In October 2024, US President Trump officially announced the unconditional pardon of Zhao Zhangpeng (CZ), the founder of Binance Exchange. This decision marks a major shift in US cryptocurrency regulatory policy and a landmark event in Trump’s second term of crypto-friendly policies.
1. Background review
1.1 The beginning and end of the CZ case
Conviction status: In November 2022, Binance founder and former CEO Zhao Zhangpeng reached a plea agreement with the US Department of Justice, admitting to violating the Bank Secrecy Act and failing to establish an effective Anti Money Laundering (AML) program on the Binance platform.
Penalty result:
- CZ Personal Penalty: $174 million
- Binance fine: $4.20 billion (one of the largest corporate compliance penalties in US history)
- Sentence: 4 months imprisonment (completed in 2024)
- Resigned as CEO of Binance
Nature of the charge: CZ was charged with regulatory compliance failure, not direct involvement in money laundering or fraud. Prosecutors originally recommended a three-year sentence, but the judge ultimately sentenced him to only four months, indicating that the judicial system considered the crime relatively minor.
1.2 Trump’s changing attitude towards cryptocurrency
First term (2017-2021):
- Publicly stating “dislike Bitcoin and cryptocurrency”
- Believing that cryptocurrency facilitates illegal activities
- Be skeptical and critical of the industry
Policy shift during the 2024 election campaign:
- Clear commitment to support the development of the cryptocurrency industry
- Proposing a vision to make the US the “global cryptocurrency capital”
- Deliver supportive speeches at industry events such as the Bitcoin Conference
- Accepting cryptocurrency-related political contributions
- Commit to reforming the existing regulatory framework to provide clear guidance to the industry
Policy practice for the second term in 2024:
- Signed Executive Order to Establish National Bitcoin Strategic Reserve
- Appoint crypto-friendly individuals to key regulatory positions
- Push Congress to pass cryptocurrency-friendly legislation
- Promise to review and possibly pardon some cryptocurrency-related cases
2. The core reason why Trump pardoned CZ
2.1 National strategy and global competition
2.1.1 vying for global cryptocurrency leadership
Competition for technological dominance: After artificial intelligence and semiconductors, blockchain and cryptocurrency technologies have become new strategic competition areas. The US faces challenges from other countries and regions in the field of digital finance, and the Trump administration sees the cryptocurrency industry as key to maintaining the US’s leadership position in fintech.
Capital and Talent Attraction: In the past few years, due to regulatory uncertainty in the US, a large number of cryptocurrency companies and entrepreneurs have turned to jurisdictions with more friendly regulations such as Singapore, UAE, and Switzerland. Pardoning CZ sends a strong signal to the world: the US welcomes legitimate cryptocurrency innovators and entrepreneurs, encouraging them to do business, invest, and create jobs in the US.
Status of Financial Innovation Center: New York and San Francisco have long been centers of global financial and technological innovation. Trump wants to ensure that the US continues to maintain this position in the era of Web2 and digital finance, rather than letting London, Singapore, or other cities replace it.
Delivering on campaign promises: During the 2024 election campaign, Trump repeatedly promised to review cryptocurrency-related cases and support industry development. Pardoning CZ is a specific action to fulfill this campaign promise and demonstrate to supporters that his words and deeds are consistent.
2.1.2 economic growth considerations
Job Creation: The cryptocurrency and blockchain industry employs over 200,000 professionals in the US, covering multiple fields such as engineers, compliance experts, marketing, and client servers. Friendly regulatory environments help the industry expand and create more high-paying job opportunities.
Tax contribution: The cryptocurrency industry and investors contribute billions of dollars in tax revenue to the US every year. Supporting industry development means a larger tax base and fiscal revenue.
Digital extension of the dollar: Stablecoins (such as USDC and USDT) are mainly anchored to the US dollar, and their global circulation actually expands the influence of the US dollar in the digital economy. A prosperous crypto ecosystem can strengthen the dominant position of the US dollar in the 21st century, which is crucial to the national interests of the US.
Industrial chain effect: The development of the encryption industry drives related industries such as Cloud Services, cyber security, financial technology, and legal services, forming a complete industrial ecosystem.
2.2 Legal and judicial considerations
2.2.1 the principle of nature and proportionality
Compliance failure vs malicious fraud: CZ was charged with failing to establish an adequate Anti Money Laundering compliance system, rather than actively participating in money laundering, defrauding customers, or misappropriating funds. This is fundamentally different in legal and moral seriousness. Many legal experts believe that for technical compliance violations, large fines and short-term imprisonment are already sufficient punishments.
