Crypto Influence in the U.S. Presidential Election 2024

The 2024 U.S. presidential election is shaping up to be a significant moment for the crypto industry. With increasing influence and significant investments in the political landscape, the relationship between cryptocurrency and U.S. politics is stronger than ever. This topic has resonated through media lately, particularly considering the recent activities of the republican candidate Donald Trump.

Here's a detailed look at how the upcoming presidential election might influence the crypto industry and vice versa.

What is the U.S. Take on Crypto Today?

First and foremost the regulatory environment of cryptocurrency in the U.S. is dynamic and sometimes even results in legal conflicts - such as the SEC vs Ripple case. Various federal agencies, including the notoriously mentioned Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and the Financial Crimes Enforcement Network (FinCEN), play critical roles in overseeing the industry. Each agency has its own set of guidelines, leading to a patchwork of regulations that can be challenging for businesses and investors to follow.

The SEC, for example, has been particularly active in regulating initial coin offerings (ICOs) and classifying certain digital assets as securities. This has led to numerous enforcement actions against companies that failed to comply with securities laws. FinCEN focuses on anti-money laundering (AML) and know-your-customer (KYC) requirements. You may have noticed these requirements when creating an account on a centralized exchange - you are asked to provide all kinds of personal information, as well as proof of identity.

State-level regulations add another layer of complexity. States like New York have implemented their own licensing requirements, such as the BitLicense, which sets stringent standards for crypto businesses. Other states, like Wyoming, have taken a more crypto-friendly approach, enacting laws that encourage blockchain innovation and investment.

Why is the Presidential Election Important?

Currently, the U.S. has a key position and high influence in the technological sector, including crypto, which sets high stakes for the upcoming presidential election. The regulatory and innovation environment for the crypto industry may be largely influenced by how the new elect feels towards digital assets. In the U.S., the president holds a significant portion of the executive power, therefore the surrounding laws and policies may change quickly.

In case a candidate with a positive approach towards digital assets is elected, the regulation should become clear and not too restrictive (generally a piece of very good news in the market), which in turn drives a positive sentiment. However, if the head of the U.S. isn't too keen on the overall idea of cryptocurrency, it may hinder the pace of innovation and adoption by a great degree.

International Competition in the Crypto Market

When it comes to comparison with other nations, the U.S. seems to be at a crossroads. The government has to decide whether to let the technological innovation flow freely (and maintain the tech industry leader position) or implement more customer protection policies, potentially slowing the progress.

The European Union, for instance, is known for its cautious approach towards innovation and the crypto sector is no exception. The EU has been working on establishing a unified regulatory framework with the Markets in Crypto-Assets Regulation (MiCA), which aims to create a standardized approach across member states. Countries like Switzerland and Malta have become crypto-friendly hubs, attracting blockchain businesses with favorable regulations and tax policies.

China, once a bitcoin-mining behemoth, would be an interesting competitor to the U.S. in terms of innovation and adoption, however, the government crackdown on cryptocurrencies has made all the transactions outlawed. In September 2019, China accounted for 75% of the world's Bitcoin energy use, and by April 2021, that number had fallen to 46%. Notable number nevertheless, but it is difficult to innovate when the government is knocking at your door.

On the other hand, Japan was one of the first major economies to recognize Bitcoin as legal tender and freeing it from tax, doing so in 2017. This early embrace of cryptocurrency has positioned Japan as crypto-friendly, attracting talent and capital.

The country has implemented a comprehensive regulatory framework for crypto exchanges, requiring them to register with the Financial Services Agency (FSA) and adhere to strict security and operational standards. The country has seen widespread adoption of cryptocurrencies, with many retailers accepting Bitcoin and other digital assets as payment. Major financial institutions in Japan have also launched their own cryptocurrency exchanges and blockchain initiatives.

Presidential Candidates and Their View on Digital Assets

With millions of Americans now holding digital assets, crypto has become a significant concern for voters, especially in key swing states like Pennsylvania and Nevada. This new voting bloc is young, diverse, and bipartisan, making it a potential game-changer in the election. While President Biden's administration has taken a hostile stance toward crypto, leading to the potential alienation of younger voters, former President Trump has shown signs of softening his previously skeptical views.

