In this podcast episode, Wu Blockchain founder Colin Wu engages in a dialogue with Yan Meng, co-founder of Solv Protocol, to discuss the potential impact of Trump’s election win on the crypto industry. They explore how Trump might partially fulfill his campaign promises by easing crypto regulations, potentially creating new development opportunities for the industry through the Fit21 Act and a token “safe harbor.” The discussion delves into factors contributing to Trump’s changing stance on crypto, including fundraising needs and ideological influences from right-wing economic thought. Predictions for the industry’s future under a new administration, possible short-term market gains, and whether it could lead to a sustained bull run remain uncertain. They also discuss the effects of prediction markets on the industry, possible supply-side reforms under Trump, and strategies for the crypto sector to find growth opportunities within the regulatory environment in the coming years.

The audio transcription was generated by GPT, so there may be some errors. Please listen to the full podcast:

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Opening Introduction

Colin: Welcome to our podcast. As you know, today marks the release of the U.S. election results. Just a few hours before this recording, Trump secured 277 electoral votes and has effectively been elected as the next President of the United States. Today, we’re joined by Mr. Yan Meng, a well-known advocate for crypto in the Chinese-speaking community with unique insights into regulatory matters. We’ll be discussing the post-election impact on the crypto industry.

Yan: Thank you, Colin. My name is Yan Meng, co-founder of Solv Protocol and co-author of the ERC-3525 standard. I’m delighted to be here with Colin to discuss how the U.S. election might affect our industry.

Colin: You’re being humble, Mr. Meng. You’re also the co-founder and Vice President of CSDN, a well-known technical website in China, and have been a dedicated advocate and developer in the blockchain space for a long time.

Yan: Actually, my recent trip to the U.S. wasn’t to delve into the crypto scene but rather to accompany my daughter, who’s starting college there. For her first time studying in the U.S., I wanted to be with her to ensure everything was going smoothly. Her school is in Los Angeles, so we first flew to LA, then visited some of the country’s main tech hubs, including Silicon Valley and Seattle. I spent the entire month of September in the U.S., meeting both old and new friends across different communities — white Americans, Indians, Japanese Americans, and a large number of Chinese-Americans. Later, I wrote a short travel diary sharing some observations. It wasn’t exactly a surprise, but I’d long felt that Trump had a strong chance of winning, and today’s results seem to confirm that intuition.

Observing Trump’s Popularity and Economic Concerns Among Americans

Colin: So, among the people you encountered, was Trump’s support relatively low? Were there many who supported him?

Yan: Interestingly, most people I met supported Trump, which was quite surprising. We all know that the western states tend to be “deep blue,” traditionally backing Democratic candidates. Yet, a large number of people I encountered in these western states openly expressed their support for Trump.

Colin: I had a similar experience with a CoinDesk board member I once met — a highly educated American woman who spoke multiple languages. She was conflicted: on one hand, she thought Trump’s presidency might benefit the crypto industry; on the other, her political beliefs made her lean towards supporting Harris. Ultimately, she decided that for the greater good, the Democratic Party needed to win, despite any potential gains for crypto under Trump. It was a fascinating experience.

In the lead-up to the election, some polls and other sources indicated Harris would win, but on prediction markets, Trump held a substantial lead, with his real-time figures consistently reflecting this edge. I’m curious about your thoughts on that.

Yan: This time, our prediction markets definitely “made headlines.” They displayed a level of precision and responsiveness that starkly contrasted with traditional polling methods. I believe that, from now on, similar prediction markets and the mechanisms our industry has developed will increasingly gain attention for significant events like elections. The market’s response to Trump’s policies, if he assumes office, could actually be favorable for our industry. I’d observed these market indicators for quite some time before today’s results.

However, my belief in Trump’s high probability of winning mainly stemmed from personal experience. Inflation, in my view, was the current administration’s major point of failure and likely the key reason for their rejection by the public. When I spoke to friends in the U.S., they were perplexed by the indecisiveness of some voters. If it were up to me, inflation alone would justify a vote against the government — no need to consider other factors. Many Americans, especially those who don’t enjoy high incomes or comfortable lifestyles, would feel the pinch of inflation acutely, and that frustration is bound to influence voting decisions. Inflation is, in my opinion, a “death sentence” for the current government’s popularity.

Other issues certainly factor into voters’ choices — crime, homelessness, diversity, and equity policies, for example. But inflation, in my view, was likely the decisive factor in this election.