Imprisoned and heavily punished: CZ has already served a 4-month sentence and the individual and company have paid more than $4.40 billion in fines, which is one of the largest corporate compliance penalties in US history. From the perspective of proportionality, this punishment is already quite severe, and the necessity of continuing to retain criminal records is questioned.
Inspiration from Judicial Sentencing: The prosecutor originally recommended a three-year sentence, but the federal judge ultimately sentenced him to only four months, indicating that the judicial system believed that CZ’s behavior was not as serious as the prosecutor’s accusation. The judge’s ruling provided a reasonable basis for the president’s pardon.
2.2.2 Selective Enforcement and Fairness
Comparison with traditional finance: After the 2008 financial crisis, almost no Wall Street executives faced criminal prosecution for causing a global economic collapse, millions of job losses, and trillions of dollars in losses. In contrast, the harsh enforcement of the cryptocurrency industry appears disproportionate, leading to widespread criticism of “double standards” and “selective enforcement”.
The regulatory framework is unclear: The regulatory framework for cryptocurrency in the US has long been unclear. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have disputes over which digital assets are securities and which are commodities, making it difficult for companies to determine compliance boundaries. Severe punishment of companies in the absence of clear rules has raised questions about “law enforcement before legislation”.
Restoration of justice: Pardons can be interpreted as measures to correct excessive law enforcement, ensure judicial proportionality and fairness, rather than just favoring a particular industry. This helps rebuild business confidence in the US rule of law.
2.2 Industry lobbying and political influence
2.2.1 Political Rise of the Crypto Industry
Significant political contributions: In the 2024 election cycle, the cryptocurrency industry donated over $124 million to candidates who supported friendly regulatory policies, becoming an undeniable political force in the US political arena. These funds mainly flowed to Republican candidates, but also included some Democrats who were open to crypto.
Super Political Action Committee (PAC): Super PACs funded by the crypto industry, such as “Fairshake” and “Stand With Crypto”, have placed a large number of TV and online advertisements in multiple key constituencies, successfully influencing the results of multiple congressional elections. These organizations clearly support Trump’s crypto-friendly policy stance.
Direct lobbying activities: Major cryptocurrency companies such as Coinbase, Ripple, Kraken, and Circle have significantly increased their lobbying spending in Washington, communicating directly with members of Congress, White House officials, and regulatory agencies to promote legislative and executive measures that benefit the industry.
Grassroots mobilization capacity: The crypto community has strong grassroots mobilization capabilities and is able to pressure elected officials through social media, online petitions, emails, and phone calls. Over 200,000 people have signed an online petition calling for a pardon for CZ.
2.4 CZ’s personal influence
Industry Leadership: As the founder of the world’s largest cryptocurrency exchange, CZ is one of the most influential figures in the industry. At its peak, Binance accounted for over 60% of global cryptocurrency trading volume and served over 140 million users. Pardoning him has strong symbolic significance, representing support and recognition for the entire industry.
Social media influence: CZ has over 10 million followers on Twitter/X and is one of the most followed opinion leaders in the crypto space. His every move is closely watched by the global crypto community, and his supporters are actively campaigning for his pardon on social media.
Charity and public image: CZ has made a large number of donations in education, disaster relief, medical health and other fields through Binance Charity Foundation, and responded quickly to international humanitarian events such as the Ukraine crisis, shaping a positive public image.
2.5Regulatory philosophy and ideology
2.5.1 the concept of “small government”
Reducing Regulatory Intervention: Trump and his Republican base tend to favor free markets and “small government” ideas, opposing excessive regulatory intervention. They believe that the government should provide space for innovation, rather than stifling entrepreneurship through onerous compliance requirements. Pardoning CZ is in line with this ideological position.
Criticism of “regulation through enforcement”: Republicans strongly criticized the “regulation by enforcement” strategy adopted by SEC Chairperson Gary Gensler during the Biden administration – setting actual regulatory standards by suing companies without clear rules. Pardons symbolize a clear rejection of this practice.
Market self-regulation: This school of thought believes that the market itself has the ability to self-correct, and the government should set basic rules, but allow market participants to compete and innovate freely. Excessive intervention will instead stifle innovation and reduce efficiency.
2.5.2 technological optimism
Supporting financial innovation: Consider cryptocurrency and blockchain as important representatives of financial innovation and technological progress, similar to the position of the Internet in the 1990s. The government should encourage rather than stifle this wave of innovation.
Decentralized values: The decentralized nature and anti-censorship properties of cryptocurrency align with the values of some conservatives and liberals who “limit government power, increase individual freedom and privacy.”
The US Exception: We believe that the US should maintain its leadership position in emerging technologies, rather than allowing excessive regulation to lead to the outflow of talent and capital to competing countries.
