Caroline Bishop 27 July 2024 13:40
The US elections, with key figures like Kamala Harris and Donald Trump at the forefront, could see a dramatic shift in cryptocurrency policy.
The political landscape in the United States has shifted dramatically in recent weeks, providing a glimpse into the contours of a new era of cryptocurrency policy and regulation in the country. According to dYdX, President Joseph R. Biden, who has led an administration that has been surprisingly hostile towards cryptocurrencies, has decided not to seek the Democratic presidential nomination. Instead, President Biden has endorsed Vice President Kamala Harris for the presidency.
The short term: Complex policy uncertainties in turbulent times
Election years, especially presidential election years, are historically difficult times to pass complex legislation in Congress. Lawmakers frequently return to their home states and districts to connect with constituents, and their records are scrutinized by voters and special interests. That makes nuanced, bipartisan votes rarer because they are harder to explain in short statements that could impact reelection campaigns.
Issues like cryptocurrency, while not as politically risky as topics like immigration or healthcare, are complex laws that require significant staff time to process. The Senate Agriculture Committee, led by outgoing Sen. Debbie Stabenow, is struggling to garner support for a new market structure bill focused on digital goods. The bill aims to provide a clear regulatory framework for digital products, which is needed in the evolving cryptocurrency space. But in the current political climate, such a sensitive bill is difficult to attract attention.
The role of regulators also adds uncertainty. The Securities and Exchange Commission (SEC), under Gary Gensler, has taken a hardline stance on cryptocurrencies and focused on regulation through enforcement. This approach creates uncertainty and stifles innovation in the industry. Gensler’s stance is unlikely to change in the short term regardless of who wins the presidential election. However, a new administration could influence the overall direction of the SEC and other regulatory agencies, leading to a more balanced approach to crypto regulation.
Mid-term outlook: Hopes for more open-minded managers
Biden’s choice not to accept the Democratic nomination means his administration’s often-hostile stance toward cryptocurrencies is fading. This doesn’t indicate exactly how Biden will view the crypto industry next year, but it will likely be different.
Former President Trump has been trying hard over the past few months to win over the crypto industry and crypto-conscious voters, but his biggest moment yet was when he addressed the Bitcoin community in Nashville. Though he has been vocal in his support for Bitcoin, he has yet to articulate clear policy goals that would demonstrate a deep understanding of the technology and its ecosystem.
In contrast, Kamala Harris has no notable track record on crypto and is not scheduled to address the Nashville community, despite being invited. Harris’ relative youth likely makes her more open to blockchain technology than the current president. Crypto is becoming a generational issue rather than a strictly partisan one. The average age of the 71 Democrats who voted in favor of passing the FIT21 bill in the House of Representatives in May was 10 years younger than those who voted against it. But age alone doesn’t guarantee anything, and some Biden administration officials may take over.
Long-term perspective: Generational change
The long-term outlook for crypto regulation hinges on Congress’ ability to draft and pass legislation that allows crypto and DeFi to thrive in the U.S. While they fell short of passing meaningful legislation this year, there has been progress that gives hope for whichever candidate takes office next year: President Trump has voiced his support, and Democrats have begun to soften their stance.
Voters are already making their voices heard by advancing pro-crypto and open-minded candidates in primaries across the country. As Congress transitions to a new generation, things are likely to move in crypto’s favor. The evolving U.S. political landscape presents both challenges and opportunities for the future of crypto regulation. As the Biden administration retreats, there is cautious optimism that policy will shift under new leadership, whether it be Harris or Trump. While immediate legislative hurdles and regulatory uncertainty remain, growing generational support for crypto and evolving bipartisan engagement point to a bright future. Key to long-term success will be Congress’ ability to craft and pass legislation that fosters innovation while providing clear regulatory guidance, ensuring the U.S. remains a leader in the rapidly evolving world of blockchain and digital assets.
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