The upcoming US presidential election could have significant implications for the cryptocurrency industry, which has faced criticism for being "rife with fraud and hucksters," according to Gary Gensler, chair of the Securities and Exchange Commission (SEC). He emphasized that the global investing public has suffered substantial losses due to crypto companies not adhering to established regulations.
As the industry pours millions into political donations, it aims to influence the November elections in pursuit of more favorable regulations. Alongside the presidential race between Donald Trump and Kamala Harris, all 435 House districts and 33 Senate seats are up for re-election.
The candidates’ stances on cryptocurrency present a stark contrast. Trump has actively sought support from crypto enthusiasts, promising to position America as the “crypto capital of the planet” and even proposing a “strategic national bitcoin stockpile.” Recently, he launched a new crypto venture, World Liberty Financial, declaring that “crypto is one of those things we have to do.” This marks a significant shift from his previous dismissal of Bitcoin as a “scam” and a potential threat to the US dollar.
In contrast, the Biden administration, with Harris as vice president, has initiated a comprehensive crackdown on the crypto sector. High-profile cases, such as the sentencing of FTX founder Sam Bankman-Fried to 25 years in prison for fraud and the recent actions against Binance CEO Changpeng Zhao, highlight the administration's tough stance. The SEC has pursued a record number of enforcement actions, reinforcing the need for regulatory compliance in an industry often viewed as lacking oversight.
Gensler pointed out that crypto firms must comply with long-established laws that protect investors, echoing regulatory principles established since the SEC's inception in 1934 following the 1929 market crash. He warned that while cryptocurrency is a small part of global capital markets, it has the potential to undermine public trust.
Despite the controversies, a survey by the Federal Reserve revealed a decline in American crypto users, dropping from 12% in 2021 to 7% last year. While Harris has not publicly articulated her position on cryptocurrencies, her advisors have indicated support for policies fostering growth in emerging technologies.
Industry leaders like Coinbase’s Paul Grewal stress the importance of the US market for crypto innovation, noting that the global landscape is evolving rapidly, with many other nations not waiting for the US to catch up. He emphasized that every vote, including those from crypto enthusiasts, will be critical in the close race for the White House.
As regulatory developments continue in both the US and Europe, the crypto sector is keen to back lawmakers who adopt a more favorable stance. With the election drawing near, the industry has already contributed a record $119 million to political donations, as it seeks to elect pro-crypto candidates and challenge critics across party lines.
The outcome of the election may very well determine the trajectory of cryptocurrency regulation in the United States, making the stakes higher than ever for both the industry and its supporters.
