The Democratic and Republican parties have shown stark differences in policy priorities, regulatory direction, and innovation tolerance regarding cryptocurrency.
Written by: Chandler, ForesightNews
The countdown to the 2024 U.S. presidential election has begun.
According to NBC News data, as of 2:00 AM local time on October 30, over 50 million voters across the U.S. have voted early for the 2024 presidential election.
As the electoral battle heats up, the issues that voters are focusing on are gradually centered on the future direction of the U.S. economy and the disparities in policy choices. Morgan Stanley analysts Monica Guerra and Daniel Kohen analyzed the potential impact of the 2024 U.S. presidential election on the market in a recent report, pointing out that economic signals are mixed and investor uncertainty is increasing.
Fluctuations in consumer sentiment and ongoing high prices are influencing voters' views, while traditional market indicators provide no clear predictions for election outcomes.
Due to fluctuations in consumer confidence and ongoing price pressures, economic signals remain complex, while election delays and tight races in swing states further heat up market volatility expectations. The differences and divergences in bipartisan policies will undoubtedly become key discussion points in this context.
According to Coindesk, citing a new poll from Fairleigh Dickinson University, cryptocurrency holders are more likely to vote for Trump rather than Vice President Harris. Half of the cryptocurrency holders said they plan to vote for Trump, while only 38% prefer Harris.
Among non-cryptocurrency holders, Harris leads by 12 percentage points: 53% of non-cryptocurrency voters say they would vote for Harris, while 41% plan to vote for Trump.
Grayscale's mid-year poll report shows that over the past six months, due to geopolitical tensions, inflation, and dollar risks, voters have become more concerned about Bitcoin. Due to macro dynamics and Bitcoin's own maturity, nearly half of the voters (47%) are increasingly expecting some of their portfolios to include cryptocurrencies (up from 40% at the end of last year).
Similar to the first phase of polling this year, respondents listed inflation as the primary issue in the election (28%), further emphasizing the potential value of assets like Bitcoin that have transparency and strict supply.
In this U.S. presidential election cycle, the political influence of the cryptocurrency industry is not only reflected in the expanding voter base but also shows an increasingly significant weight in political donations.
Data shows that by July 2024, the cryptocurrency political action committee (super PAC) Fairshake has raised over $200 million, becoming one of the largest super political action committees, raising over $25 million just in June. In August, Fairshake announced it would spend $25 million on television advertising campaigns to support 18 House candidates from both parties.
Additionally, according to data released to the public by the Federal Election Commission on Sunday, the cryptocurrency political action committee PAC Fairshake allocated nearly $29 million in September, becoming one of the organizations with the highest expenditures across all industries in this election cycle. Of this, $15 million was donated to the "Defend American Jobs PAC" which focuses on cryptocurrency and blockchain policy and supports Republicans; $5 million was donated to the "Protect Progress PAC," which only supports Democrats.
Fairshake also donated over $1.9 million to Congressman Patrick Ryan (Democrat, New York), over $1.7 million to Congressman Steven Horsford (Democrat, Nevada), and nearly $1 million to Congresswoman Angela Dawn Craig (Democrat, Minnesota). The remaining funds were donated to several candidates in Illinois, Colorado, Oregon, Iowa, and Arkansas.
In this context, cryptocurrency assets, as an emerging financial and technological force, are entering the political agendas of both parties with an undeniable presence, becoming one of the key factors influencing candidates' policy statements. However, the stark differences between the Democratic and Republican parties in policy priorities, regulatory direction, and innovation tolerance are also one of the important reasons for this election's impact on the future development of the cryptocurrency industry.
The Democratic Party's stance and policy orientation on cryptocurrency: Cautious regulation
Under the Democratic government led by Biden, the U.S. regulatory stance on the cryptocurrency industry has been cautious, aiming to improve regulations and maintain market order. In March 2022, Biden signed an executive order (Ensuring Responsible Innovation in Digital Assets), marking the first formal proposal by the U.S. government for a strategic framework regarding the cryptocurrency industry.
The order directs federal agencies to conduct a comprehensive review of the potential risks and regulatory needs of digital assets, and in September 2022, a detailed development framework for digital assets was published, further clarifying regulatory direction.
This cautious attitude is also profoundly influenced by the last bear market and the chain reaction triggered by the FTX collapse. The (2023 Presidential Economic Report) released in March 2023 conducted a harsh assessment of the value and risks of crypto assets, stating that crypto assets "are too risky to serve as payment tools or effectively expand financial inclusivity," warning that such assets may pose sustained risks to financial markets, investors, and consumers.
