Regulation
The upcoming US elections will define the future of cryptocurrency regulation
Bishop CarolineJul 27, 2024 1:40 PM
The US election could radically reshape cryptocurrency politics, with key figures like Kamala Harris and Donald Trump taking center stage.
The political landscape of the United States has radically reshaped itself in recent weeks, potentially providing a glimpse of the contours of a new era for cryptocurrency policy and regulation in this country. According to dYdXPresident Joseph R. Biden, who has presided over a surprisingly hostile administration regarding cryptocurrencies, has decided not to seek the Democratic Party nomination for president. Instead, he has endorsed his vice president, Kamala Harris, for the position.
The Short Term: Complex Policy Uncertainty in Turbulent Times
Election years, especially presidential ones, are historically difficult times to push complicated legislation through Congress. Members frequently return to their home states and districts to stay in touch with constituents, and their records are scrutinized by voters and special interest groups. That makes nuanced, bipartisan votes rarer, since they are difficult to explain in a soundbite that could impact a reelection campaign.
With an issue like cryptocurrency, even if it isn’t as politically dangerous as issues like immigration or health care, the legislation itself is complex and requires a lot of staff time to handle. The Senate Agriculture Committee, led by a retiring Debbie Stabenow, has struggled to get support for a new market structure bill focused on digital goods. This bill aims to provide a clear regulatory framework for digital commodities, which is needed as the crypto space evolves. However, in the current political climate, getting attention for such a nuanced bill is a challenge.
The role of regulatory agencies also contributes to uncertainty. The Securities Exchange Commission (SEC), under Gary Gensler, has taken a hard line on cryptocurrencies, focusing on regulation through enforcement. 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 wins the presidency. However, a new administration could influence the overall direction of the SEC and other regulators, potentially leading to a more balanced approach to cryptocurrency regulation.
The medium term: hope for a more open-minded leader
Biden’s decision not to accept the Democratic nomination means his administration’s often hostile stance on cryptocurrencies is about to disappear. This doesn’t tell us exactly how the executive branch will view the sector next year, but it will likely be different.
Former President Trump has worked hard to court the cryptocurrency industry and crypto-focused voters in recent months, with his biggest moment so far coming when he addressed the Bitcoin community in Nashville. He has been vocal in his support, but has yet to articulate clear policy goals that indicate a deep understanding of the technology and ecosystem.
In contrast, Kamala Harris has no significant track record on cryptocurrency and will not address the Nashville community, despite being invited. Her relatively young age makes her more open-minded about blockchain technology than the current president. Cryptocurrency is becoming more of a generational issue than a strictly partisan one. The average age of the 71 Democrats who voted to pass the FIT21 bill in the House in May is a decade younger than those who voted against it. However, age alone is no guarantee, and some Biden administration staffers may continue.
The long term: generational change
The long-term outlook for crypto regulation revolves around Congress’s ability to craft and pass legislation that will allow crypto and DeFi to thrive in the United States. Despite failing to pass significant legislation this year, there has been progress that provides hope regardless of which candidate takes office next year. Trump has signaled his support, and Democrats have begun to moderate their stance.
Voters are already making their voices heard by advancing pro-crypto and open candidates in primaries across the country. As Congress transitions to a new generation, things are likely to move in favor of cryptocurrency. The changing U.S. political landscape presents both challenges and opportunities for the future of cryptocurrency regulation. As the Biden administration steps down, the potential for policy change under new leadership, whether Harris or Trump, brings cautious optimism. Immediate legislative hurdles and regulatory uncertainties remain, but growing generational support for cryptocurrency and evolving bipartisan engagement point to a promising future. The 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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