“Investors around the world have lost a lot of money” because cryptocurrency companies failed to comply with the laws his agency is trying to enforce, said Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC).

This comes as the industry spends millions of dollars on political donations, in an attempt to influence the outcome of the US elections in November in the hope of more favorable future laws.

In addition to the presidential battle between Donald Trump and Kamala Harris, all 435 House districts are up for reelection, as well as 33 of the 100 Senate seats.

The future of cryptocurrencies, one of the world’s most controversial technologies, appears to be an issue on which there appears to be a clear dividing line between Donald Trump and the outgoing Biden administration.

Trump has been courting crypto enthusiasts by promising to make America the “crypto capital of the planet,” and creating a “strategic national stockpile of bitcoin” similar to the U.S. government’s gold reserves.

Last week, he launched a new crypto company called World Liberty Financial, and while he offered few details, he said, “I think crypto is one of those things that we need to do.”

It's a big shift from three years ago, when he dismissed Bitcoin as something that "looked like a scam" and a threat to the US dollar.

Trump’s newfound enthusiasm stands in stark contrast to the Biden administration, in which Harris is vice president. The White House has led a crackdown on crypto companies in recent years.

In March, Sam Bankman-Fried, the founder and CEO of FTX, was sentenced to 25 years in prison for fraud, after he stole billions of dollars from clients around the world, many of whom are still trying to get their money back.

“This is an emerging field, and once they record their crypto assets in a new ledger, they are [wrongly] saying, ‘We don’t think we want to comply with time-tested laws,’” Gensler says.

He explains that rules that force companies that want to raise money from the public to “share certain information” with them have been in place to protect investors since the SEC was created.

This happened in 1934, in the wake of the infamous Wall Street Crash of 1929 that heralded the Great Depression.

“Cryptocurrencies are only a small part of capital markets in the United States and the world, but they could undermine the confidence that ordinary investors have in capital markets,” Gensler says.

While fans claim cryptocurrencies offer a fast, cheap and secure way to move money, a survey by the US central bank, the Federal Reserve, found that the number of Americans using them fell from 12% in 2021 to 7% last year.

Harris has not said much about cryptocurrencies, but one of her advisers said last month that she would “support policies that ensure that emerging technologies, and this kind of industry, can continue to grow.”

Recent meetings between her team and industry executives were aimed at building trust, and giving crypto chiefs hope for a brighter future whoever wins in November.

“I can’t stress enough how important this is, not just for the United States, but for the world,” said Paul Grewal, chief legal officer at cryptocurrency firm Coinbase, who attended the meetings.

“Not only is the US an important market for cryptocurrencies, but a lot of the important technology surrounding it was developed here. I think it’s also important not to lose sight of the fact that the rest of the world is not simply waiting for the US to regulate itself.”

He adds that given how tight the race for the White House is, “every vote will matter, and crypto votes are no exception.”

The crackdown on cryptocurrencies in the United States this year has been mirrored in Europe. In April, the European Union approved new laws to try to reduce the risk of criminals using cryptocurrencies.

But other regulators are slow to act. The Group of 20 leading economies is working on minimum standards for cryptocurrencies, but they are not legally binding and take-up has been slow.

In the United States, the House of Representatives passed a bill to regulate cryptocurrencies, but the Senate has not passed it. Critics say the bill would give consumers less protection.

Mr. Grewal of Coinbase supports the bill, saying: “This is not an industry that avoids regulation.” He adds that the sector just wants the same standards applied to cryptocurrencies as it does to other assets, “not stricter, but not weaker.”

With the US election approaching in November, the crypto industry sensed an opportunity to help elect lawmakers who take a sympathetic view of the corporations.

By last month, the sector had already spent an unprecedented $119 million on donations, according to research by the nonprofit Public Citizen.

The money is being used “to help elect pro-crypto candidates and attack crypto critics, regardless of political affiliation,” says Rick Claypool, research director at the consumer advocacy group.

They have outspent any other industry when it comes to corporate donations, because they are “trying to discipline the US Congress to give in to their demands for less oversight, and weaker consumer protections,” he added.