Wu: So, you believe that Trump’s victory mainly reflects the nation’s discontent with domestic economic and governance issues? Compared to these factors, foreign policy or military matters likely have little sway over voters’ decisions, and ideological influences might be similarly minor, especially since red and blue states traditionally support their respective parties. The real battle lies in swing states.

Yan: Indeed, as the saying goes, “There’s no first place in literature, no second in military.” Ideological and foreign policy debates are subjective and open to interpretation. History will be the judge of who’s right and who’s wrong. But with inflation, there’s no room for debate. Colin, have you been to the U.S. recently? Hotel prices have nearly doubled since four years ago, food costs are up 30–60%, and rental cars, alcohol, and gas prices have increased by at least 30%. This level of inflation signifies a failure in economic governance. In my view, high inflation alone would warrant rejecting the current administration.

Potential Shifts in Federal Reserve Policy Under Trump’s Leadership

Colin: Given this perspective, does Trump’s election imply potential shifts in the Fed’s interest rate policy or its broader monetary path? Or would the Fed remain largely independent?

Yan: Trump has publicly stated that he believes rates should not only stop increasing but actually be cut further. Naturally, this raises concerns in macroeconomic circles about whether his administration might reignite inflation. However, Trump also proposed a solution of sorts by suggesting that the U.S. should reinitiate domestic oil and gas production to curb energy prices and overall inflation. The feasibility of offsetting the impact of rate cuts with lower energy prices remains to be seen, but at least he has a plan — what could be termed supply-side reform.

Colin: Another possibility is that, if Trump initiates a trade war with China or other countries, inflation could be affected by limitations on the import of cheap goods.

Yan: Yes, I encountered several compatriots in the U.S. who were already preparing for a trade war. Trump’s tariff policies target not only China but also Europe. The only exception remains the North American Free Trade Zone — Canada and Mexico — where tax levels will remain minimal or even nonexistent due to the agreement in place. So now, many Chinese companies are proactively moving their factories to Mexico, aligning with Trump’s aim of bringing manufacturing back to North America. This may not be 100% effective, but it has a certain logic to it. In contrast, when I listened to Harris, I felt she lacked a coherent policy vision, which could explain her eventual defeat.

Colin: Yes, Harris initially seemed to have an advantage in the debates with Trump, but her performance declined over time, and she even declined some key interview opportunities, disappointing some of her supporters, which likely contributed to her loss.

Trump’s Support for Crypto: Fundraising and Political Strategy

Colin: Now let’s address what our audience is most curious about — Trump’s support for crypto. Although this is an important topic for the crypto community, it doesn’t seem to have significantly influenced the election outcome. From my understanding, Trump’s primary reason for supporting crypto is fundraising. After all, his key voter base has no direct connection to crypto. However, through the crypto sector — NFTs, token issuance, or accepting donations — he managed to raise substantial funds, especially given the considerable financial gap between him and the Democrats. Do you agree with this interpretation? Why do you think Trump suddenly shifted to supporting crypto?

Yan: Yes, fundraising is indeed a major factor. Just weeks before the election, he launched an ICO project, which was highly indicative. Typically, a cautious politician would avoid such a move, but Trump is anything but typical. His approach is unique — his “strength,” so to speak.

However, I believe other factors might have contributed to Trump’s change in stance on crypto. Not only does fundraising play a role, but Trump may have genuinely shifted his perspective on crypto over the past few years.

Multiple Factors Behind Trump’s Change in Stance on Crypto

Yan: Over the past four years, Trump’s relationship with the Republican establishment has evolved significantly. Initially, he clashed with the party’s mainstream factions, but by the 2022 midterm elections, the GOP had gradually become more “Trumpian.” Meanwhile, it’s plausible to consider that Trump himself may have become somewhat more aligned with traditional Republican ideology, absorbing some classic right-wing values.

Right-wing economic ideas have likely shaped his stance on crypto, as blockchain and digital currency are rooted in Austrian economic principles championed by thinkers like Hayek, representing the right side of the economic spectrum. Trump’s closer alignment with the Republican establishment likely reflects this mutual influence.

