After passing the threshold of 270 electoral votes needed to win, former President Donald Trump is expected to return to the White House to take up his post for the second time, after beating Democratic candidate Vice President Kamala Harris. After a nail-biting
few months, Trump was elected with many of his voters citing inflation as the reason for the Republican vote, despite inflation having soared due to the Covid-19 aftermath and the Ukraine war, but having fallen since during the Biden presidency.
Alongside promises that are not under his purview to make – for example, lowering interest rates – experts had warned ahead of the 2024 election that Trump’s vow to impose higher tax on imports could in fact increase prices. Further, the President-Elect
has proposed tax cuts that are similar to those implemented in 2017, in favour of the wealthy, and tariffs on imported foreign goods. And, as many wake up to the news of Trump’s win to a shocking 19.C (66.F) day in November – at least on the East Coast, US
citizens are reminded that the next President will be rolling back hundreds of environmental protections.
At AFP 2024, just weeks before this historic election, Finextra sat down with Monex CEO John Doyle, a company whose website
states that “the possibility of a second Trump administration, with all its promised tariffs and spending, has boosted USD in a major way over the last few sessions as such policies do risk a return of high inflation and, in turn, less room for the Fed
to ease monetary policy,” the website added.
Nigel Green, CEO of deVere Group, also said that: “Wall Street is seeing renewed optimism as Trump’s pro-business policies are expected to boost various industries. His proposed tax cuts, deregulation, and infrastructure investments have long been viewed
as favorable to corporations, driving a positive outlook for equity markets. Industrials, energy, financials, and tech stocks are likely to see the most immediate gains as investors anticipate growth-friendly policies. Industrials, in particular, could thrive
under a Trump presidency as his administration would likely push for massive infrastructure spending. Energy stocks, especially in oil and gas, are expected to rise due to Trump’s deregulatory stance, favoring fossil fuel production.”
He continued: “With the possibility of Trump at the helm, the dollar is poised for further gains. A stronger dollar reflects confidence in US economic growth prospects under Trump’s leadership, attracting foreign capital and boosting the purchasing power
of American consumers. Historically, Trump's protectionist rhetoric has sparked concerns over trade relations with key emerging market economies, including China and Mexico. This could lead to capital outflows from these regions as investors seek safe-haven
assets in developed markets like the US.
“While emerging markets may initially suffer from the uncertainty surrounding trade policies, they remain a crucial part of a diversified portfolio. Investors should be prepared to take advantage of discounted assets in these markets once the dust settles.
As ever, the key is diversification. As markets react to political outcomes, being well-positioned across a range of assets is crucial. We’ve long maintained that the intersection of politics and finance can create unique opportunities for investors, and this
election is no exception. No-one has a crystal ball but investors are preparing to position their portfolios for a Trump win.”
But what does this win mean for fintech and what learnings can the industry take from Trump’s previous presidential term?
Cryptocurrency has been a central part of the Trump campaign in 2024, after he started accepting donations in virtual currencies. His pledge
lauded that he has “reduced regulations and championed innovation in financial technology, while Democrats, like Biden and his official surrogate Elizabeth Warren, continue to believe only government has the answers to how our nation leads the world.” On
Election Day, bitcoin
surged to a record high of $75,389 as Trump took key swing states Georgia, North Carolina, and Pennsylvania.
Jesper Johansen, CEO and founder of Northstake, an Ethereum staking marketplace providing compliant and secure institutional staking and liquidity solutions, said: “Incoming President Trump has the power to save crypto in the US, where urgent change is needed.
First amongst the new administration’s priorities should be to define staking as an opportunity for US investors. The question still lingers: is staking a commodity or a security?
“Asset managers need to know how to safely incorporate staking into their ETH ETFs to satisfy Ether's total returns. Currently, $6 billion USD sitting in ETH ETFs is not being staked, marking significant missed economic opportunities. This may also be the
key reason that uptake of ETH ETFs has lagged behind that of BTC ETFs. ETH ETFs are not as competitive and are stifled by unclear and unsustainable regulation. Once these core issues have been solved, changes are needed within the SEC to ensure that crypto
is viewed as a vehicle of innovation, rather than something to be feared.”
