By Jonathan Josephs
Compiled by: TechFlow
While Trump’s views on cryptocurrencies have been pretty clear, Harris’ stance has been less clear.
The cryptocurrency industry is "full of fraud, charlatans and scammers", the head of one of the United States' top financial regulators has told the BBC.
Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), said that "investors around the world have lost too much money because crypto companies failed to follow the laws that his agency tried to enforce."
The comments come amid the industry's spending of millions of dollars in political donations in an attempt to influence the outcome of the November U.S. election in the hope of obtaining more favorable laws.
In addition to the presidential race between Donald Trump and Kamala Harris, 435 House districts are up for reelection, as are 33 of the 100 Senate seats.
The future of cryptocurrency is one of the most hotly debated technologies in the world, an issue on which there appears to be a clear divide between Donald Trump and the outgoing Biden administration.
Trump promised to make the United States the "cryptocurrency capital of the world" and create a "National Strategic Bitcoin Reserve" similar to the U.S. government's gold reserves in an effort to win votes from crypto enthusiasts.
Last week, he launched a new crypto company called World Liberty Financial, and while he provided few details, he said “I think cryptocurrency is one of the things we have to do.”
This is a stark reversal from his attitude three years ago when he viewed Bitcoin as "looking like a scam" and a threat to the US dollar.
Trump’s new enthusiasm stands in stark contrast to the Biden administration, where Harris is vice president. In recent years, the White House has launched an all-out crackdown on crypto companies.
In March, FTX founder and CEO Sam Bankman-Fried was sentenced to 25 years in prison for fraud in which he stole billions of dollars from customers around the world, many of whom are still trying to get their money back.
Then in April, Changpeng Zhao, the founder of Binance, the world’s largest crypto exchange, was sentenced to four months in prison and the company paid a $4.3 billion (£3.2 billion) fine. He admitted allowing criminals, child abusers and terrorists to register on his platform to launder money, in a case brought by the US Department of Justice.
The U.S. Securities and Exchange Commission (SEC) has also filed a lawsuit against Binance. Last year, the financial regulator brought a record 46 enforcement actions against companies trying to profit from the emerging technology.
The jailing of cryptocurrency boss Sam Bankman-Fried reflects the worst of the crypto industry.
“This is an area that has developed where just because they’re recording their crypto assets on a new accounting ledger, they’re [falsely] saying ‘we don’t think we want to comply with time-tested laws,’ ” Gensler said.
He explained that rules forcing companies looking to raise money from the public to “share certain information with them” have been in place since the SEC was founded and are meant to protect investors.
This dates back to 1934, after the infamous Wall Street crash of 1929, marking the beginning of the Great Depression.
“Cryptocurrencies represent only a small portion of U.S. and global capital markets, but they have the potential to undermine the trust that ordinary investors have in capital markets,” Gensler said.
While supporters argue that cryptocurrencies offer a fast, cheap and secure way to transfer money, a survey by the Federal Reserve, the U.S. central bank, found that the number of Americans using cryptocurrencies fell to 7% last year from 12% in 2021.
Harris has not said much about cryptocurrencies, but one of her advisers said last month that she would "support policies that ensure emerging technologies and the industry can continue to grow."
Recent meetings between her team and industry executives are aimed at building trust while giving cryptocurrency bosses hope for a brighter future for whoever wins in November.
“I can’t stress enough how important this is, not only for the United States but for the entire world,” said Paul Grewal, chief legal officer at cryptocurrency company Coinbase, who attended the meetings.
“Not only is the U.S. a significant market for cryptocurrency, but significant technology around cryptocurrency is developing here as well. I think we have to realize that the rest of the world is not sitting there waiting for the U.S. to get its affairs in order.”
He added that with the race for the White House so hotly contested, “every vote is going to count, and the cryptocurrency vote is no exception.”
U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has been highly critical of some cryptocurrency companies.
The U.S. crackdown on cryptocurrencies this year has also been echoed in Europe, where the European Union agreed in April on new laws aimed at reducing the risk of cryptocurrencies being exploited by criminals.
However, other regulators have been slower to act. The Group of 20 (G20) is working on minimum standards for cryptocurrencies, but these are not legally binding and implementation has been slow.
In the United States, a bill to regulate cryptocurrencies has been passed by the House of Representatives but has yet to pass the Senate, with critics arguing it would reduce consumer protections.
Coinbase’s Grewal supported the bill, saying: “This industry is not shying away from regulation.” He added that the industry simply wants the same standards applied to cryptocurrencies as other assets, “no stricter, but no looser.”
With the November U.S. elections approaching, the cryptocurrency industry senses an opportunity to elect lawmakers sympathetic to the industry.
By last month, the industry had spent a record $119 million on donations, according to research by the nonprofit Public Citizen.
Rick Claypool, the consumer advocacy group's research director, said the money was used to "help elect pro-crypto candidates and attack cryptocurrency critics regardless of political affiliation."
He added that they spend more on corporate donations than any other industry as they try to get the U.S. Congress to yield to their demands for less regulation and weaken consumer protections.
