The 2024 U.S. presidential election is poised to shape the future of cryptocurrency. A win by Vice President Kamala Harris has the crypto community divided: some investors fear her connection to Biden’s seemingly anti-crypto administration could harm the market, while others think her leadership could spur growth through favorable policies. While the industry has clashed with the Biden administration over regulatory issues, executives and experts believe both a potential Harris administration and a second Trump term would offer a softer approach to crypto regulation.

A Shift in the Democratic Stance?

Despite the Biden administration’s stricter stance, Vice President Kamala Harris has signaled a potential shift in the Democratic party’s approach. During a fundraising event, Harris expressed her intention to “encourage innovative technologies like AI and digital assets.” This marks a departure from the current administration’s approach, which has been characterized by regulatory crackdowns, particularly by the Securities and Exchange Commission (SEC) under Chair Gary Gensler.

The SEC’s approach under Biden, led by Chair Gary Gensler, has been labeled restrictive, spurring speculation over his potential replacement under a new administration. Mark Cuban and other industry figures believe that Harris may bring clarity to regulations, making the U.S. a more stable environment for crypto. Draper further advocates updating outdated U.S. securities laws, arguing that applying old frameworks to modern digital assets is counterproductive.

While the U.S. remains attractive due to its massive economy, crypto companies face regulatory pressures, leading some to consider moving operations abroad. The election outcome could introduce new SEC leadership and shift regulatory dynamics, with the potential to either solidify the U.S. as a crypto hub or accelerate the migration to more welcoming markets.

While Harris has not detailed specific crypto policies, her comments have been welcomed by some in the industry. Billionaire entrepreneur Mark Cuban, a Harris surrogate and crypto enthusiast, expressed optimism about a Harris presidency: “Absolutely it will be friendlier under a Harris admin,” he wrote, emphasizing the significance of Harris’s pledge to protect crypto users.

Further evidence of a potential shift within the Democratic party comes from the formation of groups like Crypto4Harris, which aims to support Harris’ campaign while advocating for a “complete reset on crypto and blockchain policy,” according to Jonathan Padilla, CEO of blockchain company Snickerdoodle Labs.

Harris will advocate for regulations that ensure “Black men who invest in and own these assets are protected.” 

Source: kamalaharris.com

Trump’s “Crypto President” Pitch

On the Republican side, Donald Trump has actively courted the crypto industry, declaring his intention to make the U.S. the “crypto capital of the planet.” Trump has criticized the current administration’s approach to crypto regulation and proposed a series of crypto-friendly policies, including the creation of a government stockpile of Bitcoin and a crypto advisory council. 

He has also vowed to block the Federal Reserve from creating its own digital currency, a move opposed by many in the crypto community.

Congressional Influence

Beyond the presidential race, the crypto industry is also making its presence felt in congressional elections. Crypto corporations and wealthy investors have poured over $119 million into influencing federal elections, according to a report by Public Citizen. This includes significant spending on campaign ads, with crypto groups spending considerably more to support Republican candidates than Democrats.

While Fairshake, a major crypto PAC, has endorsed candidates from both parties, its affiliate super PACs have directed significantly more ad spending towards Republicans, according to AdImpact data. This indicates a strategic investment in the GOP, though the industry maintains connections with both sides of the aisle. 

Kristin Smith, CEO of the Blockchain Association, suggested a Republican-controlled Senate would be beneficial for the industry, stating, “I think a slightly Republican Senate would be good because it neutralizes Elizabeth Warren’s ability to influence.” Warren, a vocal critic of the crypto industry, is seen as a significant obstacle to the industry’s legislative goals.

Looking Ahead

Regardless of the election outcome, several factors point to a potential shift in the regulatory landscape for crypto. The industry anticipates a review or even reversal of the SEC’s “SAB 121” guidance, which requires public companies to account for crypto assets held on behalf of others as liabilities. This guidance has been a major concern for the industry, hindering wider adoption by financial institutions.

The bipartisan congressional vote to overturn SAB 121, though vetoed by President Biden, suggests growing support for a more favorable accounting treatment of crypto assets. Recent actions by the SEC, including granting BNY Mellon approval to custody cryptocurrencies without accounting for them as liabilities, further indicate a potential softening of the agency’s stance.

These developments, coupled with the increasing political engagement and financial influence of the crypto industry, suggest that regardless of who occupies the White House or controls Congress, the cryptocurrency industry is likely to find itself operating in a more welcoming regulatory environment in the coming years. The increasing mainstreaming of crypto, coupled with the industry’s aggressive lobbying efforts, has positioned it for potential gains regardless of the election’s results.