Speaking to Finextra on Trump’s likely victory in the US Election, Zumo’s founder and CEO Nick Jones said: “Trump has been perceived as the significantly more crypto friendly candidate, and supporters will now hope for a more innovation friendly environment.
Part of that innovation is the enormous global opportunity for climate investment and climate impact we have seen catalysing in the US.
“We have already seen significant advancements in Europe relating to crypto and sustainability, such as mandatory sustainability disclosures for crypto-asset service providers under the Markets in Crypto-Assets (MiCA) regulation. And during the recent Climate
Week NYC, we felt energised by the enthusiasm from US providers and their movement towards adopting environmentally friendly practices. As Europe drives forward with its own digital asset specific sustainability requirements, we hope that the US too will continue
its momentum and positive impetus in sustainability and innovation.
“We believe in the transformative potential of blockchain and AI to build a better world and drive the energy transition, but we can't ignore the vast amounts of electricity these industries consume. Innovation in these sectors must not come at the cost
of the planet. We hope to see continued positive developments out of the US,” Jones continued.
Speaking of AI, we must remember the words of the incoming Vice President, J.D. Vance who in July 2024,
expressed his concern around the safety of AI. At the time, he mentioned that “AI poses a number of safety concerns and I fully admit that there are a number of issues I worry about as AI continues to develop. In particular, you could imagine a scenario
where AI makes these chatbots much more efficient, much more believable, allows predators to prey on children more easily online. That is a real concern and something that I think that we in this committee should be very concerned about. And I know that's
a bipartisan worry.
“On the flip side of it, I also worry that that legitimate concern is justifying some overregulation or some preemptive overregulation attempts that would frankly entrench the tech incumbents that we already have and make it actually harder for new entrants
to create the innovation that's going to sort of power the next generation of American growth and American job creation,” Vance added.
As the fintech sector has experienced across the world, regulation can be a help and a hindrance for innovation, but as Scott Dawson, CEO of DECTA, explains to Finextra, “a second Trump term means a change of leadership at major regulation and enforcement
bodies like the Federal Trade Commission (FTC), with an emphasis on getting rid of regulations. It’s likely that we’ll see the granting of new banking charters, and, with a general lack of effective regulation, it’s a certainty that low-quality players are
going to enter the market. This could mean increased competition, or it could mean a race to the bottom.
“It was a remarkable close and divisive campaign, but hopefully the country can unite and move forward. With the UK and US both having a change of government in 2024, it will be interesting to see if and how our countries align over the coming years, particularly
given the very different strategies towards key issues such as tax, trade and regulation. A lot has been made of the cryptocurrency opportunity as Trump takes office again. I don’t see it having a significant change in the long term. Much like we say a jump
in crypto in 2021, only to see it plummet again, we will see an initial boost again, but that landscape hasn’t developed intrinsically enough to change payments infrastructure.
“The way forward for fintech has been obvious all along. Companies need to assert control over their payment systems by working with resilient providers that can adjust to changing fees, regulations and technologies. The changes this decision will bring
aren’t going to be restricted to the US – other countries will either follow suit or be indirectly affected by changing US regulations. Companies in Europe should keep up with what is happening across the Atlantic, because the US market is so huge it will
have repercussions around the world,” Dawson said.
While it remains to be seen how Trump will fair during his comeback, many fear that both the incoming President and J.D. Vance’s unconfirmed association with The Heritage Foundation’s 922 page document dubbed
‘Project 2025’ will play a substantial role in how the US is governed for the next four years. One such suggestion the document makes is for the repeal of the Dodd-Frank Act titles that created the Financial Stability Oversight Council (FSOC). This federal
government organisation identifies risks, promotes market discipline and responds to emerging threats. Project 2025 defines the FSOC as a “super-regulator tasked with identifying so-called systemically important financial institutions and singling them out
for especially stringent regulation.”
Further to this, the Mandate for Leadership calls for the Orderly Liquidation Authority (OLA) to be repealed, which was instated with Dodd-Frank to allow financial companies to be liquidated if their failure poses a significant risk to the financial
stability of the US. Project 2025 believes this is “based on the faulty premise that large financial institutions cannot fail in a judicial bankruptcy proceeding without causing a financial crisis. It gives such companies access to subsidized funding and creates
incentives for management to overleverage and expand high-risk investments. Congress should repeal each of these provisions to guard against bailouts and too-big-to-fail problems.”