Regulation
Upcoming US Elections Will Shape Future of Cryptocurrency Regulation
Caroline BishopJuly 27, 2024 1:40 p.m.
The US election could radically reshape cryptocurrency policy, with key figures like Kamala Harris and Donald Trump taking center stage.
The American political landscape has shifted dramatically in recent weeks, potentially providing a glimpse into the contours of a new era for cryptocurrency policy and regulation in the country. dYdXPresident Joseph R. Biden, who presided over an administration that was surprisingly hostile toward cryptocurrencies, has decided not to seek the Democratic Party’s nomination for president. Instead, he has endorsed his running mate, Kamala Harris, for the job.
The short term: uncertainty about complex policies in turbulent times
Election years, especially presidential ones, are historically difficult for moving complex legislation through Congress. Members often return to their home states and districts to stay connected to their constituents, and their records are scrutinized by voters and special interest groups. That makes nuanced, bipartisan votes rarer because they’re hard to explain in a few words that could impact a reelection campaign.
With an issue like cryptocurrency, while not as politically dangerous as topics like immigration or health care, the legislation itself is complex and requires a lot of staff time to navigate. The Senate Agriculture Committee, led by retiring Debbie Stabenow, is struggling to gain support for a new market structure bill focused on digital products. This bill aims to provide a clear regulatory framework for digital products, which is necessary in the evolving cryptocurrency space. However, in the current political climate, it is difficult to draw attention to such a nuanced bill.
The role of regulators also adds to the 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 stifled innovation within the industry. Gensler’s stance is unlikely to change in the near 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.
In the medium term: the hope of a more open-minded executive
Biden’s decision not to accept the Democratic nomination means that his administration’s often hostile stance toward cryptocurrencies is on the way out. It doesn’t tell us exactly how the leader will view the industry next year, but it will likely be different.
Former President Trump has been working hard in recent months to woo the crypto industry and crypto-minded voters. His biggest moment to date came 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.
Kamala Harris, on the other hand, has no significant crypto experience and will not be speaking to the Nashville community, despite being invited to do so. Her relatively young age makes her more likely to be open to blockchain technology than the current president. Crypto is becoming more of a generational issue than a strictly partisan one. The average age of the 71 Democrats who voted for the passage of 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 members of the Biden administration may remain in office.
The long term: generational change
The long-term outlook for cryptocurrency regulation depends on Congress’ ability to draft and pass laws that will allow cryptocurrencies and DeFi to thrive in the United States. While the legislation passed this year has not been significant enough, there has been progress that provides hope, regardless of who 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 pushing crypto-friendly and open-minded candidates in primaries across the country. As Congress transitions to a new generation, things are likely to shift in favor of cryptocurrencies. The evolving U.S. political landscape presents both challenges and opportunities for the future of cryptocurrency regulation. As the Biden administration steps down, the possibility of policy change under new leadership, whether Harris or Trump, provides cautious optimism. Immediate legislative hurdles and regulatory uncertainties remain, but growing generational support for cryptocurrencies and evolving bipartisan engagement point to a bright future. The key to long-term success will be Congress’s ability to craft and pass legislation that fosters innovation while providing clear regulatory guidance, ensuring the United States remains a leader in the rapidly evolving world of blockchain and digital assets.
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