Trump’s Election Victory Could Signal A Flourishing Era For Digital Assets Like Bitcoin, & More

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1. Trump’s Election Victory Could Signal A Flourishing Era For Digital Assets Like Bitcoin

By: Frank Downing

Last week, Donald Trump became the first openly pro-crypto candidate to be elected President of the United States, joining 266 pro-crypto candidates in the House of Representatives and 18 pro-crypto candidates in the Senate.[1] Come January, the number of pro-crypto members on both sides of the aisle in Congress will surpass the number of anti-crypto members.

As the price of bitcoin has surged to a record high, the new Administration seems poised to bring much needed clarity to the regulation of digital assets in the United States. Among the possibilities are a more crypto-friendly U.S. Securities and Exchange Commission (SEC) and the end of Chair Gensler’s “regulation by enforcement,” a re-opening of the initial public offering (IPO) window for late-stage digital asset companies like Circle and Kraken, and the passage of long-awaited and much-needed digital assets legislation.

Senate passage of the Financial Innovation and Technology for the 21st Century Act (FIT21) and the Clarity for Payment Stablecoins Act of 2023—both approved already by the House of Representatives—may top the legislative agenda. Both Acts clarify the jurisdiction of the SEC and the Commodity Futures Trading Commission (CFTC), providing comprehensive regulatory frameworks for the exchange and custody of digital assets and stablecoins, respectively. We believe that repealing the Staff Accounting Bulletin 121 (SAB-121), which has prevented traditional institutions from the custody of digital assets, also is likely to be a legislative priority.

In our view, the incoming Trump Administration is likely to provide the digital asset industry with significant tailwinds and reignite digital assets innovation in the United States.

2. The Next Administration Could Transform The Business Of Defense

By: Tasha Keeney, CFA

The business of defense in the United States seems ripe for a disruptive shift. Traditional defense prime contractors (primes), for example, are not structured to deliver the low-cost, agile, AI-enabled drones now essential in modern warfare. While a movement toward cost-effective, tech-driven solutions is underway, wars in Ukraine and the Middle East have amplified and accelerated the sense of urgency behind affordable, adaptable defense weapons and strategies.

Focused on efficient spending, it’s possible the Trump Administration could increase this momentum. Informed by innovators like Elon Musk, the Department of Defense could accelerate the development, deployment, and adoption of new technologies. Just as SpaceX drove a paradigm shift in aerospace with fixed-price contracts and agile development, defense contracting could undergo meaningful transformation.

As a result, traditional innovative tech-focused companies could create significant headwinds for corporate defense giants. Companies like Shield AI, Anduril, and Kratos could be prime beneficiaries.

3. The Presidential Election Results Signal A Potential Revival In M&A, With Positive Implications For Innovation And Disruptors

By: Brett Winton

In the aftermath of the US presidential election, capital markets are bracing for sweeping changes. Among the most impactful could be loosening the grip of the Federal Trade Commission (FTC) on merger and acquisition (M&A) activity—a potential shift that could reverberate across all areas of innovation.

M&A activity has languished at historic lows in recent years, as shown below. Relative to the value of the US equity market, M&A volume has dropped to levels not seen since 1992.

Given the FTC’s wide-spread practice of quashing M&A during the last four years, the decline in activity is not surprising. In 2022, for example, the FTC sued Meta for attempting to buy a small VR fitness game developer.[2]

Who benefits more from a drought in M&A, large cap incumbents or disruptors? The answer is somewhat counterintuitive, especially within the innovation space.

Large-cap companies often are hurt marginally when they make acquisitions: many overpay and struggle with integration. Yet, even when their competitors overpay for innovative companies, large cap incumbents can be threatened more significantly because disruptive technologies can accelerate change and alter competitive dynamics.

The scenario is like the classic “prisoner's dilemma”: collectively, large-cap firms would benefit if none pursued acquisitions, allowing disruptors with weaker balance sheets and distribution difficulties to falter or fail. Yet, if large-cap companies do not collude—agree not to acquire—each will act in its own interest, often to the detriment of them all. In essence, the FTC's stringent policies have enforced a "no-snitching" rule, effectively curbing acquisitions and, in the process, favoring large cap incumbents over disruptors.

A potential resurgence in M&A activity could reshape the innovation landscape significantly. While higher levels of M&A might deprive the public equity market of some smaller cap assets, they also will enable price discovery and establish structural valuation floors for public innovative companies based on the strategic value of their intangible assets.

Moreover, the mere threat of M&A gives innovative companies greater financing flexibility. It signals to potential investors viable exit strategies and the potential for substantial returns, thereby encouraging investment and fueling further innovation.

Given the election outcome, a potential regime change at the FTC could catalyze a revival in M&A activity. With potentially profound implications for both large-cap incumbents and disruptive innovators, M&A could level the playing field and foster a more dynamic, innovation-driven market.

4. Will President Trump Transform Healthcare With A Market-Driven Approach To Innovation, Competition, And Prevention?

By: Nemo Marjanovic, PhD

The incoming Trump Administration may look to make some significant changes to healthcare. Our research suggests that a range of positive moves potentially could be made. In general, we believe the new administration could pivot healthcare toward competition and innovation. Instead of repealing the Affordable Care Act (ACA), Trump might improve it by making insurance options more flexible, expanding short-term health plans and enhancing price transparency to drive competition and lower premiums. Additionally, reforms might promote the sale of insurance across state lines, increasing consumer options and reducing costs. Not only would these shifts prioritize consumer choice, but they also should incentivize insurers to innovate with more cost-effective, personalized plans.

Modernizing the FDA to accelerate the approval of new therapies is another possibility. By reducing the number of regulatory hurdles, the FDA could create a more competitive pharmaceutical landscape, and accelerate approvals for gene editing, precision medicine, and AI diagnostics. We believe these changes would encourage faster access to life-saving treatments and align well with President-elect Trump's general goal to boost government efficiency.

The Administration also could support healthcare initiatives that leverage AI, genomics, and other digital tools to catalyze a shift from reactive “sickcare” to proactive, preventive healthcare. Emphasizing early detection and curative approaches while allowing Medicare to negotiate drug prices potentially could free up funds to invest in breakthrough therapies that treat disease at its roots, ultimately reducing long-term costs.

Finally, we believe drug pricing reforms—perhaps tying Medicare prices to international benchmarks, for example—could increase access to medicine. In our view, the combination of deregulation, competition, and predictive healthcare could transform US healthcare into a sustainable, patient-centric model, prioritizing health and longevity over chronic disease management.

Digital assets, often referred to as cryptocurrencies, such as Bitcoin and Ether are relatively new investments, which have unique and substantial risks and which may be more volatile than other types of investments. Digital assets operate without central authority or banks and are not backed by any government. Even indirectly, digital assets may experience very high volatility. Digital assets are not legal tender. Federal, state or foreign governments could restrict the use and exchange of digital assets. Digital asset exchanges could stop operating or permanently shut down due to fraud, technical glitches, hackers or malware.

ARK strongly encourages any investor considering an investment in any digital asset to consult with a financial professional before investing. All statements made regarding digital assets are strictly beliefs and points of view held by ARK and are not recommendations by ARK to buy, sell or hold any digital asset. Historical results are not indications of future results.

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[1] Stand with Crypto. 2024. “Crypto election updates.”

[2] U.S. Federal Trade Commission. 2022. “FTC Seeks to Block Virtual Reality Giant Meta’s Acquisition of Popular App Creator Within.”