Numerous questions still wait for answers, but one clear outcome of the 2024 US Presidential Election campaign is that the decentralized and state-independent crypto world has also become a battleground for political race.
Bitcoin has been the subject of various economic theories, ideas, and beliefs since its launch in 2009. It is no surprise because its impact on the global financial system is undeniable. Cryptocurrency has been a permanent part of common talks, so no wonder that this topic has also appeared in the 2024 U.S. presidential election campaign. This is especially important, as approximately 90 million people have already owned some type of cryptocurrency in the U.S. Also remarkable that nearly half of all corporate donations to the 2024 presidential candidates have come from crypto supporters.
„Sail against the Wind” – The Biden Administration
In the past four years, the Biden administration’s approach to cryptocurrencies has been controversial and has received numerous critical remarks from market participants. Regarding the development of digital financial assets, the Biden administration has endeavored to keep the leading position of the U.S., but in reality, it could not deal with the new financial innovations.
It was not a positive message either that President Biden appointed Gary Gensler as leader of the U.S. Securities and Exchange Commission (SEC) in 2021, who had likened the cryptocurrency market to the Wild West. Gensler’s presidency was characterized by vexing actions and lawsuits, which resulted in negative effects on the crypto market participants and prices. The SEC took aim at popular crypto exchanges such as Binance and Coinbase, stating that several tokens in their supply qualify as securities in reality and that they do not have the licenses to trade with them. In that time, the legal battle between the SEC and the American tech company Ripple known for its XRP token became more intense. The justification was similar: XRP was classified as an unregistered security.
The crypto community considered these proceedings clearly as a campaign against the crypto world. The leadership of the SEC faced numerous criticisms, and they lost several lawsuits as well.
The failure of hard actions taken is well illustrated by the fact that after a lengthy warfare, and delays, furthermore a cyberattack against the SEC, the first Bitcoin spot ETFs finally received approval in January 2024. Why was this decision historic? The Bitcoin Spot ETF (Exchange-Traded Fund) is a fund that trades on the exchange and tracks the price of Bitcoin. The fund manager must keep the underlying Bitcoin in reality. Therefore, the ETF is a regulated and transparent instrument that provides the opportunity of indirect investment to institutional investors in the cryptocurrency market. The capital of large investors greatly exceeds the total value of the entire crypto market, so their entry can considerably increase the liquidity of the crypto market.
Trump’s Turnaround
Initially, Donald Trump was among those who were unequivocally skeptical about Bitcoin. He considered it too volatile and potentially dangerous with regard to the U.S. dollar. However, by 2024, Trump has made a complete turnaround and has become a committed crypto advocate. He launched his own crypto project called World Liberty Financial. He appeared at the Bitcoin 2024 conference in Nashville and promised that if elected, he would implement a crypto-friendly shift in the government’s financial policy. He stated that by easing regulations, the U.S. would become the „world’s Bitcoin superpower.” In this context, he vowed to end all attacks against fair crypto assets and to dismiss Gary Gensler from the head of the SEC. He has no longer referred to Bitcoin as an enemy of the U.S. dollar but as a currency serving the American nation, and which should be mined in the U.S. in the future, strengthening thereby the country’s independence. He also spoke about the need for the United States to hoard a Bitcoin reserve, furthermore suggested that BTCs confiscated from crimes should not be converted to dollars but kept in national property.
Will Harris pick up the gauntlet?
Democratic presidential candidate Kamala Harris has been following Trump’s strong crypto-communications in this respect, consequently, she also has incorporated the topic into her campaign. The Democrats had to correct their earlier position because the supporters of cryptocurrencies considered the Biden administration too unfriendly towards the industry.
In August 2024, Democratic Party leaders set up a political advocacy group called Crypto4Harris to exploit the potential of cryptocurrency fans to support the Harris campaign. One of the purposes of creating this group was to counteract Trump’s growth among cryptocurrency supporters.
However, Harris’s campaign avoids clear statements. When she does speak about the crypto industry, she emphasizes only the need for regulations. Her statements are mainly welcomed by those who are concerned about the risks due to the lack of regulation in the crypto market. However, others remind us that too strong regulations could restrict the development of the crypto market.
Charles Hoskinson, the founder of Cardano, sounded the alarm bell and warned about the potential negative impacts of the policy of Harris on the American crypto industry. Notable investors in the crypto market, such as the Winklevoss twins, along with other market experts, question where Harris stands with regard to cryptocurrencies. However, there are those who trust Harris. Chris Larsen, co-founder of Ripple – the issuer of one of the strongest cryptocurrencies – has recently supported the Democratic candidate’s campaign with one million dollars.
Harris vs. Trump?
It seems that the issue of cryptocurrency is prominently present in the American presidential campaign. Donald Trump’s messages tend to favor issuers and investors and are reflecting the more liberal interpretation of the crypto market. By focusing on the need for regulation, Kamala Harris highlights the state’s regulatory role.
Beyond the high-sounding campaign promises, the key question is whether the new administration will be able to support real innovations in the crypto market. So far, there are only a few facts, but speculations have already come up. Many count for a significant drop in Bitcoin’s price in case of Harris’s win, and a rise if Trump is the winner.
Gábor Hellner, Tamás Savci
