Regulation
Why Pantera Capital says Biden’s crypto pivot is sincere – DL News
- Despite blocking a bill seen as pro-crypto, Biden still supports digital assets.
- US presidential candidates view crypto voters as a powerful bloc.
Joe Biden’s pivot to wooing the crypto industry is sincere, Pantera Capital analysts say – despite the president blocking a bill seen as pro-crypto.
The bill would have removed an unpopular element of the Securities and Exchange Commission’s guidance, which essentially discourages 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 commissioner he appointed,” 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.
Crypto has increasingly become a hot topic as the US presidential election approaches.
“Biden is instead choosing to take the quieter route of asking the SEC to change the rule itself.”
— Pantera Capital analysts
While presumptive Republican presidential nominee Donald Trump has placed himself firmly in the pro-crypto camp, Biden has taken a more ambiguous stance.
However, Jiang and Lowe say Biden is slowly getting used to the industry despite his public blocking of a bill to tear up Staff Bulletin 121.
Death by veto
Gensler is confident that the SEC guidelines remain in place.
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This is despite opposition not only from the crypto industry and its allies in Congress, but also from the powerful Wall Street lobby.
The Senate voted to pass a resolution removing SAB 121, but Biden blocked the effort.
Pantera suggested that openly siding with Gensler would have embarrassed the president. Additionally, presidents tend to respect the independence of regulatory agencies from the executive branch of government.
Biden “instead chooses 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 pro-local crypto innovation stance, signaling a shift in tone in the current administration,” they added.
The White House said the administration was “looking forward” to working with Congress to establish rules for crypto, “that will promote responsible digital asset development and payments innovation and help strengthen U.S. leadership in the system global financial institution.
FIT21 law
Pantera noted that Biden did not veto a much larger bill – the pro-crypto FIT21 Act, which passed the House of Representatives in mid-May.
FIT21 will evolve as it moves through 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 decision against SAB 121 was vetoed, it speaks to a broader desire to balance regulation with innovation in the crypto space,” 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 would have held out his hand to the industry.
Trump has hosted Bitcoin miners and non-fungible token investors at his Florida resort, Mar-A-Lago, and accepts crypto campaign donations.
The endorsements from Trump – and now Biden – are a response to several factors, the Pantera note said.
Both candidates are trying to appeal to a new voting bloc, the memo said, citing research showing that 40% of U.S. adults own crypto in 2024.
Additionally, explicitly pro-crypto candidate Robert F. Kennedy Junior is “winning crucial votes in swing states,” the memo says.
“Ultimately, politicians are reflecting the demands of marginal voters, 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 any advice? Send him an email to joanna@dlnews.com.