Trump Would Bridge The Gap Between Cryptocurrency And Banks, VCs Hope: 'Still A Poisoned Chalice Today'

Amid ongoing banking challenges, the cryptocurrency industry is hopeful that Donald Trump‘s recent election victory could pave the way for improved banking relations. This optimism stems from Trump’s promises to establish a national Bitcoin BTC/USD reserve and a regulatory council.

What Happened: The crypto sector has faced significant hurdles in securing banking partners since the collapse of FTX and other firms in 2022, The Wall Street Journal reported on Wednesday. Many banks have distanced themselves from crypto companies, exacerbated by regulatory warnings and lawsuits against firms like Coinbase COIN, Kraken, and Binance BNB/USD.

Trump’s recent announcement of venture capitalist David Sacks as the White House crypto czar has sparked hope for policy changes. Sacks has emphasized the need to address banking issues on X, formerly known as Twitter. Despite these developments, banks continue to close accounts of crypto firms, according to industry insiders.

Nic Carter of Castle Island Ventures described the ongoing challenges in finding banking partners.

"Banking crypto is still a poisoned chalice today," Carter said. "They do not want the Eye of Sauron descending upon them"—referring to the villain in "The Lord of the Rings” series.

The involvement of Trump allies like Marc Andreessen and Elon Musk has brought renewed attention to these issues, with many crypto founders sharing their banking struggles. Congressional committees are now investigating banking access, with bipartisan support for legal businesses to have financial services. However, banks remain cautious due to crypto’s volatility and fraud risks, awaiting potential government guidance changes.

Why It Matters: The election of Donald Trump has already had a significant impact on the cryptocurrency market. According to a JPMorgan report, November saw a historic rally in the crypto market, fueled by political developments and increased investor sentiment following Trump’s win. This rally positively affected tokens, decentralized finance projects, stablecoins, and publicly traded companies tied to cryptocurrencies.

Furthermore, Trump’s potential return to the White House could usher in a new era of cryptocurrency-friendly policies. Trump has expressed interest in boosting market metrics, including cryptocurrencies, and has even taken credit for Bitcoin’s recent price surge. His administration’s focus on these areas could lead to significant changes in the crypto industry’s relationship with banks.

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