Regulation
Why Pantera Capital Says Biden’s Crypto Pivot Is Sincere – DL News
- Despite blocking a bill considered pro-cryptocurrency, Biden continues to support digital assets.
- US presidential candidates see crypto voters as a powerful bloc.
Joe Biden’s backlash in courting the cryptocurrency industry is sincere, Pantera Capital analysts say, despite the president blocking a bill seen as pro-crypto.
The bill would have eliminated an unpopular part of Securities and Exchange Commission guidelines that essentially dissuade large U.S. banks from offering large-scale cryptocurrency custody services.
“We believe Biden’s veto more likely reflects his reluctance to publicly oppose the nominee commissioner,” Cosmo Jiang and Erik Lowe wrote in a research note, referring to SEC Chairman Gary Gensler.
Jiang is a portfolio manager and Lowe is head of content at Pantera, a hedge fund specializing in digital assets.
Cryptocurrencies have increasingly become a hot topic in the run-up to the US presidential elections.
“Biden instead chooses to take the quieter route of asking the SEC to change the rule on its own.”
— Pantera Capital analysts
While presumptive Republican presidential nominee Donald Trump has stood firmly on the side of cryptocurrency supporters, Biden has taken a more ambiguous position.
However, Jiang and Lowe say Biden is slowly closing in on the industry despite publicly blocking a bill aimed at tearing up Staff Bulletin 121.
Death by veto
Gensler believes the SEC guidelines remain in place.
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This is despite opposition not only from the cryptocurrency industry and its allies in Congress, but also from the powerful Wall Street lobby.
The Senate voted to pass a resolution repealing SAB 121, but Biden blocked the effort.
Pantera implied that openly opposing Gensler would embarrass the presidency. Furthermore, presidents tend to respect the independence of regulatory agencies from the executive branch of government.
Biden is “choosing instead to take the quieter route of asking the SEC to change the rule on its own,” Jiang and Lowe wrote.
Even though he vetoed SAB 121, Biden “affirmed a favorable stance toward onshore crypto innovation, which signals a change in tone in the current administration,” they added.
The White House She said the administration was “eager” to work with Congress to establish rules for cryptocurrencies, “which will promote responsible digital asset development and payments innovation and help strengthen U.S. leadership in the global financial system.”
FIT law21
Pantera noted that Biden did not veto a much more significant bill, the pro-crypto FIT21 Act, which passed the House of Representatives in mid-May.
FIT21 will evolve as it passes the Senate, the research note says, but it is still a “step toward creating a more defined regulatory environment for cryptocurrencies.”
“Although the Senate’s move against SAB 121 was vetoed, it shows a broader push to balance regulation with innovation in the cryptocurrency industry,” the note adds.
The Biden administration has been influenced by powerful crypto-skeptics, including Senator Elizabeth Warren and Gensler.
However, in recent months, Biden’s presidential campaign has taken a turn he reportedly addressed to industry.
Trump has hosted Bitcoin miners and non-fungible token investors at his Florida resort, Mar-A-Lago, and accepts campaign donations in cryptocurrencies.
Trump’s support – and now Biden’s – is a response to some factors, we read in Pantera’s note.
The two candidates are trying to appeal to a new voting bloc, the note said, citing research that shows 40% of American adults will own cryptocurrencies in 2024.
Additionally, explicitly pro-crypto candidate Robert F. Kennedy Junior is “picking up crucial votes in swing states,” the note said.
“Ultimately, politicians reflect the demands of the fringe voter, and major political parties are realizing that being pro-crypto is a winning strategy.”
Joanna Wright reports on regulation and policy for DL News. Do you have advice? Email her at joanna@dlnews.com.