The crypto industry is increasingly invested in the upcoming U.S. elections, particularly regarding Donald Trump’s potential return to power. While Trump has shown a clear, albeit shifting, stance on cryptocurrencies, Vice President Kamala Harris’s position remains less defined.
SEC Chairman Gary Gensler recently criticized the crypto sector, claiming it is rife with fraud and has cost investors significant losses due to non-compliance with existing laws. His remarks came in the context of the crypto industry spending millions on political donations to influence the November election, seeking more favorable regulations.
In addition to the presidential race between Trump and Harris, all 435 House seats and 33 of 100 Senate seats are also up for election. The future of cryptocurrency, one of the most debated technologies globally, is at a crossroads between Trump’s pro-crypto promises and the Biden administration’s regulatory crackdown.
Trump has vowed to make the U.S. “the global capital of cryptocurrency,” proposing a national strategic Bitcoin reserve akin to the U.S. gold reserve. Recently, he launched a new crypto company, World Liberty Financial, asserting that “cryptocurrency is one of the things we must do.” This marks a stark contrast to his previous characterization of Bitcoin as a “scam.”
In contrast, the Biden administration has taken a hard line against crypto firms, highlighted by the incarceration of FTX founder Sam Bankman-Fried for fraud, and recent penalties against Binance’s founder for allowing illicit activities on their platform.
While Gensler emphasizes that the SEC has long enforced rules requiring companies to share information with investors to protect them, he also warns that crypto’s minimal market share could undermine trust in broader capital markets. Despite proponents claiming cryptocurrencies offer rapid, affordable, and secure transactions, a recent Federal Reserve survey found the percentage of Americans using crypto dropped from 12% in 2021 to 7% last year.
Harris has been less vocal about cryptocurrency, but her team has indicated a willingness to support policies that allow emerging technologies to thrive. Recent meetings between her advisors and industry executives aimed to build trust and provide hope for a better future, regardless of the election outcome.
Paul Grewal, chief legal officer of Coinbase, emphasized the importance of the U.S. market for crypto and the need for a balanced regulatory framework that does not overly restrict the industry. With the elections approaching, the crypto sector sees a chance to elect lawmakers sympathetic to its interests.
As of last month, the industry has reportedly spent a record $119 million on political donations, attempting to back candidates who support cryptocurrencies and challenge their critics. Consumer advocacy groups have noted that this spending is unprecedented in scale, aiming to sway Congress toward less regulation and more consumer protections.
The stakes are high as the crypto community navigates a complex regulatory landscape and seeks to influence the future direction of the industry in light of the upcoming elections.
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