The prospect of Donald Trump re-entering the White House has sent shockwaves through the cryptocurrency world, igniting both excitement and concern. In the wake of Trump’s November US election victory, Bitcoin and other digital assets surged to unprecedented highs, with Bitcoin itself passing the $100,000 mark. Yet, alongside this meteoric rise, concerns about fraud risks in the crypto landscape loom large.
Once a staunch critic of Bitcoin, calling it a “scam” during his first term, Trump adopted a markedly pro-crypto stance during his 2024 campaign. Highlights included delivering a keynote speech at the Bitcoin Conference in Nashville, and proposing bold initiatives like a national Bitcoin reserve, increased crypto mining, and sweeping deregulation of the sector. These moves have buoyed investor confidence, but they also raise pressing questions about the potential for fraud and market abuse in a less regulated environment.
Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs, attributes crypto’s growth under Trump to “themes of deregulation, potential tax cuts, and overall support for decentralised currencies and risk assets.” However, deregulation may create a double-edged sword. While it could spur innovation, it might also provide fraudsters with new avenues to exploit.
Robin Bradley, CEO of bigspark, warns that a deregulated market could exacerbate vulnerabilities. “If crypto adoption is given a free pass, with significant deregulation introduced, there could be consequences, with fraudsters quick to exploit the gaps,” he says.
Despite not taking office until January, some of Trump’s ideas are already seeing fruition. The proposed Boosting Innovation, Technology and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act, spearheaded by Republican senator Cynthia Lummis, aims to acquire over a million Bitcoin for a national reserve. And the planned Department of Government Efficiency (DOGE), led by Elon Musk, also signals a clear endorsement of the crypto sector – seemingly named after Dogecoin, a form of crypto regularly endorsed by Musk.
But such large-scale initiatives, as well as the increased hype around cryptocurrencies, could attract those eager to exploit potential regulatory loopholes. “Any national initiative like a Bitcoin reserve could create an influx of scammers looking to profit, particularly if they sense there is also decreased regulation,” Robin explains. “While stabilising Bitcoin’s value might be a goal here, it may also inadvertently facilitate money laundering and fraud.”
The schemes that could proliferate include investment fraud, impersonation scams, and blackmail. “With investment fraud, scammers often promote ‘get-rich-quick’ schemes, promising high returns with little or no risk,” Robin explains. “And they may impersonate celebrities, government departments, businesses, or financial experts – possibly even Trump or Musk themselves in this case – to lure victims into transferring funds to fraudulent and untraceable accounts. Or the victim may be threatened with the release of sensitive information unless they pay the scammers with crypto, taking advantage of its anonymity. If the sector’s popularity rises, expect these scams to become more sophisticated.”
While Trump’s policies may help legitimise cryptocurrency as an asset class, fostering innovation and mainstream adoption, the challenge lies in striking a balance. A regulatory framework that supports growth without compromising investor protection is essential. “Without proper regulation, fraud will always be one step ahead of innovation,” Robin warns. “An environment with unchecked deregulation could also undermine trust in the sector over the long term, deterring potential investors and slowing its broader acceptance.”
Ultimately, Trump’s pro-crypto stance may catalyse unprecedented growth in the industry, but without robust safeguards, it could also leave the door wide open for exploitation. Finding the right balance will be critical to ensuring the sector’s long-term success while minimising the risks of fraudulent behaviour.
