Trump's Second Term Creates Rare Crypto Policy Window

The United States is entering what may be the most favorable policy environment for cryptocurrency since the industry emerged. According to a new outlook from TD Cowen's Washington Research Group, President Donald Trump's second term has created a rare convergence of aligned regulators, political will, and market momentum. This alignment is pulling digital assets closer to the center of the U.S. financial system.

The report characterizes 2026 as a short window in which crypto firms could secure lasting policy gains. However, these gains are not guaranteed to endure. The firm repeatedly warned that many initiatives could be revised or reversed by a future Democratic administration if they are not finalized, implemented, and legally defended before the next presidential transition in 2029. The strategy emphasizes speed and durability over ambition, focusing on targeted adjustments rather than sweeping legislation.

The report describes the broader environment as a 'golden age of deregulation' for financial services, housing, and crypto. President Trump has moved faster than prior presidents to assert control over financial regulators, installing leadership teams explicitly committed to lighter, more tailored oversight. This includes a more permissive stance toward digital assets and tokenization.

The White House, Treasury Department, and market regulators are described as unusually aligned on the view that regulation should accommodate innovation rather than constrain it. This alignment underpins many of the crypto initiatives expected to unfold in 2026. However, TD Cowen cautions that timing is critical. Rules must be finalized this year to withstand court challenges and become harder to unwind if political control shifts after the 2028 election.

At the Securities and Exchange Commission (SEC), Chair Paul Atkins is preparing to use exemptive relief to expand crypto-related activity within U.S. securities markets. The SEC is expected to issue so-called 'innovation exemptions' as early as the first quarter of 2026. These exemptions would allow brokerages and crypto platforms to offer tokenized stocks and bonds that settle instantly and operate outside certain elements of the National Market System.

Early tokenized equity trading is expected to focus on retail investors, benefiting online brokerages and crypto-native exchanges. The SEC is likely to loosen best-price obligations for these products while leaving the core Order Protection Rule intact for traditional markets. The firm assigns this initiative a moderate sustainability rating, suggesting a future Democratic SEC would layer on investor protections rather than dismantle tokenization altogether.

The SEC is also expected to clarify how staking-as-a-service programs are treated under securities law. Fixed-return staking products would likely be classified as securities, while variable, profit-sharing arrangements could be treated as fee-for-service activities. TD Cowen sees growing bipartisan agreement that staking requires a clearer framework, even if the details remain contested.

On the banking side, regulators have begun opening the perimeter to crypto firms while maintaining formal limits on deposit-taking and lending. In December 2025, the Office of the Comptroller of the Currency (OCC) granted national trust charters to several crypto firms, including Circle, Ripple, and Paxos. These charters allow them to hold stablecoin reserves under a single federal regime instead of navigating state-by-state oversight. TD Cowen argues these charters deepen the integration between traditional banking and digital assets and could eventually pave the way for banks to issue and manage stablecoins themselves.

The Federal Reserve is also moving to accommodate crypto-linked payments activity. The report highlights a proposal for 'Payment Master Accounts' that would grant eligible crypto and payments firms limited, non-interest-bearing access to the Fed's payment rails. These accounts would process transactions without providing overdrafts or discount-window access. TD Cowen sees the move as durable once implemented, despite concerns from banks about increased competition.

On Capitol Hill, the centerpiece of the crypto agenda is a proposed market-structure bill known as the CLARITY Act. TD Cowen remains skeptical that Congress will deliver a second major legislative win after passing stablecoin legislation, but it says a narrow compromise remains possible on investor protection, custody standards, and anti-money laundering rules. The largest obstacle is Democratic insistence on ethics provisions barring senior government officials and their families from owning crypto exchanges, issuing tokens, or operating stablecoins. This language is aimed at President Trump's ties to World Liberty Financial. TD Cowen warns there is no easy compromise on this issue, raising the risk that market-structure legislation slips into 2027 or collapses altogether.

Beyond trading and regulation, the report points to growing interest in tokenizing real-world records, including property deeds, mortgage documentation, and medical files. These projects are framed as efficiency upgrades rather than deregulatory flashpoints, making them more politically durable.