Crypto pins hopes on reshaped Securities and Exchange Commission for deal revival under Trump
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Donald Trump gesturing at a Bitcoin event in the US in July 2024. He was a one-time crypto sceptic who was won over after a massive lobbying effort.
PHOTO: REUTERS
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SINGAPORE – With Donald Trump headed back to the White House
A half-dozen mergers advisers and venture capitalists interviewed by Bloomberg after Trump’s emphatic victory said they expect a sharp pickup in activity in 2025.
They cited expectations that Trump will follow through on his pledge to remove US Securities and Exchange Commission (SEC) chairman Gary Gensler, who has led a years-long crackdown on the industry, as well as for more favourable legislation.
A post-election spike in cryptocurrency prices provided a first indication that the record US$135 million (S$179 million) the industry funnelled in 2024 into US political races up and down the ballot might pay off.
Now, many chief executives emboldened by that reaction are likely to rely on takeovers to speed up expansion plans, according to investment bankers focused on digital assets.
“With Trump in the White House, we expect 2025 to be a much stronger year for dealmaking,” said Mr Casper Johansen, who runs The Spartan Group’s digital-assets advisory business.
Crypto executives have long blamed a dearth of mergers and acquisitions – even as asset prices staged a two-year revival – on uncertainty around US regulations.
Other financial centres, from Singapore to Dubai, have already established crypto regulatory regimes, and the European Union’s Markets in Crypto-Assets framework will take full effect at the end of 2024.
That left the US as the last major market without a comprehensive set of regulations for crypto – fanning a perception of what the industry has come to deride as “regulation through enforcement”.
Trump’s victory will ease lingering C-suite fears of deals being blocked, business lines being declared illegal and legal action from the SEC, according to Dragonfly Capital managing partner Haseeb Qureshi.
“All things considered, I expect the next four years to be much more favourable than the last four,” he said.
It is far from certain that eased regulations will unleash a deal bonanza. One possible hurdle to a pickup in deals is that most crypto firms remain closely held, meaning that if they pay in stock, negotiations about valuations can become fraught.
Many would-be acquirers last raised money during the bull market that ended in 2022 at valuations far higher than those prevailing today.
The resulting mismatch between buyers’ and sellers’ expectations “is where we have seen a lot of these potential deals die during negotiations”, said general partner Rob Hadick of Dragonfly.
Trump, a one-time crypto sceptic who was won over after a massive lobbying effort, campaigned on promises to stockpile the original token for a national reserve and make sure all remaining bitcoins are “made in the US”.
His message resonated with a small but financially influential cohort left embittered by what they describe as unfair treatment following the FTX implosion two years ago.
Among crypto companies that have already signalled an appetite for acquisitions are brokerage FalconX and stablecoin operator Tether Holdings.
Tether, which generated an unaudited profit of US$2.5 billion in the third quarter off its massive reserves, said in June that it expected to pour more than US$1 billion into deals in the next 12 months. BLOOMBERG