Subsequently, the SEC and the Commodity Futures Trading Commission (CFTC) have imposed strict enforcement actions on cryptocurrency companies such as Binance, Kraken, and Coinbase, reflecting the Biden administration's high concern about industry risks and strong intent to regulate market order.
In 2024, the Democratic Party's regulatory stance on the cryptocurrency industry is gradually shifting, and the internal stance on cryptocurrencies is no longer unified. The strict regulatory path promoted by radicals such as Senator Elizabeth Warren is no longer receiving comprehensive support. Some Democratic lawmakers are gradually leaning towards a more pragmatic attitude, recognizing the negative impacts of limited innovation.
On May 16, 2024, a group of Democratic senators joined Republican senators to pass a bill to repeal SAB 121, which originally required banks holding cryptocurrency assets to maintain equivalent cash, placing a significant burden on financial institutions. The move to overturn SAB 121 is seen as a new trend of opposition to excessive SEC intervention within the Democratic Party, suggesting a shift in cryptocurrency regulatory stance from aggressive to neutral.
In addition, an increasing number of lawmakers within the Democratic Party are gradually recognizing the economic and technological value of the cryptocurrency industry, especially its appeal among young voters.
On May 23, the SEC's attitude towards spot Ethereum ETFs suddenly shifted, which was interpreted as a friendly signal released by the Democrats under election pressure. Faced with Trump's open support for the cryptocurrency industry and the attraction of a large number of crypto voters, the Democratic Party had to reassess its stance on cryptocurrency policy to avoid losing the support of young voters and cryptocurrency industry practitioners.
Market signals and campaign pressures have also accelerated policy adjustments. The Democratic Party realizes that overly extreme cryptocurrency regulatory policies may lead to negative market reactions and weaken their support in key swing states.
On October 14, presidential candidate and Vice President Kamala Harris proposed a new plan to provide loans to Black entrepreneurs and others facing obstacles in financing. According to Harris's campaign outline aimed at attracting Black male voters, the plan will provide 1 million loans, with a maximum forgiveness of $20,000. Harris also promised to support a regulatory framework for cryptocurrencies, providing more investment certainty for 20% of Black Americans who own or have owned digital assets.
Additionally, California Governor Gavin Newsom is viewed as an important supporter within the Democratic Party's campaign team. In terms of cryptocurrency regulation, Newsom signed an executive order in May 2022 to establish a licensing framework for cryptocurrency companies in California. Although he vetoed a bill aimed at establishing a cryptocurrency regulatory framework in September 2022,
In October 2023, the (Digital Financial Assets Act) was signed. This act is widely seen as a counterpart to New York's BitLicense system, showing that California is competing with New York in cryptocurrency regulation, striving to take the lead in this emerging industry. Among the potential Democratic candidates, Newsom may be the leader most knowledgeable about the cryptocurrency industry, suggesting he may have strong policy-making capabilities and be willing to collaborate with the cryptocurrency industry to jointly develop national-level policies and educational programs.
Overall, the Democratic Party's regulatory stance on the cryptocurrency industry has gradually shifted from aggressive to neutral in recent years. However, despite some easing in regulatory policies, the Democratic Party still prioritizes traditional issues such as macroeconomic stability and social equity, and cryptocurrency does not occupy a core position in its policy agenda.
The Republican Party's stance and policy orientation on cryptocurrency: Active Commitment
Trump has shown an unusually optimistic and friendly attitude toward the cryptocurrency sector in this presidential campaign. To gain more votes and economic support from the cryptocurrency sector, Trump's campaign team announced that it would accept cryptocurrency donations, stating that this move aims to unite those who "oppose Biden's government control over the U.S. financial market."
According to the (Wall Street Journal), Trump's campaign team raised a total of $331 million in the second quarter, with cryptocurrency donations accounting for about 1%, most of which were Bitcoin and Ethereum, valued at approximately $3 million. Between May and the end of June, about 100 people donated cryptocurrencies to Trump's campaign team.
On specific policy support, the Republican Party expressed support for multiple favorable cryptocurrency policy measures in its official party platform for the 2024 U.S. election, vowing to end the "illegal and un-American crackdown" on the U.S. cryptocurrency industry.
At the same time, Trump appointed Ohio Senator J.D. Vance as the Republican vice presidential candidate. Vance was a venture capitalist and has publicly supported cryptocurrencies multiple times, criticizing the SEC's regulatory model. Last month, he also drafted legislation aimed at reforming the regulatory approach to digital assets. In his annual report submitted last year, he disclosed that as of 2022, he held Bitcoin worth between $100,000 to $250,000 through Coinbase.
