The Trump Effect: A New Era for EB-5 Investment, Innovation, and the SEC?

Mona Shah, Esq.
New York City

Rebecca S. Singh, Esq.
New York City

As Donald Trump once again ascends to the presidency and the tumult of the recent election cycle subsides, a pressing question emerges: What can the EB-5 industry expect from a second Trump presidency?

Strong anti-immigration rhetoric shaped Trump’s campaign, and his first term challenged both immigrants and the immigration industry.

However, his pro-business approach, recent economic shifts, and promise to shake up the regulatory landscape—especially concerning the Securities and Exchange Commission (SEC)—could create fertile ground for investment and innovation.

A Mixed Legacy: Challenges from the Past

During his former tenure, Trump’s administration implemented several policies that affected the EB-5 program.

One of the most significant actions occurred when he ceased recognizing Hong Kong as a distinct, autonomous region through his July 14, 2020, executive order.

This change forced many Hong Kong-born investors into the Chinese Mainland’s lengthy visa waiting lines, causing a notable decline in EB-5 applications from that region.

The impact spread widely, as Hong Kong has historically provided major investment for the program.

Additionally, Trump’s policies regarding immigration adjudications delayed EB-5 petition processing.

The removal of deference in immigration adjudications meant that officials scrutinized many petitions more intensely, prolonging approval times and creating uncertainty for investors who had committed their capital to EB-5 ventures. The EB-5 Reform and Integrity Act of 2022 (RIA) rectified this issue.

Iran, however, lost its E-2 Treaty Trader status and faced particularly long delays at consulates, further complicating the investment landscape.

Moreover, the controversial travel ban targeting predominantly Muslim countries created an atmosphere of fear and uncertainty for many potential investors.

This policy not only affected individuals from those nations but also sent a chilling message to foreign investors contemplating US residency through investment.

The confluence of these factors may have deterred some high-net-worth individuals from pursuing opportunities within the EB-5 program.

The Promise of Smart, Merit-Based Immigration

Despite these challenges, Trump’s vision for a merit-based immigration system could appeal to investors seeking a more streamlined pathway to residency.

His proposed points system emphasizes skills, economic contributions, and investment potential, aligning well with the interests of high-net-worth individuals looking to invest in the US economy.

As Trump will likely focus on addressing illegal immigration, there exists potential for reforms that could attract investors eager for a more efficient application process.

The possibility of merit-based immigration aligns with global trends, where countries increasingly seek to attract skilled immigrants who can contribute to their economies.

This shift could enhance the attractiveness of the US as a destination for investment immigration, particularly for those looking to leverage the EB-5 program to secure permanent residency.

A Boon for Entrepreneurship and Investment: Deregulation and Tax Cuts

Trump’s return to the presidency stands poised to rejuvenate the entrepreneurial landscape in the United States.

His administration’s commitment to lowering corporate taxes and reducing regulatory burdens could create a more favorable environment for business growth.

Lowering corporate taxes benefits existing businesses and incentivizes foreign investors to establish new ventures in the US, providing a dual advantage for those considering the EB-5 program.

Historically, Trump’s administration pushed through significant tax reforms that resulted in a multitrillion-dollar tax cut, primarily benefiting corporations and high-income earners.

Many analysts believe his administration could revive similar strategies in his second term, further enhancing the US as an attractive destination for foreign investment.

As potential investors consider their options, the prospect of a robust, pro-business environment under Trump may sway their decisions toward pursuing residency through investment.

Trump’s emphasis on deregulation could streamline processes for foreign investors looking to establish businesses in the US.

By reducing red tape and simplifying the regulatory landscape, with the Fraud Detection and National Security (FDNS) protecting the integrity of the immigration system, the Trump administration could facilitate quicker project approvals and operational setups, making it easier for foreign entrepreneurs to thrive in the US market.

Stock Market Surge: The Investor’s Reaction

The market’s response to Trump’s election highlights the optimism surrounding his policies.

Following the announcement of his return to the presidency, stocks soared to all-time highs. US yields jumped, and the dollar experienced its best day since 2022, sending a clear message: Investors eagerly anticipate the pro-business policies that characterized Trump’s previous administration.

“We all celebrate with Wall Street as we finally have someone in the office who values entrepreneurship. President Trump understands businessmen and entrepreneurs — we will surely see in his presidency the will to encourage legal immigration, particularly of those with millions in their pockets, ready to invest and create new jobs rather than the immigrants crossing the border with empty pockets. Logically, it’s better to welcome newcomers who have undergone thorough vetting and whose backgrounds we know.”

~ Sam Bayat, Founder of Bayat’s Legal Services, based in Dubai

The correlation between political stability and market performance remains crucial.

Investors often seek to minimize risk and maximize returns, and a Trump presidency could restore confidence in the markets. The prospect of renewed tax cuts and deregulation could increase capital flows into the US.

Trump vs. the SEC

Since taking the helm at the SEC, Gary Gensler has aggressively pursued regulatory actions against a myriad of businesses, especially in the cryptocurrency sector, which has chilled innovation.

The SEC has filed numerous lawsuits against crypto projects and EB-5 projects, alleging securities law violations, creating an environment of uncertainty for entrepreneurs and investors alike.

Many companies have left the US market, citing increasing regulatory burdens as a primary reason for their departures.

Donald Trump promised to “fire Gary Gensler” on day one of his administration, to the raucous approval of a packed arena at this year’s Bitcoin Conference. This move could signal a significant shift in the SEC’s approach to regulation.

By advocating for lighter oversight, particularly in the burgeoning fields of cryptocurrency and investment migration, Trump aims to create an environment conducive to growth and innovation.

Crypto: A New Frontier for Investors

The cryptocurrency landscape represents another area where Trump’s policies may influence foreign investment.

Following his election win, Bitcoin experienced a significant surge in value, reflecting growing interest in digital assets.

Trump’s proactive stance on regulating cryptocurrency is evident from his participation in the Bitcoin conference in Nashville, where he recognized its importance within the investment sphere.

Trump’s endorsement of Senator Cynthia Lummis, a leading advocate for cryptocurrency, further reinforces his commitment to fostering a favorable environment for crypto investments.

The proposal to establish a federal Bitcoin reserve could attract foreign investors looking to diversify their portfolios and capitalize on the booming cryptocurrency market.

The regulatory landscape evolves as the SEC moves towards approving Bitcoin exchange-traded funds (ETFs). This evolution presents new opportunities for investment that align with Trump’s policies, creating a more inviting climate for foreign investors interested in the US market.

Furthermore, the rise of cryptocurrencies could transform traditional investment paradigms, allowing foreign investors to engage with US markets in innovative ways.

The integration of cryptocurrencies into mainstream finance could increase participation from global investors.

Global Alliances: A Magnet for Investment

Trump’s strong relationships with world leaders, including Saudi Crown Prince Mohammed bin Salman and Turkey’s President Recep Tayyip Erdogan, could also play a crucial role in driving investment into the US.

These ties may facilitate increased foreign direct investment as global investors look to the US for stability and growth opportunities.

For instance, Saudi Arabia actively seeks to diversify its economy away from oil dependence, and US investments could play a significant role in that strategy.

Similarly, Turkey’s strategic position as a bridge between Europe and Asia makes it a valuable partner for US businesses looking to expand their global footprint.