Author: Terry｜Blockchain in Plain Language
Four years ago, if someone told you that in this round of US presidential election, candidates from both parties would actively promote their recognition and support for the crypto industry, even to the point of "keeping up with the Joneses", would you believe it?
You would think that person is crazy.
But the reality is so dramatic. For the crypto industry, the 2024 U.S. presidential election has become a political show that is completely different from the 2020 and 2016 elections. Whether it is the agenda setting throughout the election cycle or the public statements of the presidential candidates on both sides, cryptocurrencies have unprecedentedly begun to be involved, and the candidates on both sides are even "comparing" their open attitudes.
This article will briefly explore the undercurrent behind this significant variable, that is, whether the U.S. cryptocurrency policy trend is really turning the wheel, and what will the changing attitudes of many politicians and regulators mean in 2024? How will the encryption and Web3 industries be affected?
Trump and Biden's "Cryptocurrency War"
Although the first televised debate of the 2024 US presidential election has not yet begun, Trump and Biden have already started to attack each other on many issues, among which the open attitude towards cryptocurrency is a key arena.
First of all, five years ago, when he was still in office, Trump publicly stated that "he does not like Bitcoin and other cryptocurrencies because they are not currencies, their value is highly volatile and they have no real basis." However, as a rare heavyweight politician who has issued several NFT series in succession, Trump is now qualified to show his strong support for cryptocurrencies.
Especially as the election situation heats up, Trump has increasingly positioned himself as a "crypto-friendly" candidate, claiming to be a supporter of financial technology innovation. On May 22, he opened a cryptocurrency donation website to officially accept crypto donations - in addition to Bitcoin and Ethereum, it also supports USDC, SOL, XRP, DOGE, ZRX, SHIB and other cryptocurrencies.
He even frequently made public statements to demonstrate his inclusiveness towards cryptocurrencies: leading the "cryptocurrency army" and "pushing the campaign to victory on November 5 (election day)" and so on.
In contrast, Biden, who has always been known for his strict regulatory attitude, seems to have softened his stance due to concerns about the election situation, trying to win the support of young voters. After all, people of color and young people were the key Democratic Party vote banks for Biden's victory in the 2020 election, and their recognition of cryptocurrencies is the highest among all generations and ethnic groups:
More than 20% of voters in six key swing states consider cryptocurrency an important issue; another nationwide survey of registered voters commissioned by crypto firm Paradigm found that crypto asset ownership was higher among communities of color and younger people.
So according to The Washington Times, as Biden's re-election campaign has trouble attracting Generation Z voters, it is now hiring a "meme manager" to manage internet content and emoticons (including memes).
In addition, US presidential candidate Robert Kennedy Jr. (nephew of former President John F. Kennedy) is also a staunch supporter of encryption. "Cryptocurrency is our way out of dependence on the Federal Reserve, which is the best way to fight inflation. It deprives the government and the monopoly banking system of control, which uses money printing to transfer wealth to billionaire oligarchs while plunging ordinary Americans into poverty. If you agree that Crypto equals freedom, please help me advance this vision as president."
Overall, the election year is definitely a key factor. For the United States, the group that directly or indirectly holds crypto assets has become a force that cannot be ignored, especially when the poll data is tight. The "critical few" are very popular, as can be seen from the passage of the FIT21 bill at this time point.
From FIT21 to a softening of regulatory stance
Whether it is Trump's positive statement or Biden's timely shift, it is essentially to win votes from the crypto community, just as both of them have gone to extremes to open accounts on Tiktok for campaign propaganda, which is just one of the measures to deal with the election situation in the election year.
To put it bluntly, politicians’ openness to crypto assets is more like a means to an end in the context of 2024. The loosening of administrative, legislative, and regulatory levels is an important observation window that deserves more attention in the future.
It is worth noting that on May 22, the 21st Century Financial Innovation and Technology Act (FIT21 Act) was passed by the House of Representatives with an overwhelming majority of 279 votes to 136. The bill establishes a regulatory framework for digital assets and is seen as one of the bills that may have the most far-reaching impact on the crypto industry.