2.6 International relations and geopolitics
2.6.1 CZ’s international background
Multicultural identity: CZ was born in Jiangsu, China, grew up in Canada and holds Canadian citizenship. After working in Japan for many years, he is a true global citizen. Overemphasizing his birthplace may lead to accusations of racial discrimination, and pardons help demonstrate the openness and inclusiveness of the US.
Global influence: CZ has a huge influence in the global crypto community, especially in the Asian, Middle Eastern, and Latin American markets. His friendly attitude towards him helps improve the image of the US in the international crypto community and demonstrates that the US welcomes global talents.
2.7 Preventing the outflow of talent and capital
International regulatory competition: Singapore, UAE, Switzerland, Hong Kong and other places are actively attracting crypto companies and talents. Singapore has become the crypto center of Asia, while UAE Dubai offers highly attractive regulatory environments and tax incentives. The US needs to maintain its advantage in this “regulatory arbitrage competition” through friendly policies.
Immigration and Talent Policy: Harshly cracking down on legitimate encryption companies may lead to the outflow of outstanding entrepreneurs and technical talents to other countries. Pardons send a clear signal that “the US welcomes legitimate innovators” and help attract and retain top global talents.
3. Profound impact on the cryptocurrency market
3.1 Immediate market reaction
Price dynamics
Bitcoin and Ethereum: After the announcement of the pardon, the price of Bitcoin rose by about 8-12% within 24 hours, while Ethereum rose by 10-14%. The market interpreted the pardon as a strong signal of fundamental improvement in the US regulatory environment, and investor confidence significantly increased.
Counterfeit products are increasing: Positive sentiment quickly spread to the entire cryptocurrency market, with almost all categories of digital assets rising, from DeFi tokens to Layer 2 solutions, from NFT projects to AI tokens. The total market capitalization increased by more than $200 billion in a week.
Surge in stablecoin minting: The significant increase in the minting volume of USDC and USDT indicates that new funds are flowing into the cryptocurrency market. This is usually seen as a leading indicator of a sustained bull market.
Transaction active level
High trading volume: Trading volumes on major exchanges reached multi-month highs following the pardon news, with 24-hour trading volumes exceeding $140 billion, two to three times normal levels.
Futures and Derivatives: The significant increase in open interest contracts for Bitcoin and Ethereum futures indicates that institutional investors are increasing their leveraged positions. The demand for bullish options in the options market has surged.
On-chain activities: The number of active addresses, number of transactions, and transaction fees on the blockchain network have all increased significantly, reflecting broader customer engagement.
3.2 Structural improvements in regulatory environments
Policy clarification process accelerates
Congressional legislation promotes: Amnesty clears political obstacles for crypto-friendly legislation. Bills such as the Financial Innovation and Technology for the 21st Century Act (FIT21) are accelerating in Congress and are expected to be passed in the next 6-12 months. These bills will provide a clear regulatory framework for digital assets and clarify the regulatory boundaries between the SEC and CFTC.
Change in attitude of regulators: The new SEC chairperson and CFTC chairperson appointed by Trump both have an open attitude towards cryptocurrency. The SEC has stopped multiple enforcement actions against cryptocurrency companies and begun constructive dialogue with the industry to explore how to promote innovation while protecting investors.
Adjustment of enforcement priorities: Moving from “law enforcement before legislation” to “law enforcement before law enforcement”, regulators said they would focus on combating genuine fraud and criminal activity, rather than technical compliance issues.
State-level regulatory coordination: The federal government has strengthened coordination with state regulatory agencies to avoid regulatory arbitrage or duplication of regulation. The experiences of crypto-friendly states such as Wyoming and Texas have been promoted nationwide.
Compliance costs and certainty
The compliance path is clear: Enterprises now have a clearer understanding of what requirements need to be met to operate legally in the US, and no longer need to explore in the vague area. This reduces the uncertainty of legal risks and compliance costs.
Enterprise compliance willingness to increase: When companies believe that following the rules will be treated fairly, they are more willing to invest in building strong compliance systems. This actually raises the standard for the entire industry.
Regulatory sandboxes and pilot projects: Regulators are launching more sandbox programs that allow innovative projects to test new technologies and business models in a controlled environment, while working closely with regulators.
3.3 Business confidence and investment surge
Return to the US market
Offshore business returns: US crypto companies that have moved to non-China in the past few years are considering returning. Binance.US may restart and expand operations; other companies with headquarters in Singapore and the UAE may establish important branches in the US.
Increase in new business registrations: The number of newly registered cryptocurrency and blockchain companies in the US has surged. Traditional business registration hotspots such as Delaware and Nevada, as well as crypto-friendly states such as Wyoming, have seen a significant increase in registration.