There’s also a broader geopolitical aspect to consider. The Democratic Party’s main financial supporters come from Wall Street, represented by figures like Soros and other Jewish financiers. This backing creates some friction within Jewish communities, for example, between Israel and the Wall Street financial establishment, and it has long fostered tension between Anglo-Saxon industrial capital and Jewish financial capital in the U.S. Trump stands on the side of traditional manufacturing capital, representing middle-class white Americans, while crypto poses a disruptive challenge to Wall Street. Crypto can be seen as a powerful “weapon” for Trump — a valuable political bargaining tool against Wall Street’s financial interests.

Discussion on Trump’s Likelihood to Fulfill Promises After the Election

Colin: Now, opinions are split. Some say pre-election promises rarely translate into post-election action, especially for small sectors like crypto. Others, including you, hope Trump will deliver on some of these promises. For example, he mentioned firing the SEC chair, halting the government’s sale of Bitcoin, and even creating a strategic Bitcoin reserve. However, some have noted that he technically can’t fire the SEC chair directly. From your perspective, what actions might Trump realistically take?

Yan: I believe Trump will partially fulfill his promises. During his first term, he was among the most committed presidents to executing his campaign pledges. This was partly due to his unique approach to politics and his desire to set himself apart from traditional politicians. For example, although he couldn’t repeal “Obamacare,” he made a serious attempt to do so, only to be blocked by Congress. Based on his track record, he did follow through on many promises.

This time, however, the context is different. Trump has become a more traditional politician, reconciling with the Republican establishment. He’s learned some of the “game” of political compromise, but he’s still very shrewd. Last time, he emphasized his ability to fulfill promises as a foundation for re-election, but now, after four years of legal battles, he’s likely to make policy choices more selectively.

As for concrete actions, I think Trump will prioritize pushing the Fit21 Act. This bill has already passed the House, and with Trump holding a solid foundation in both the House and Senate, he’ll probably move forward with it. Passing the Fit21 Act could have a far greater impact on crypto than replacing the SEC chair.

It’s essential to understand that even if a new chair were appointed, the SEC would still be bound by the law. Only by amending legislation can substantial regulatory change occur.

Possible SEC Chair Replacement: Impact on Regulation

Yan: Regarding the SEC chair, while the U.S. President cannot directly remove the SEC chair, a resignation or vacancy would allow Trump to nominate a new candidate, subject to Congressional approval. Given a Republican-controlled White House and Congress, there are numerous means to prompt the chair to step down. So, while Trump’s call for the chair to “step down” isn’t entirely empty rhetoric, his potential actions would mainly serve as symbolic gestures to appease both the crypto community and Wall Street.

If Trump were to combine these efforts, it would significantly impact our industry. There’s also speculation that he may appoint the female SEC commissioner as the next chair, although I think that’s less likely. I doubt he’d make that choice just to cater to the crypto community. We’ll have to wait and see.

So, in my view, these “two and a half” actions — pushing forward the Fit21 Act, changing the SEC chair, and potentially appointing the female commissioner — are the primary steps he’s likely to take.

Discussion on ICO as a Funding Model: Is a Revival on the Horizon?

Yan: The concept of ICOs actually dates back to 2014, with Mastercoin as the first ICO project. From then until around 2019, it could be considered the “ICO era.” One major reason ICOs failed to gain enduring success was the EOS project. Personally, I believe EOS did a disservice to the industry. I have no qualms saying this: EOS’s failure had a profoundly negative impact on the space. This failure led to ICOs being largely replaced by IEOs (Initial Exchange Offerings), which continues to this day. As Colin mentioned, the IEO model is now facing significant challenges as well.

Frankly, ICOs are the most suitable funding model for the blockchain, crypto asset, and digital currency industries. The IEO is essentially a distortion of the ICO model. Having researched token economics for many years, I’ve long hoped for an ICO revival. Although early ICOs faced many issues, almost inevitably leading to failure, this doesn’t mean the concept itself is unworkable. At the very least, it’s worth exploring solutions to these challenges in different ways. That’s why I especially hope ICOs can make a comeback in some form.

Trump recently launched an ICO himself, and it was successful. I wonder if this could mark an opportunity to revive the ICO model. For projects that are genuinely committed to innovation, ICOs remain the best funding model, as they truly embody the spirit of crypto and open finance. Unfortunately, past failures tarnished the model, giving way to IEOs and other “O” offerings that lack the same energy. So, beyond the “two and a half” moves mentioned previously, I have a somewhat far-fetched hope that Trump might drive the ICO model back on track through policy support. If that happens, the impact on our industry would be profound.

