lack of clarity when it comes to crypto regulations. Companies and banks have worried about drawing unwanted attention from regulators and facing enforcement actions, and clear regulations haven't been set in stone that stakeholders could follow.
Official White House Photo by Joyce N. Boghosian.
The sheer presence of Trump and his friendly approach to the sector has obviously changed this, but the administration is also working to get actual regulations into writing. On the White House's fact sheet for its crypto roadmap, it specifically says that it wants Congress to remove "existing gaps in regulatory oversight" by giving the Commodities Futures Trading Commission oversight of the spot market for cryptocurrencies.
This would be a big win for crypto businesses, which had worried the Securities and Exchange Commission might claim jurisdiction and apply its strict enforcement of securities regulations to the sector. The U.S. House of Representatives recently passed the Clarity Act, which seeks to create a broad regulatory framework for the crypto sector, but the Senate still needs to approve the legislation, and amendments are possible.
2. Integrating DeFi into mainstream finance
The White House's fact sheet also calls for Congress to enact legislation that "embraces DeFi technology and recognizes the potential of integrating such technology into mainstream finance." DeFi stands for decentralized finance, which refers to the use of decentralized applications with smart contract functionality.
This one really applies to Ethereum's blockchain network, which is considered the mecca of DeFi. Smart contracts are automated systems created on blockchain networks that essentially automate a contract by having it carried out only after certain terms and conditions are met. There are so many use cases for smart contracts. An example could be applied to the real estate sector and the execution of a mortgage or rental contract. For instance, if the proper documentation is provided, certain conditions are met, and a down payment is made, a smart contract could automatically execute a mortgage.
According to crypto exchange Gemini's Cryptopedia, more than half of all decentralized applications run on Ethereum's blockchain, with more than 600,000 people regularly using these applications. Wider use of DeFi is likely to benefit Ethereum more than any other token and network.
3. Stablecoins
Congress' first big crypto legislation that Trump has since signed into law is the Genius Act, which seeks to create a framework for the use of stablecoins in the broader payments ecosystem. Stablecoins are digital assets pegged to a currency or commodity, and several of the largest stablecoins are backed by the U.S. dollar.
Trump and Treasury Secretary Scott Bessent are big fans of stablecoins, largely because companies can use U.S. Treasury bills, notes, and bonds in the reserve pool. Wider usage of stablecoins could drum up demand for Treasuries, which could help with the U.S. government's debt and fiscal issues. The White House fact sheet says, "The widespread adoption of dollar-backed stablecoins will modernize payments infrastructure and allow the United States to move away from costly and outdated legacy systems."
Interestingly, the two largest backed stablecoins, Tether and USDC, currently do most of their issuance on Ethereum's network. According to Binance, roughly 70% of stablecoin volume is moved through Ethereum.