Relocation of headquarters: Several international crypto businesses have announced the relocation of their global or regional headquarters to the US to take advantage of improved regulatory environments and proximity to the world’s largest Capital Markets.
Financing and IPO boom
The surge in venture capital: In Q4 2024, venture capital investment in crypto and blockchain projects reached its highest point in nearly two years. Top venture capital funds such as Sequoia Capital, a16z, and Paradigm announced the establishment of a new crypto special project fund with a total size exceeding $10 billion.
The IPO window opens: Crypto companies such as Kraken, Circle, and BlockFi have restarted their IPO plans. Regulatory clarity makes it easier for these companies to meet listing requirements, and investors are more willing to participate.
Strategic investments and mergers and acquisitions: Traditional Financial Institutions (banks, asset management companies, payment processors) have significantly increased their strategic investments and acquisitions in crypto companies. This has promoted the integration of traditional finance and the crypto world.
SPAC and DPO Direct Listings: In addition to traditional IPOs, more crypto businesses are entering the open market through SPAC (Special Purpose Acquisition Company) mergers or DPO Direct Listings.
Product innovation accelerates
New financial products: The trading volume of Bitcoin and Ethereum spot ETFs continues to grow; ETF applications for more asset classes (Solana, Cardano, etc.) have been approved; structured products, options, futures and other derivatives have become more diverse.
DeFi and traditional finance integration: Traditional Financial Institutions such as JPMorgan Chase and Citibank have begun to pilot the integration of DeFi protocols into their products to provide hybrid Financial Services.
Enterprise-level blockchain applications: More companies are adopting blockchain technology for supply chain management, digital identity verification, cross-border transfer and other applications. IBM, Oracle, Microsoft and other enterprise technology companies are increasing their investment.
3.4 Investor structure and capital flows
Institutional investors are entering the market in large numbers
Pension and endowment funds: Regulatory clarity has led institutional investors with strict fiduciary responsibilities (such as pension funds and university endowments) to begin allocating cryptoassets. Although the initial allocation ratio is small (1-4%), due to the huge asset scale managed by these institutions (trillions of dollars), even a small allocation can bring billions of dollars in new funds to the market.
Hedge funds and family offices: Hedge funds see cryptocurrency as a new alpha source and significantly increase their allocation. Family offices (managing ultra-high net worth family wealth) see cryptocurrency as an important component of portfolio diversification.
Asset Management Companies: BlackRock, Fidelity, Invesco, and other global asset management companies are launching more crypto-related products, allowing ordinary investors to access this asset class through traditional accounts.
Insurance companies and banks: Some insurance companies have begun to allocate Bitcoin in their investment portfolios; banks offer encrypted custody, trading, and lending services.
Retail investor participation
Reduced barriers to entry: Clearer regulation and more traditional channels (such as Robinhood and Fidelity brokerage accounts) make it easier for ordinary investors to participate.
Education and cognitive enhancement: Mainstream media reports on cryptocurrency are more objective and in-depth; universities are offering more blockchain and cryptocurrency courses; community education activities are increasing.
The FOMO effect: Price increases and media attention have triggered a “fear of missing out” (FOMO) mentality, driving more retail investors to enter the market. This may create a positive feedback loop, but it also brings the risk of a bubble.
3.4 International capital flows
US Capital Markets Attraction: Globally, the US has the deepest Capital Markets, the most complete legal system, and the largest investor base. The improved regulatory environments have made the US the preferred destination for global cryptocurrency capital.
Reduced cross-border arbitrage: When US regulation is friendly, funds no longer need to engage in “regulatory arbitrage” through complex offshore structures, simplifying cross-border capital flows.
Impact of Emerging Markets: US policy shift may affect regulatory attitudes in other countries. The European Union, United Kingdom, Australia, etc. may seek a balance between “not falling too far behind” and “remaining cautious”; some Emerging Markets may follow in the footsteps of the US.
3.5Technological development and ecosystem prosperity
Blockchain infrastructure upgrade
Layer 1 increased competition: Layer 1 blockchains such as Ethereum, Solana, Cardano, and Avalanche continue to compete and improve in terms of performance, scalability, and security. Developer resources and user attention are allocated among different platforms.
Layer 2 Solution Burst: Layer 2 scaling solutions such as Optimism, Arbitrum, zkSync, and Polygon have been widely adopted. They provide lower costs and faster transactions while maintaining the security of Ethereum.
Cross-chain interoperability: Projects such as Cosmos and Polkadot that focus on cross-chain communication have received more attention. The flow of assets and data between different blockchains has become smoother.
Infrastructure as a Service: Companies such as Alchemy, Infura, and QuickNode that provide blockchain infrastructure services are growing rapidly, lowering the technical barrier for developers.
