US Election Results: What Do They Mean for Fintech & Payments?

November 2024

Fintech & Payments

Lorien Carter

Senior Research Analyst

Donald Trump’s second term is set to begin in January 2025. In this blog, we dive into the cryptocurrency and regulatory reforms he has promised - and how these might impact key fintech and payments markets.

How Will the Digital Currency Markets Be Affected?

The election of a pro-crypto president has ignited strong optimism in the cryptocurrency market. In the week since Donald Trump has been announced as the election winner, Bitcoin’s price surged 80%; reaching an all-time high of over $88,000. Donald Trump’s vocal support of cryptocurrency, such as his vow to make the US the “crypto capital of the world” and proposing the creation of a national bitcoin reserve, have reinforced expectations of a more favourable regulatory environment for digital assets in the US.

Currently, the US cryptocurrency sector is experiencing a lack of clarity regarding the legal classification of cryptocurrencies. The SEC (Securities and Exchange Commission) has pursued lawsuits against several prominent cryptocurrency companies, including Ripple and Binance, based on the premise that a cryptocurrency is a security.

Trump has promised to demote the current chair of the SEC, Gary Gensler, which would clear the way for a more crypto-friendly appointee to advocate for clearer favourable regulations tailored to the crypto industry. While it is not yet clear if Trump has the power to do so, it signals his intent to reduce legal pressures on crypto firms, paving the way for industry growth.

In opposition to his positive view on cryptocurrencies, Trump’s presidency currently opposes CBDC (Central Bank Decentralised Currencies) implementation; potentially delaying ‘digital dollar’ development indefinitely. His support for the CBDC Anti-Surveillance State Act, which requires congressional approval for the Federal Reserve to issue a CBDC, suggests that he rejects CBDCs on the grounds of personal privacy infringements.

Reduced Regulatory Oversight

Trump’s stance on financial regulation is centred around reducing the reach of regulatory authorities; aiming to ease compliance burdens on financial institutions and fintechs.

One of Trump’s plans is to repeal the Biden Executive Order on Artificial Intelligence. Biden’s order established the AISI (AI Safety Institute) requiring companies to submit reports about how their AIs were being trained and the security measures being taken to reduce risk. Without this order, companies can innovate with lower operational costs, but they may be exposed to more risks such as data privacy issues and cybersecurity threats.

The Donald Trump presidency could lead to a more complex landscape for Open Banking in the US, driven by potential roll-back of regulatory provisions such as the Dodd-Frank Act. The Dodd-Frank Act tightly regulates the financial sector systems that were believed to have contributed to the 2008 financial crisis.

Section 1033 of this Act requires financial service providers to provide consumers and authorised third parties with access to their financial data, thus facilitating Open Banking. In his first term as President, Trump moved to roll back the Dodd-Frank Act; easing restrictions in the financial industry. If Trump continues to weaken the Dodd-Frank Act in his second term, this may delay Open Banking efforts; potentially complicating market entry for fintech firms focused on data-driven services.

Long-term Weakening of the Role of the Dollar in International Trade

Finally, the protectionist tariffs suggested by Trump may drive countries to diversify trade partnerships and reduce their reliance on the US. This could lead to an increased use of alternative currencies in international trade; weakening the dollar’s role as the dominant reserve currency.

This comes alongside efforts by the BRICS nations to establish an alternative to current cross-border systems, as well as individual efforts by countries such as China to popularise their own currencies. As such, there is the risk that deploying tariffs at scale will accelerate the move away from the dollar.

Uncertainty Will Delay Decision Making

Ultimately, the election of President Trump creates significant uncertainty around the future of the US economy broadly, as well as the way payments and fintechs operate. In the short to medium term, we believe this will likely restrict investment in the US market, while the dust settles. However, we believe the US market will remain highly lucrative, with any changes creating fresh opportunities for innovation.

Lorien is a Research Analyst in the Fintech and Payments team at Juniper Research, and specialises in analysing and forecasting emerging trends and innovations in financial markets. Her latest reports have covered topics including CBDCs & Stablecoins, eCommerce Payments, and Modern Card Issuing Platforms.