Trump himself attended the 2024 Nashville Bitcoin Conference on July 28 to deliver a speech, clearly stating that if elected, he would fire the current SEC Chairman Gary Gensler and significantly reform the regulatory policies regarding cryptocurrencies to free the current government’s suppression of the cryptocurrency industry.
Trump has promised to provide more electricity resources to Bitcoin miners, ensuring that the U.S. becomes the center of global cryptocurrency. He compares the development of Bitcoin to the rise of the steel industry a century ago, believing that Bitcoin will bring immense potential and growth opportunities to the U.S. economy.
Trump also praised the pioneers of the cryptocurrency industry, appreciating the "builder spirit" they embody, and emphasized that the U.S. should lead the future of Bitcoin, or it will be surpassed by China and other countries. In his vision, the U.S. will become the global superpower in Bitcoin and cryptocurrencies, supported by American electricity and resources.
In his speech, Trump reiterated his strong opposition to CBDCs, promising to stop CBDC projects and defend citizens' right to self-custody. He believes that decentralized assets like Bitcoin will not threaten the U.S. dollar but are important tools for maintaining American financial sovereignty and freedom.
Trump clearly stated that if he returns to the White House, he will stop the current government’s "persecution" of the cryptocurrency industry, promote a fairer and clearer regulatory framework, and provide a stable environment for the development of the cryptocurrency industry. He proposed the idea of a strategic reserve of Bitcoin, keeping the Bitcoin assets held by the U.S. as national permanent wealth. His commitment demonstrates a vision of making Bitcoin and cryptocurrencies a part of revitalizing the "American Dream," providing strong support and trust for the Bitcoin community.
In addition, the Trump family has begun to refresh its presence in the cryptocurrency field. Trump's son Donald Trump Jr. and his younger son Eric Trump are deeply involved in launching the cryptocurrency project World Liberty Financial (WLFI), with Trump himself serving as the "chief cryptocurrency advocate," supporting the WLFI project, although he has not commented specifically on the project's details.
There are even reports that WLFI plans to issue its own stablecoin, which is still in development and may take some time to launch. The team is simultaneously developing the main project components of World Liberty Financial, including the stablecoin, to ensure these features are ready for launch at the appropriate time.
In this round, Trump has also formed a deep bond with Musk. Musk, as an active advocate in the cryptocurrency field, is known for promoting Bitcoin payments and the use of Dogecoin (DOGE), echoing Trump's policy inclination. Previously, in Trump's campaign speech, he proposed establishing a "Department of Government Efficiency" (D.O.G.E.), planned to have Musk lead the agency to conduct comprehensive audits of federal government finances and performance to reduce inappropriate spending.
Musk expressed support for this and promised to serve without compensation. The acronym for this agency cleverly echoes the name of Dogecoin, a pun that involves both politics and cryptocurrency, making their inclination in the cryptocurrency field unmistakable.
The Future Direction of Cryptocurrency Policy in the U.S. Election
In summary, the differences between the two parties in the U.S. regarding cryptocurrency asset policy profoundly affect the future of this industry. The Democratic Party's policy stance leans towards caution, aiming to protect consumer rights and maintain market stability through strict regulation. Although it has gradually shifted towards neutrality in recent years, the Democratic Party's focus on the cryptocurrency industry remains limited, prioritizing overall economic and financial stability.
In contrast, the Republican Party advocates for reducing regulatory restrictions and is committed to supporting innovation in the cryptocurrency industry, viewing it as a key way to enhance America's competitiveness in global financial markets. Candidates like Trump are trying to attract support from the cryptocurrency industry by actively endorsing Bitcoin and other cryptocurrency assets and promising to reform the SEC's regulatory model.
These policy differences directly impact market dynamics. On one hand, if the Democratic Party continues to implement cautious regulatory policies, it may increase compliance costs for cryptocurrency businesses and raise market entry barriers, potentially suppressing industry innovation. However, this move could enhance market trust and strengthen investor protection, positively contributing to long-term stable development.
On the other hand, the Republican Party's loose policies may accelerate capital inflow, pushing the United States to take the lead in global cryptocurrency innovation and attracting more projects to land in the U.S. However, a relatively loose regulatory environment may also be accompanied by higher risks, leading to increased market volatility.
The future direction of cryptocurrency policy is crucial for the United States' position in global financial innovation. Among the major economies, the U.S. faces fierce competition from Europe, Asia, and other regions in promoting fintech and cryptocurrency innovation. To maintain leadership in this emerging field, the U.S. may need to achieve bipartisan coordination in future policies to create a more inclusive, transparent, and forward-looking policy framework.
At the same time, by coordinating relationships between various regulatory agencies and industry organizations, the U.S. can strike a balance between ensuring innovation and managing risks, promoting healthy development of financial innovation.