DeFi (decentralized finance) is mature
Total locked value (TVL) growth: The total locked value of DeFi protocols rebounded from the low point and broke through the $100 billion mark again. The usage of top protocols such as Uniswap, Aave, and MakerDAO has surged.
Diversification of revenue products: From simple liquidity mining to complex structured products, delta-neutral strategies, automated market making, etc., DeFi products are more mature and diverse.
Traditional Financial Integration: Some DeFi protocols have started to collaborate with traditional Financial Institutions to provide compliant on-chain Financial Services. This “CeDeFi” (integration of centralized and decentralized finance) model has received attention.
Risk management improvements: After experiencing multiple hacking and vulnerability incidents, DeFi protocols have become more mature in smart contract auditing, insurance, threat and risk assessment.
NFTs and digital ownership
The rise of practical NFTs: From pure art and collectibles, NFTs have expanded to practical scenarios: event tickets, memberships, Game Props, digital identities, copyright certificates, and more.
Brands and businesses adopt: Traditional brands such as Nike, Adidas, and Starbucks are deepening their NFT strategies and integrating them into customer loyalty programs and marketing activities.
Intellectual property protection: A clearer legal framework helps resolve intellectual property issues related to NFTs, such as copyrights, trademarks, derivative rights, etc.
Metaverse and Virtual World: The active level of virtual world platforms such as Decentraland and The Sandbox has increased, and the trading of virtual land, buildings, and assets has increased.
Stablecoins and payments
US dollar stablecoin dominance: The circulation of USDC (published by Circle) and USDT (Tether) continues to grow, becoming the most important trading medium and value storage tool in the cryptocurrency market. Their widespread use has actually expanded the influence of the US dollar in the global digital economy.
Compliance stablecoin growth: Under clear supervision, stablecoins that meet Anti Money Laundering and Know Your Customer (KYC/AML) requirements are more favored by institutions and merchants. Enterprise-published stablecoins such as PayPal’s PYUSD are gaining more adoption.
Cross-border transfer application: The application of stablecoins in cross-border remittances and international trade settlements has significantly increased, especially in areas where traditional banking services are expensive or inaccessible.
Central Bank Digital Currency Competition: The success of private stablecoins may accelerate the launch of central banks’ own digital currencies (CBDCs). Discussions about digital dollars by the Federal Reserve may become active again.
Enterprise and institutional applications
Supply chain management: Multinational companies such as Walmart and Maersk use blockchain to track product sources, prevent counterfeiting, and optimize logistics.
Digital Identity and Authentication: Digital identity systems based on blockchain are used for education certificate verification, medical record management, government services, and more.
Tokenized assets: Progress has been made in tokenizing traditional assets such as real estate, art, and commodities (dividing ownership into digital tokens), improving liquidity and accessibility.
Corporate Financial Management: More Listed Companies (such as MicroStrategy and Tesla) have allocated some of their corporate cash reserves to Bitcoin or other cryptoassets.
4. latent risks and challenges
4.1 Speculative bubble risk
Irrational Exuberance: The market may over-interpret the positive meaning of pardons, forming speculative bubbles divorced from fundamentals. Historically, the cryptocurrency market has experienced multiple boom-bust cycles, with each bull market peak accompanied by a sharp adjustment.
Retail risk: FOMO-driven retail investors may buy at high prices, lack risk awareness and investment experience, and suffer significant losses in subsequent market adjustments. Regulatory agencies need to strengthen investor education and protection.
Leverage Accumulation: Optimism may lead investors to overuse leverage and amplify positions through borrowing or derivatives. High leverage makes the market more prone to chain liquidation and flash crashes.
4.2 Possibility of regulatory rebound
Congressional opposition: Democratic lawmakers such as Elizabeth Warren and Sherrod Brown may strongly criticize pardons as “privilege of the rich” and “indulgence in financial crimes”, and push for stricter counter-legislation. If the Democratic Party regains control of Congress in the 2026 midterm elections, there may be a policy reversal.
State-level regulatory tightening: Federal easing does not mean that all states will follow suit. States such as New York and California may maintain or strengthen local regulation, forming a “regulatory puzzle” and increasing the complexity of corporate compliance.
International Regulatory Differences: The European Union’s MiCA (Crypto Asset Market Regulation) and the United Kingdom’s Financial Services and Markets Act may differ from US standards, posing challenges for multinational businesses.
4.2 Moral Hazards
“Big but not falling” psychology: Pardons may send the wrong signal, making large companies or influential founders believe that they can evade legal consequences through political influence. This may encourage risky behavior and moral hazard.
Compliance Incentive Distortion: If companies believe that the cost of violations can be resolved through political means, they may reduce investment in compliance systems and increase systemic risks in the long run.