However, as President, Trump’s most substantial influence on this sector would likely come from legislative support. It’s unlikely that he would initiate an ICO or similar activities for his family while in office. I believe the most promising path for our industry will come from legislative changes he might drive forward.

Colin: Understood, and I think your narrative is very clear. It would indeed be contradictory for Trump to support ICOs pre-election and then oppose them afterward. Of course, the SEC chair is likely to be replaced, though whether “Crypto Mom” will step in, as many in the crypto community hope, remains uncertain.

The Fit21 Act’s Potential Global Regulatory Impact

Colin: Speaking of the Fit21 Act, its core seems to propose solutions to determine when crypto tokens should be classified as securities and when they should be viewed as commodities, based on decentralization criteria. My understanding is that projects with a sufficient level of decentralization could receive a temporary exemption period. Do you see this act as significant? And does it have a realistic chance of being implemented? If it does, could it set a clearer standard for the entire industry?

Yan: Absolutely, this act is crucial. When we look at the Fit21 Act alongside the token safe harbor proposal, they provide a foundational regulatory framework. To summarize, the Fit21 Act’s key principle is to establish when a token should be classified as a commodity under CFTC regulation or as a security regulated by the SEC. Specifically, if no single entity controls over 20% of a token, including any hidden alliances, it could qualify as a commodity and benefit from the relatively more relaxed regulatory environment of the CFTC. This setup would allow greater flexibility for derivative operations in the commodities space. If a token’s control concentration exceeds 20%, it would be considered a security and be subject to stricter regulations under securities law.

Most blockchain projects start with control concentrations well above 20%, meaning that without further provisions, they’d largely be classified as securities. This is where the token safe harbor proposal becomes essential. Drafted and amended twice by “Crypto Mom” herself, its core tenet is that even if a project is classified as a security, it can still qualify for a multi-year “safe harbor” if it commits to future decentralization. This period allows projects to operate under a temporary exemption from stringent securities laws while working towards decentralization. After this time, if the project can demonstrate that it has achieved decentralization, it can “exit” the safe harbor without the risk of facing prior legal consequences. If decentralization is not achieved, however, it could face penalties, including potentially being forced to provide refunds.

The global implications of these two bills, if passed, would be significant. Although they wouldn’t directly regulate projects based in other countries like China, Singapore, or Japan, many international projects would likely adopt the standards set by these laws, knowing that exchanges would favor tokens meeting these criteria. This could lead to a global shift, with projects voluntarily aligning with these U.S. standards, creating a ripple effect across the crypto landscape.

Take, for example, the current situation with stablecoins in Australia. Although the country doesn’t yet have an official regulatory framework for stablecoins, some operators already conform to draft guidelines to avoid future legal issues. This shows that even without direct jurisdiction, U.S. legislation could strongly influence global crypto norms.

Colin: Understood. Still, I’m somewhat cautious about the prospects. During Trump’s last term, some tokens were registered with the SEC, but the overall result wasn’t ideal. Many projects ultimately chose to abandon token issuance due to the cumbersome process. If Trump’s administration can resolve this regulatory stranglehold, it would indeed be monumental. The first step would be to clear any legal uncertainties surrounding previous projects, thereby lifting the “Sword of Damocles” hanging over DeFi, NFTs, and token-issuing platforms. If projects can innovate and empower tokens without fearing legal repercussions, that alone would be a game-changer. The next step would be to create clear rules, making it easier for new users and participants to enter the market.

The Future of Crypto-Related Lawsuits Under New Legislation

Colin: Do you think Trump’s election would alleviate some of the current lawsuits affecting the crypto industry? Or would similar cases likely continue?

Yan: I expect some relief. As you mentioned, earlier tokens failed largely because they rigidly adhered to securities laws, treating tokens like traditional securities and ignoring their distinct characteristics. The process required for a token to register as a security is cumbersome, especially when the liquidity on designated STO exchanges is negligible. Thus, projects saw little benefit in opting for STO registration, given that they could achieve much higher liquidity on traditional exchanges.

In that climate, many projects attempting the STO route soon cooled off. However, the Fit21 Act and the token safe harbor proposal reflect a more nuanced approach, taking the unique nature of tokens into account and allowing for compliance within both DeFi and centralized exchange environments. I’m reasonably optimistic that these new legal frameworks will lead to fewer lawsuits. Of course, each case should be evaluated individually, but there’s hope that these new acts could mitigate overly stringent legal actions that may have previously stifled the industry.

