(Bloomberg) — With Donald Trump headed back to the White House after an election in which candidates backed by the crypto industry overwhelmingly won seats in Congress, the stage appears set for a rush of digital-asset mergers.
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A half-dozen mergers advisers and venture capitalists interviewed by Bloomberg News after Trump’s emphatic victory said they expect a sharp pickup in activity next year. They cited expectations that Trump will follow through on his pledge to remove US Securities and Exchange Commission Chair Gary Gensler, who’s led a years-long crackdown on the industry, as well as for more favorable legislation.
A post-election spike in cryptocurrency prices provided a first indication that the record $135 million the industry funneled into this year’s US political races up and down the ballot might pay off. Now, many CEOs emboldened by that reaction are likely to rely on takeovers to speed up expansion plans, according to investment bankers focused on digital assets.
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“With Trump in the White House, we expect 2025 to be a much stronger year for dealmaking,” said 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 centers, from Singapore to Dubai, have already established crypto regulatory regimes, and the European Union’s Markets in Cryptoassets 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 favorable than the last four,” he said.
It’s far from certain that eased regulations will unleash an M&A 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.