Declining Public Trust: Pardons may be seen by the public as perks for the privileged, undermining trust in the rule of law and judicial fairness, especially in the context of prominent economic inequality issues.
4.4 Market manipulation and fraud
Insufficient regulatory resources: The rapidly expanding market may exceed the supervisory capacity of regulatory agencies, leaving room for market manipulation, insider trading, and pump-and-dump scams.
Quality of projects varies: A large number of new projects have emerged in the bull market, including projects of poor quality, lack of practical value, or pure fraud. Investors need to have the ability to discern.
Social Media Impact: Coordinated manipulation on social media platforms such as Twitter and Telegram, such as pump groups, can mislead retail investors.
4.5 Systemic risk
Centralized risk: Although blockchain is essentially decentralized, in reality many key nodes (large exchanges, custodian service providers, stablecoin publishers) are highly centralized. Their failure could trigger a systemic crisis.
Liquidity Risk: During periods of market stress, liquidity can quickly dry up, leading to sharp price fluctuations and chain liquidation.
Cyber security threats: As the value of encrypted assets grows, they become more attractive targets for hackers, Ransomware, and national-level network attacks.
Stablecoin Anchor Risk: If major stablecoins become unanchored (losing their 1:1 value to the US dollar) due to insufficient reserves, runs, or regulatory issues, it may trigger market panic and systemic risks.
4.6 Reconstruction of the financial system
Decentralization process: DeFi and blockchain technology have challenged the role of many traditional financial intermediaries (such as clearinghouses, custodian banks, and certain types of brokers). Financial Services may shift from an “intermediary model” to a “protocol model”.
Transformation of traditional banking: Commercial banks must adapt or integrate encrypted services, otherwise they face the risk of being marginalized. Some forward-looking banks have begun to provide encrypted custody, trading, and lending services.
Capital Markets Efficiency Improvement: Tokenized assets and 24/7 trading can increase market liquidity, reduce transaction costs, and shorten settlement times (from T + 2 to near real-time).
Changes in Monetary Policy Transmission Mechanism: If cryptocurrencies and stablecoins are widely adopted, the effectiveness of central banks in implementing Monetary Policy through the traditional banking system could be compromised.
4.7 Global currency competition landscape
Digital extension of the dollar: The global circulation of the US dollar stablecoin is actually the continuation and strengthening of the US dollar hegemony in the digital age. This helps the US expand its influence in areas without traditional banking infrastructure.
Geopolitics of Digital Currency: The US supports private stablecoins and cryptocurrencies, forming a new geo-economic competition landscape, and digital currencies have become a new battlefield for great power competition.
Small State Currency Sovereignty Challenges: In countries with unstable currencies or severe inflation (such as Argentina, Turkey, and Venezuela), USD stablecoins and Bitcoin are widely adopted as value stores and transaction media, effectively replacing their own currencies. This poses a challenge to the monetary sovereignty and economic policy independence of these countries.
New Global Payment System: Blockchain-based cross-border transfer systems could challenge traditional Global Payment Networks such as SWIFT and change the way international financial sanctions are implemented.
4.8 Socio-economic impact
Inequality of wealth: The rise in cryptocurrency prices may exacerbate wealth inequality, as early adopters and large holders receive disproportionate returns, while later entrants take on higher risks.
Potential for Financial Inclusion: On the positive side, cryptocurrency could provide financial services to 2 billion unbanked people around the world, enabling them to save, transfer money, borrow and invest.
Changes in the job market: Web2 and the crypto industry create a large number of new jobs (blockchain development, smart contract auditing, DeFi analysis, NFT curation, etc.), but they may also replace some jobs in traditional finance.
The Digital Divide: Technological complexity could exacerbate the digital divide, with tech-literate groups better able to take advantage of crypto opportunities, while the elderly and less educated may be marginalized.
Cultural and social impacts: The values of the crypto community (decentralization, transparency, and resistance to censorship) may influence broader social and political discussions, especially debates about privacy, freedom, and government power.
5. Reactions from different stakeholders
5.1 The cryptocurrency industry
Exchange: Coinbase, Kraken, Gemini and other US local exchanges publicly welcome the pardon, believing that this marks the end of the “regulatory winter”. Binance announced that it will consider expanding its US business again on the premise of meeting all regulatory requirements.
Blockchain projects: The development teams of major blockchain projects such as the Ethereum Foundation and Solana Labs have stated that clear policies will give them more confidence in establishing development centers and recruiting talent in the US.
Venture Capital: Crypto venture capital firms such as a16z, Paradigm, and Pantera have stated that they will significantly increase their investment in US projects. Previously, due to regulatory uncertainty, they preferred to invest in non-China projects.