Colin: That makes sense. We have to acknowledge, though, that Bitcoin and Ethereum ETFs have already been approved, marking a significant milestone for the industry. However, the path to approval involved some crucial court rulings, like Grayscale’s favorable judgment.

Yan: Precisely.

Support for Solana and Future Market Prospects

Colin: With Trump’s victory, we might see some positive momentum for Solana, as the U.S. seems particularly supportive of Solana in addition to fostering connections between Wall Street and the crypto sector. Do you think this election will bring further support for Solana’s growth?

Yan: I would agree. The recent approval of Bitcoin and Ethereum ETFs was cause for celebration, and some even joked that we had “friends on the inside” helping out. But our industry needs more than isolated asset recognition. What we truly need is a regulatory framework — what I call a “positive regulatory framework.” At the moment, only the U.S. has the capability to provide this structure for the crypto industry.

Implementing such a framework will require a collaborative effort between the government, the market, and industry participants. Trump alone cannot realize this, but any effort he makes in that direction will be meaningful for the industry. Such a framework’s impact far outweighs any individual asset’s performance. Our industry isn’t just about trading assets like Bitcoin and Ethereum; it’s about supporting groundbreaking innovations in blockchain technology. We need a comprehensive industry ecosystem for that vision to thrive.

Solana, in particular, has symbolic importance within the industry. Should Solana’s token secure ETF approval, it would repeat the precedent set by Bitcoin and Ethereum. But while Bitcoin’s ETF had a significant impact, Ethereum’s influence was relatively muted, and Solana’s ETF approval might not bring about a paradigm shift. Still, Solana stands out as a hub of innovation. If the Trump administration interacts with the Solana community, supporting its development through legislation or executive measures, it could further the broader goal of establishing a positive regulatory framework — more meaningful than simply greenlighting additional ETFs.

Price Outlook for Bitcoin and Ethereum After Trump’s Election

Colin: One final question that’s on everyone’s mind: based on your experiences and understanding of the market, what price trends do you anticipate for Bitcoin and Ethereum following Trump’s election? Which sectors should people keep an eye on?

Yan: The older I get, the less I like to make specific predictions. There are two main reasons: predicting is difficult, and precise forecasts aren’t essential. However, I understand people enjoy hearing forecasts, so I’ll share my thoughts, though they aren’t financial advice and lack a proven track record.

Forecasting is challenging because accuracy is elusive, as countless experts and influencers have learned the hard way. However, a Bayesian approach — one that doesn’t attempt to predict specifics but instead models scenarios — can be more useful. In this case, you outline possible outcomes and monitor the market for signals, adjusting probabilities as events unfold. This flexibility beats hard predictions.

So, based on this approach, I foresee three potential scenarios for the industry:

Best-case scenario: Trump fully follows through on his promises, facilitating industry growth, with actions like reviving ICOs and implementing the Fit21 and token safe harbor acts. In this case, we might see a strong initial surge, followed by a more stable long-term bull market, akin to the internet’s rise post-2004. This scenario is ideal, though I see it as the least likely.

Worst-case scenario: A “wild bull” run ensues, overshooting market confidence and leading to an eventual crash, possibly inviting more regulatory scrutiny, as seen with the 2022 collapses of Three Arrows Capital and FTX. This scenario could spiral into a cycle of booms and busts, undermining long-term industry growth.

Most probable scenario: Trump partially fulfills his promises, leading to a solid market uptrend that doesn’t turn into a wild bull run. This scenario entails cyclical fluctuations but moves the industry in a healthy, gradual growth direction. I estimate a probability distribution of 20%, 30%, and 50% for each scenario, respectively, and will monitor signals to adjust my approach accordingly.

Although some may find the “wild bull” scenario the least desirable, market cycles can be managed by adjusting strategies. In 2021, my primary error was anticipating sustainable growth too soon, failing to exit at the optimal moments during major downturns. This time, I’ll leverage scenario modeling to refine my strategy and avoid repeating past mistakes.

Colin: That’s great insight. Thanks so much, Mr. Meng. I wish your project every success, and to our listeners, please make sure to follow Mr. Meng on Twitter and stay updated on his work. Thank you all!

Yan: Thank you, Colin. Goodbye, everyone!

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