Trump’s Win Threatens Memecoins under its Regulatory Sanity

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As a researcher with extensive experience in the crypto and financial markets, I find myself intrigued by the mixed predictions surrounding the potential impact of a Donald Trump presidency on the memecoin market. On one hand, Omid Malekan’s analysis resonates with my understanding of the regulatory landscape under Trump, which could lead to increased scrutiny of unregulated assets like memecoins. However, Murad Mahmudov’s perspective, rooted in the organic growth and popularity of memecoins among retail traders, raises valid concerns about overlooking the market dynamics that drive these digital tokens.

Should Donald Trump secure victory in the approaching presidential election, it might pose potential challenges for the thriving meme coin market, as per Omid Malekan, an academic in finance at Columbia Business School.

In a post on X, Malekan argued that memecoins, digital tokens that often gain value through internet culture rather than utility could struggle under a Trump administration due to his push for regulatory “sanity.” 

According to Malekan, memecoins are a type of economic empowerment for the people, as they challenge the biased and sometimes fraudulent distribution models (tokenomics) common in venture capital-funded and insider-owned cryptocurrencies. However, he thinks this grassroots approach may conflict with the more traditional, utility-focused regulatory stance that he expects from Trump.

As a researcher, I too emphasize that a shift in political power towards a Republican administration may spark a revival of Initial Coin Offerings (ICOs) and widespread token airdrops, mirroring the early days of the cryptocurrency landscape prior to stricter regulations on venture capital-backed tokens.

He believes this change is due to the influence of individuals such as Senator Elizabeth Warren and SEC Chair Gary Gensler, who have been vocal advocates for stricter cryptocurrency regulations, resulting in tighter policies concerning token sales.

Castle Island Venturas partner Nic Carter agreed with Malekan’s perspective, stating that “memecoins primarily stem from frustration towards a strict SEC regulation.” According to Carter, if the SEC under a Trump administration were to become more lenient, retail traders might find less reason to engage in memecoin trading.

In terms of its size, the current market for meme-based cryptocurrencies stands at approximately $61 billion, as reported by CoinGecko. However, opinions within the larger cryptocurrency community are split on whether a potential victory by Donald Trump could influence these memecoins.

Murad Mahmudov, an advocate for memecoins, expressed a different viewpoint from Malekan’s. He stated that most buyers of memecoins aren’t concerned about politics, but rather see the rise of these digital tokens as connected to a continually expanding global money supply. This trend, according to Mahmudov, is independent of who holds the presidency, indicating it might persist regardless.

Trump’s political campaign has made broad statements regarding cryptocurrency, including plans to establish the U.S. as the global leader in crypto and Bitcoin, and to relocate all remaining Bitcoin mining operations within the country. A survey conducted by Coinbase suggests that these pro-cryptocurrency pledges could potentially draw support from tech-savvy crypto enthusiasts in crucial swing states such as Arizona, Michigan, Nevada, Pennsylvania, and Wisconsin.

It was found through a survey that approximately 66% of cryptocurrency holders residing in those regions were inclined to vote for a political figure who favored the crypto sector. Interestingly, backing for Donald Trump and his democratic rival, Kamala Harris, seemed fairly evenly divided.

As Election Day approaches within a fortnight, the contest between Trump and Harris is incredibly tight. Based on the latest polling data from 538, Harris currently leads Trump by approximately 1.5%.

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2024-10-28 09:56