Industry organizations: Industry advocacy groups such as the Blockchain Association and Coin Center praised the pardon as a “victory for rational regulation” and pledged to continue working with policymakers to establish an effective framework.
5.2 Regulatory agencies and government departments
New leadership of SEC and CFTC: The new chairperson appointed by Trump stated that they will adopt a “reasonable regulation” policy, focusing on combating fraud while providing space for innovation. They announced multiple working groups to study how to provide clear classification for different types of digital assets.
Ministry of Finance and FinCEN: Although Binance is the main agency to punish, the new leadership expressed respect for the president’s decision and will focus on working with the industry to develop effective Anti Money Laundering standards rather than punitive enforcement.
The Congress: The Republican-dominated Congress expressed support, with several lawmakers saying they would push for crypto-friendly legislation. Democratic lawmakers’ reactions were divided, with moderates endorsing the need for clear regulation and progressives such as Elizabeth Warren strongly criticizing.
5.3 Traditional financial sector
The large banks: Banks such as JPMorgan Chase, Goldman Sachs, and Citigroup that have already entered the cryptocurrency business welcome regulatory clarity and plan to expand digital asset services. Some conservative banks remain cautious but have also begun to explore.
Asset Management Companies: BlackRock, Fidelity, Invesco, and others have responded positively, announcing the expansion of their crypto product line and the launch of more ETFs, funds, and structured products.
Payment Company: Visa, Mastercard, and PayPal are accelerating the promotion of encrypted payment and stablecoin projects, believing that this is an important growth point for the payment industry in the future.
Traditional Exchanges: The New York Stock Exchange and Nasdaq are accelerating the development of digital asset trading platforms and do not want to fall behind crypto-native platforms in this field.
5.4 International Response
European Union: The European Union Commission stated that it will continue to implement the MiCA framework, believing that appropriate regulation is crucial to protecting consumers and financial stability, and will not lower standards due to US policies.
United Kingdom: The United Kingdom Treasury said it was studying the US experience, hoping to find a balance between innovation and regulation and maintain London’s position as a global financial center.
From Singapore: The Monetary Authority of Singapore (MAS) stated that it will continue its “gradual and balanced” regulatory approach, welcoming compliant companies but adhering to high standards. Singapore’s position as an Asian crypto center may face competition pressure from the US reopening.
The UAE: The Dubai Virtual Asset Regulatory Authority (VARA) said it would not change its strategy of actively attracting crypto businesses, emphasizing its unique advantages such as tax incentives and geographical location.
5.5 Academic and research communities
The Economist: Views are divided. Some people believe that amnesty and friendly regulation will unleash innovation potential and economic value; others warn that it may lead to speculative bubbles and financial instability.
Legal Scholars: Constitutional scholars discuss the scope and limitations of presidential pardons; financial law experts analyze the legal basis and potential loopholes of the new regulatory framework.
Technical experts: Computer scientists and cryptographers continue to study the technical challenges of blockchain scalability, privacy protection, and security, believing that clear regulation will promote technological development.
5.6 The public and the media
Cryptocurrency Community: Crypto enthusiasts on platforms such as Twitter, Reddit, and Discord generally celebrate it as a sign of the industry’s “coming of age” and mainstream acceptance.
Mainstream media: Reports are becoming more objective and in-depth, shifting from focusing primarily on price fluctuations and negative news to analyzing technology, regulation, and long-term impacts.
Skeptics and Critics: Some economists, financial experts, and consumer advocates continue to be skeptical of cryptocurrencies, warning of their speculative nature, environmental impact, and latent risks.
6. Future Outlook and Scenario Analysis
6.1 Optimistic scenario (probability 40-44%)
Features:
- The regulatory framework has been successfully established, clear, fair, and enforceable
- The encryption industry is maturing, fraud and speculation are decreasing, and practical applications are increasing
- Institutional investment continues to grow, and market depth and stability are improving
- Technological innovation accelerates, breakthroughs in DeFi, NFT, Layer 2 and other fields
- US consolidates global crypto hub position
Market performance:
- Bitcoin Price Hits $14- $200,000 in 2-2 Years
- Total Crypto Market Cap Exceeds $4 trillion
- Volatility is gradually decreasing, and the market is becoming more mature
Economic impact:
- Create hundreds of thousands of high-paying jobs
- Contributing hundreds of billions of dollars to the US economy
- The US dollar maintains its global dominance through stablecoins
6.2 Neutral scenario (probability 40-44%)
Features:
- The regulatory framework has been partially successful, but there are still gray areas and inconsistent enforcement
- The industry continues to grow, but with cyclical fluctuations and adjustments
- Institutional participation is increasing but cautious, and the allocation ratio is limited
- Technological progress but no revolutionary breakthrough
- US intensifies competition with other financial centres
Market performance:
- Bitcoin Price Slowly Rises in Volatility, Hits $10- $120,000
- The market has experienced a boom-bust cycle, and the overall trend is upward
- Volatility remains high
Economic impact:
- The industry is stable but not the main driving force of the economy
- Employment and investment growth is moderate
- The impact on the traditional financial system is gradually emerging but not disruptive
6.3 Pessimistic scenario (probability 10-14%)
Features:
- Regulatory frameworks have failed or been abused, leading to renewed uncertainty
- Major fraud or technical failure events (such as stablecoin crashes, large exchange bankruptcies).