In fact, the core point of this bill for crypto regulation is the division of regulatory powers. That is, this bill clearly defines that there are two institutions that regulate crypto assets: one is the U.S. Commodity Futures Trading Commission (CFTC), and the other is the U.S. Securities and Exchange Commission (SEC).
If a crypto asset is defined as a commodity, it is regulated by the CFTC; if it is defined as a security, it is regulated by the SEC.
The specific judgment of whether a crypto asset is a commodity or a security can be further divided into factors such as "investment contract (The Howey Test)", "use and consumption", "degree of decentralization", "functional and technical characteristics", and "market activities".
This is equivalent to clarifying comparable regulatory rules for a series of current crypto projects, which is a big step forward compared to the previous unknown state where the SEC was wielding the big stick everywhere - after all, it is well known that compared to the SEC, which frequently takes law enforcement actions in the crypto field, the CFTC is relatively mild in attitude.
However, coupled with the news of the Ethereum spot ETF, the softening of regulatory attitudes, especially the SEC's attitude, is also very obvious: at the same time, the US SEC's trading and market department called the trading platform and told them that it would approve 19b-4 this week, and then quickly approved it, which was almost a 180-degree turn.
Of course, this shift has a strong political flavor. To put it bluntly, the Democratic Party desperately needs young people to vote, and if you look at what Biden is doing from a campaign perspective, the main positioning is to position himself as a "visionary octogenarian."
The most noteworthy information is the finalization of the FIT21 bill. However, there is no corresponding bill in the Senate so far, so it will not become law yet. Although the first step has been taken, there is still a long way to go.
In any case, the relaxation at the administrative and legislative levels will always prompt a shift in supervision. Regardless of the actual subsequent direction, this will be a turning point for crypto assets to further enter the mainstream vision and obtain a legal and compliant framework.
Behind the variables, the rising influence of the crypto community
And the undercurrents behind all these variables are accelerating to the forefront.
On the one hand, there is an increasingly large group of crypto users, and their importance to the election cannot be ignored. Just like the recent market discussion about "50 million Americans holding crypto assets", it is essentially the product of the fact that the attention of the US government and the public to crypto assets and crypto asset holders has begun to increase visibly against the backdrop of the 2024 US presidential election.
Although it is not ruled out that this data is specifically provided for the 2024 election in order to soften the attitude of presidential candidates and win over crypto voters, it also indirectly shows that even if it is just a blank check project before the election, more and more politicians and candidates are beginning to have to "please" this part of the votes.
On the other hand, the crypto industry's lobbying and influence have also begun to penetrate into the field of policy making. According to DL News, citing data from OpenSecrets, a platform that tracks political donations, the crypto industry's lobbying spending hit an all-time high of $24.7 million in 2023, and in the first quarter of 2024, the crypto industry spent another $5.6 million.
Cryptocurrency industry lobbying to peak in 2023, source: datawrapper.de
Under the surface, the number of U.S. congressmen who accept political donations from cryptocurrency-related teams is visibly increasing, and they are beginning to stand on the side of the crypto industry to safeguard common interests:
For example, on May 8, 21 House Democrats voted in favor of a resolution to crack down on the SEC announcement, and on May 16, 11 Senate Democrats also voted in favor of the resolution. An analysis by OpenSecrets found that many of these congressmen are major recipients of political donations from the cryptocurrency industry.
The cryptocurrency industry has provided large donations to members of Congress. Source: datawrapper.de
summary
From a dialectical point of view, this round of elections has become a clear watershed in the development of Web3 and the crypto industry. After all, Crypto had almost no influence and presence in the previous 2020 and 2016 elections.
However, today, Web3 and the crypto industry have demonstrated their power in the general election, whether in terms of their impact on voters' cognition or the role they play in campaign strategies and capital flows, demonstrating their importance that is completely different from the past.
The wind starts from the tip of the green reed. After the dust settles on the 2024 US election, Web3 and the crypto industry may really enter a new cycle.