Gemini co-founder Cameron Winklevoss has expressed some concerns that the restrictive stance of the previous administration towards crypto would put off an entire generation of democrats. The CEO of Coinbase Brian Armstrong also pointed out on X that being anti-crypto could be a really bad strategy in 2024 as 52 million Americans have used crypto in the past.

According to the latest polls, Kamala Harris is leading by around 1% in the state average. This means that appealing to the crypto-conscious demographic might be an interesting way to secure more votes.

Republican Party: Donald Trump

A poll conducted by the VC firm Paradigm showcases that the percentage of voters who hold crypto tend to prefer Donald Trump. The former president has historically had a complicated relationship with cryptocurrency, marking Bitcoin as a speculative asset with no intrinsic value.

Recently, however, we have seen some efforts to mend this relationship with the crypto crowd. During the Bitcoin 2024 Nashville conference, Trump's narrative has clearly shifted to appeal to this demographic. He addressed the Bitcoin community, emphasizing the potential of Bitcoin and cryptocurrencies in shaping America's future.

Trump proposed creating a strategic national Bitcoin reserve, where the U.S. government would retain all Bitcoin acquired through law enforcement actions, transforming it into a permanent national asset. He criticized the current administration's stance on crypto, promising to end what he described as a "war on crypto" and to implement policies that would make the U.S. a leader in Bitcoin and crypto innovation.

Trump also highlighted the need for America to dominate in technology and manufacturing to stay ahead of countries like China. His speech included a commitment to regulatory clarity, support for Bitcoin mining, and the creation of a Bitcoin and crypto Presidential Advisory Council to foster industry growth. However, it is important to take these statements with a grain of salt, as Trump has had a history of often not delivering on his promises.

Furthermore, in an unexpected move, Trump has launched Bitcoin-branded sneakers. These sneakers, available in three editions and ranging from $299 to $499, sold out almost immediately upon release. The high demand for these sneakers, particularly the limited edition orange high tops, underscores the strong support and enthusiasm from the crypto community. The sneakers feature the phrase "Trump Crypto President" alongside the Bitcoin logo, highlighting Trump's commitment to the industry.

Source: gettrumpsneakers.com

Democratic Party: Kamala Harris

Kamala Harris has maintained a relatively quiet stance on cryptocurrencies. While she has not made many public statements specifically addressing crypto, insights can be gleaned from her broader approach to technology and innovation.

Harris is known for her progressive stance on technology. She has shown a willingness to engage with technological advancements and their regulatory needs. J.P. Thieriot, former CEO of Uphold, is actively seeking support for Harris within the crypto industry, believing she offers a more open and clear approach compared to Trump's vague promises.

Tonya Evans, a law professor at Penn State Dickinson Law, outlines several possible changes Harris might implement:

• Clearer Securities Laws: Differentiating between securities and commodities in crypto.

• Banking Regulations: Creating guidelines for banks to engage with crypto businesses.

• Tax Reforms: Providing clear guidelines for taxing digital assets.

• Consumer Protection: Strengthening laws to protect against fraud.

• Privacy Laws: Safeguarding individual data in blockchain systems.

• Education: Integrating crypto education into national standards.

Harris's campaign is engaging with the crypto community, signaling a proactive approach. Although she did not attend the Bitcoin 2024 Conference, her team's inquiries about crypto-related issues show a genuine interest in shaping policy.

Source: sentinelassam.com

Harris reportedly aims to balance regulation with innovation. The current administration has been criticized for its heavy-handed approach, but Harris's moderate tone and openness to technological advancements could suggest a more balanced path.

The Bottom Line

The 2024 U.S. presidential election could bring significant changes for the future of the cryptocurrency industry. The candidates' stances on digital assets could significantly impact regulatory environments, innovation, and market sentiment.

While Donald Trump shows a newfound support for crypto, emphasizing national Bitcoin reserves and regulatory clarity, Kamala Harris promotes a balanced approach, advocating for clear regulations and consumer protections. The election outcome will shape the U.S. position in the global crypto landscape, influencing both investors and the broader blockchain ecosystem.