The cryptocurrency space is no stranger to 4-year cycles. Any crypto enthusiast knows the importance of Bitcoin halving, which historically has been the most powerful catalyst of bull markets. Today the blockchain industry has already developed and matured for over 15 years and it’s gained the attention of some of the biggest political and financial institutions. Because regulation is more relevant than ever to crypto, there’s now another 4-year event that can significantly impact the markets - the U.S. presidential election.
A record $119 million has been donated by the crypto industry to political campaigns this cycle, with nearly half of the contributions coming from Fairshake, a super PAC backed by Coinbase. These donations span across party lines, supporting candidates who share the industry’s vision for a regulatory environment that fosters innovation. This strategy highlights crypto's growing role as an economic force. At the same time, both major candidates are trying to balance crypto-friendly stances in order to attract the crypto vote while also appealing to the more traditionally-minded voters who remain distrustful of blockchain technology.
Trump vs. Harris Outlook on Crypto
A key aspect of the 2024 election is the differing views on cryptocurrency among the leading candidates. Former President Donald Trump has emerged as a strong supporter of digital assets, pledging to make the U.S. the "crypto capital of the world." He also supports pro-crypto senator Cynthia Lummis’s proposal for a U.S. Bitcoin reserve. Some believe that if Trump were to obtain victory in November, crypto markets will immediately react with a bull rally and BTC could reach $100,000 while altcoins soar at even higher percentages.
Vice President Kamala Harris has taken a more cautious stance on cryptocurrency. While she hasn't made strong public statements on the topic, her administration has shown a willingness to engage with industry leaders. Her team has also expressed support for policies that promote emerging technologies like blockchain, but without explicitly endorsing the broad reforms proposed by Trump. This cautious approach leaves room for regulatory oversight, which could be seen either as fostering responsible growth or stifling innovation, depending on one's perspective. Crypto analysts generally view a Harris win as neutral to negative for the industry, especially since the alternative is the immensely pro-crypto Trump.
Regulatory Role of the SEC
In the United States, securities such as stocks and bonds must be registered with the Securities and Exchange Commission (SEC). This registration includes various disclosure requirements and regulations designed to protect investors. The SEC believes that existing laws classify most cryptocurrencies as securities and has taken action against certain platforms, accusing them of operating unregistered securities exchanges. However, the crypto industry prefers to be regulated by the Commodity Futures Trading Commission (CFTC) instead of the SEC.
Currently, several bills aim to clarify which crypto tokens should be classified as commodities—typically physical goods like oil—and fall under the CFTC's regulation, and which should be considered securities, representing stakes in companies. A prominent bill, the Financial Innovation and Technology for the 21st Century Act (FIT21), seeks to shift crypto oversight largely to the CFTC. However, this could increase risks for investors, and despite the crypto industry's push for CFTC regulation, the SEC has continued its enforcement actions.
Indeed, SEC chair Gary Gensler has long been considered a villain amongst the crypto community. Gensler’s crackdown on crypto has unified the struggling industry against him. Crypto enthusiasts argue that Gensler’s SEC is suppressing innovation and driving talent overseas. Tensions escalated following an SEC lawsuit against a Utah-based crypto company, DEBT Box, where a judge accused SEC lawyers of making false and misleading statements while attempting to freeze the company’s assets. This case intensified industry frustration with the SEC’s approach to regulation.
Some crypto industry leaders decided that opposing Gensler’s crackdown would be best achieved by supporting Republicans. Over the summer, venture capitalists like Marc Andreessen, Ben Horowitz, and the Winklevoss twins pledged their support to Trump. The candidate’s vice presidential pick, J.D. Vance has long advocated for crypto as a means to empower innovation and technological breakthroughs. For his own part, at the Bitcoin Conference in July this year, Trump pledged to fire Gensler on his first day in office and received a standing ovation for these remarks. Later, Trump and his sons launched their own cryptocurrency project, World Liberty Financial, and also used Bitcoin to pay for a $1,000 bar tab in New York.
Conclusion
As crypto continues to progress and mature, its relationship with regulatory agencies and leading national governments will become all the more important. And this phenomenon is greatly reflected in the 2024 election, in which 1 in 4 American voters state that inflation is the single most pressing issue they are facing at the moment. Furthermore, nearly half of voters believe that automation and blockchain represent the future of finance. It remains to be seen how exactly such a future will be shaped from a regulatory perspective, but the election results in November will surely provide a clearer picture.
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