- Political backlash, new government reverses policy
- The technical bottleneck has not been broken through, and the application scenarios are limited
- Failure of international regulatory coordination, difficulties in cross-border business
Market performance:
- The speculative bubble burst and prices fell sharply
- Bitcoin could fall below $40,000
- Many counterfeit products zero, investors suffer significant losses
Economic impact:
- Corporate bankruptcy and layoffs
- Investor confidence has been damaged for a long time
- Marginalization of the encryption industry
7. Key points and recommendations
7.1 For investors
Opportunity:
- Improved regulatory environments reduce policy risks
- Institutional entry may drive long-term value growth
- More compliance products provide convenient investment channels
Risk Warning:
- Stay rational and avoid blind investment driven by FOMO
- Fully understand the investment target, distinguish between projects with actual value and pure speculative tokens
- Do a good job in risk management and do not invest funds that cannot bear losses
- Consider tax implications and comply with tax filing requirements
Suggestion:
- Diversify investments and do not excessively concentrate on a single asset
- Long-term perspective, avoid frequent trading and leveraged speculation
- Continuous learning, tracking technological and regulatory developments
- Use a secure custody scheme to protect private keys and assets
7.2 For businesses and entrepreneurs
Opportunity:
- Reduced regulatory barriers to doing business in the US
- Easier access to financing and talent
- Greater market space and growth potential
Suggestion:
- Prioritize compliance, build strong KYC/AML systems
- Maintain a constructive dialogue with regulators
- Investment security audit and risk management
- Focus on practical value and avoid purely speculative projects
- Establish user education and protection mechanisms
7.3 For regulatory agencies
Challenge:
- Balancing innovation promotion and risk prevention
- Keeping up with rapidly changing technologies and business models
- Coordinate federal and state, domestic and international regulations
Suggestion:
- Adopt a principle-oriented rather than rule-based regulatory approach
- Establish regulatory sandboxes and pilot projects
- Strengthening international cooperation and standardization coordination
- Investment Regulatory Technology (RegTech) enhances supervision capabilities
- Maintain flexibility and adjust policies with technological development
8. Conclusion
Trump’s unconditional pardon of Binance founder CZ is a milestone event in the history of US cryptocurrency policy, reflecting a fundamental change in the US government’s attitude towards this emerging industry. There are complex political, economic, legal, and strategic considerations behind this decision, including competing for global cryptocurrency leadership, fulfilling campaign promises, correcting regulatory excesses, responding to industry lobbying, and ideological positions.
Short-term impact: The pardon news immediately triggered a strong and positive market reaction, with major cryptocurrency prices such as Bitcoin and Ethereum significantly rising, trading volume surging, and investor confidence greatly increased. This laid the emotional foundation for a possible bull market from the end of 2024 to 2026.
Medium- and long-term impact: More importantly, there are structural changes – regulatory clarity, restored business confidence, increased institutional investment, accelerated technological innovation, and the US becoming a global crypto center again. These factors may push the industry from speculative dominance to a mature development stage driven by applications.
Risks and Challenges: However, investors and industry participants should also remain vigilant against latent risks such as speculative bubbles, moral hazards, regulatory backlash, and market manipulation. Cryptocurrency has experienced many boom-bust cycles in history, and this round of policy benefits cannot guarantee the avoidance of future adjustments.
Long-term significance: From a broader historical perspective, the amnesty event may be seen as a key turning point for cryptocurrency to move from the edge to the mainstream and from experimentation to institutionalization. It marks the beginning of governments, traditional finance, and society taking seriously the potential and impact of this technology. The next few years will determine whether cryptocurrency becomes an important part of the financial system or repeats the mistakes of past technology bubbles.
Balanced perspective: Rational observers should neither be blindly optimistic “believers” nor blindly negative “skeptics”, but maintain open and critical thinking, pay attention to fundamental developments, and manage risks while enjoying innovation dividends. The story of cryptocurrency is far from over, and amnesty is just the beginning of a new chapter.
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