Caroline Bishop
27 July 2024 13:40
The US presidential election could dramatically change cryptocurrency policy, with key figures like Kamala Harris and Donald Trump taking center stage.
The political landscape in the United States has shifted dramatically over the past few weeks, potentially shedding light on the contours of a new era for cryptocurrency policy and regulation in the country. According to dYdX, President Joseph R. Biden, who led an administration that has been surprisingly hostile to cryptocurrencies, has decided not to seek the Democratic nomination for president. Instead, he has nominated Kamala Harris for the position.
Short term: Uncertainty over complex policies in turbulent times
Election years, especially presidential ones, are historically difficult times for Congress to finalize complex legislation. Members of Congress frequently travel to their home states and districts to stay in touch with their constituents, and their records are scrutinized by voters and special interest groups. This makes for delicate, bipartisan votes that are rare and difficult to explain in soundbites that could affect reelection campaigns.
Even if issues like cryptocurrencies aren’t as politically risky as topics like immigration or healthcare, the legislation itself is complex and requires significant staff time to navigate. The Senate Agriculture Committee, led by retired Debbie Staveno, has struggled to gain support for a new market structure bill that focuses on: Digital Goods. The bill aims to provide a clear regulatory framework for digital goods in the evolving cryptocurrency space, but in the current political climate, it is difficult to get attention for such a nuanced bill.
The role of regulators also adds to the uncertainty. The Securities and Exchange Commission (SEC) under Gary Gensler has taken a hard-line stance on cryptocurrencies, focusing on enforcement-based regulation. This approach has created uncertainty and hindered innovation in the industry. Gensler’s stance is unlikely to change in the short term, regardless of who takes office. However, a new administration could influence the overall direction of the SEC and other regulators, leading to a more balanced approach to cryptocurrency regulation.
Midterm: Hopes for more open-minded executives
Biden’s decision not to accept the Democratic nomination means his administration’s often hostile stance toward cryptocurrencies is fading. That doesn’t tell us exactly how the administration will view the industry next year, but it will likely be different.
Former President Trump has been working hard to attract voters who are interested in the cryptocurrency industry and crypto over the past few months, and his biggest moment came when he spoke to the Bitcoin community in Nashville. He has been vocal about his support, but has yet to articulate clear policy goals that demonstrate a deep understanding of the technology and its ecosystem.
On the other hand, Kamala Harris has no significant track record on crypto and will not address the community in Nashville despite being invited. Her relatively young age makes her more likely to be open-minded about blockchain technology than the current president. Crypto is evolving into a generational issue rather than a strictly partisan one. The average age of the 71 Democrats who voted in favor of the FIT21 bill in the House in May was 10 years younger than those who voted against it. But age alone is no guarantee, and some in the Biden administration could take over.
Long term: generational change
The long-term outlook for crypto regulation revolves around Congress’ ability to draft and pass legislation that will allow crypto and DeFi to thrive in the U.S. While no meaningful legislation has been passed this year, there have been developments that offer hope for whichever candidate takes office next year: Trump has expressed support, and Democrats have begun to soften their stance.
Voters are already making their voices heard in primaries across the country, nominating pro-crypto and open-minded candidates. As Congress transitions to a new generation, it is likely to move in a direction favorable to crypto. The changing political landscape in the United States presents both challenges and opportunities for the future of crypto regulation. As the Biden administration leaves office, there is cautious optimism that policies will change under new leadership, whether Harris or Trump. While immediate legislative hurdles and regulatory uncertainty remain, the future looks bright as intergenerational support for crypto grows and bipartisan engagement expands. The key to long-term success will be the ability of Congress to craft and pass legislation that fosters innovation while providing clear regulatory guidance so that the United States remains a leader in the rapidly evolving blockchain and digital asset space.
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