Author: Terry, Blockchain in Plain Language
Four years ago, if someone told you that in this round of the US presidential election, candidates from both parties would actively promote their recognition and support for the cryptocurrency industry, even to the point of “showing off,” would you believe it?
You would probably think that person was crazy.
But the reality is so dramatic. For the cryptocurrency industry, the 2024 US presidential election has become a political stage completely different from the 2020 and 2016 elections – unprecedentedly involving cryptocurrencies, both in terms of the topics set throughout the election cycle and the public statements of the presidential candidates, with both candidates even “showing off” their open attitudes towards cryptocurrencies.
This article will briefly explore the underlying currents behind this significant change, whether the direction of cryptocurrency policy in the United States is really shifting, what the changing attitudes of many politicians and regulators in 2024 mean, and what impact it will have on the crypto and Web3 industry.
01
Trump and Biden’s “Cryptocurrency Battle”
Although the first televised debate of the 2024 US presidential election has not yet begun, Trump and Biden have already engaged in a virtual debate on many issues, with their open attitudes towards cryptocurrencies being a key battleground.
Initially, five years ago, while still in office, Trump publicly stated that he “did not like Bitcoin and other cryptocurrencies because they are not currency, their value is highly volatile, and they have no substantive basis.” But now, as a rare heavyweight political figure who has released several NFT series, Trump indeed has the credentials to boast of his strong support for cryptocurrencies.
Especially against the backdrop of the intensifying election campaign, Trump is increasingly positioning himself as a “crypto-friendly” candidate, claiming to be a supporter of financial technology innovation. On May 22, he even opened a cryptocurrency donation website, officially accepting crypto donations – in addition to Bitcoin and Ethereum, he also supports USDC, SOL, XRP, DOGE, ZRX, SHIB, and other cryptocurrencies.
He has also frequently made public statements to demonstrate his inclusivity towards cryptocurrencies: leading the “crypto army”, “pushing the campaign towards victory on November 5 (Election Day),” and similar statements.
In contrast, Biden, who has always shown a strict regulatory attitude, seems to have significantly loosened his stance due to concerns about the election, trying to win the support of young voters – after all, ethnic minorities and young people were key Democratic voting blocs that helped Biden win the 2020 election, and their acceptance of cryptocurrencies is the highest among all generations and ethnic groups:
In six key swing states, over 20% of voters consider cryptocurrencies an important issue; a national survey of registered voters commissioned by the crypto company Paradigm found that communities of color and young people have higher rates of owning crypto assets.
Therefore, according to The Washington Post, since Biden’s re-election campaign team has faced difficulties in attracting Gen Z voters, they are now recruiting a “meme manager” to manage internet content and memes (including memes).
In addition, US presidential candidate Robert Kennedy (nephew of former President John F. Kennedy) is also a staunch supporter of cryptocurrencies, stating, “Cryptocurrencies are our way to break free from dependence on the Federal Reserve, which is the best way to fight inflation. It deprives the government and the monopolistic banking system of control, the latter transfers wealth to billionaire oligarchs by printing money, while making ordinary Americans fall into poverty. If you agree that Crypto equals freedom, please help me advance this vision as president.”
Overall, the election year is certainly a key factor. For the United States, the group that directly or indirectly holds crypto assets is already an undeniable force, especially when polling data is tight, these “key minorities” are highly sought after, as evidenced by the passage of the FIT21 bill at this time.
02
From the FIT21 Bill to Softening Regulatory Attitudes
Whether it is Trump’s proactive stance or Biden’s timely turnaround, it is essentially to attract votes from the crypto community. Just like how they both opened accounts on TikTok for campaign promotion, their openness towards cryptocurrencies in the backdrop of the 2024 election is more of a means to cope with the election year.
In essence, politicians expressing openness towards crypto assets in the 2024 election is more of a strategy, while the relaxation at the executive, legislative, and regulatory levels is the more important observation window to watch.
It is worth noting that on May 22, the “21st Century Financial Innovation and Technology Act” (FIT21) was passed in the House of Representatives by an overwhelming margin of 279 votes to 136. This bill establishes a regulatory framework for digital assets and is seen as one of the most far-reaching laws affecting the crypto industry.
The core point of this bill for crypto regulation is the delineation of regulatory authority, as it defines two agencies responsible for regulating crypto assets: the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
If a crypto asset is defined as a commodity, it falls under CFTC regulation; if it is defined as a security, it falls under SEC regulation.
And the specific determination of whether a crypto asset is a commodity or security can be further subdivided into factors such as the “investment contract (The Howey Test),” “use and consumption,” “decentralization degree,” “functionality and technical characteristics,” and “market activity.”
This means that a clear regulatory framework has been set for a series of crypto projects, which is a significant step forward compared to the previous uncertainty under the SEC’s influence – as it is known, the CFTC is relatively more lenient compared to the SEC when it comes to enforcement actions in the crypto field.
Moreover, with the news of the Ethereum spot ETF, the regulatory attitude, especially the softening stance of the SEC, is particularly evident: around the same time, the SEC’s Trading and Markets Department called trading platforms and informed them that 19b-4 would be approved this week, followed by swift approval, almost a 180-degree turn.
Of course, this political shift is quite evident. In simple terms, the Democratic Party urgently needs young people to vote, and from a campaign perspective, Biden’s positioning is mainly about positioning himself as a “visionary octogenarian.”
Only when the FIT21 bill is finalized will it be the most important information to watch, but the bill has no corresponding legislation in the Senate so far and will not become law yet, although it is a first step, the road ahead is still long.
In any case, relaxation at the executive and legislative levels will always prompt a shift at the regulatory level, and regardless of the actual outcome, this is a turning point for crypto assets to further enter the mainstream and obtain a legal and regulatory framework.
03
Behind the Variables, the Rising Influence of the Crypto Community
The underlying currents behind all these variables are accelerating towards the forefront.
On the one hand is the increasingly large crypto user base, whose importance in elections is becoming increasingly undeniable. Just like the recent market discussions about “50 million Americans holding crypto assets,” fundamentally reflects the visible increase in attention towards crypto assets and holders by the US government and opposition factions in the backdrop of the 2024 US presidential election.
While it cannot be ruled out that this data is specifically for the 2024 election to soften the stance of presidential candidates to attract crypto voters, it also indirectly indicates that more and more politicians and candidates are starting to have to “please” this segment of voters.
On the other hand, the lobbying and influence of the crypto industry are also penetrating into the policy-making realm. According to data from OpenSecrets tracking political donations, the crypto industry’s lobbying spending reached a historical high of $24.7 million in 2023, and in the first quarter of 2024, the crypto industry spent $5.6 million.
Underneath the surface, the number of US Congress members who accept political donations from teams related to cryptocurrencies is visibly increasing, as they begin to stand up for common interests in the crypto industry:
For example, on May 8, 21 House Democrats voted to support a resolution against an SEC announcement, and on May 16, 11 Senate Democrats also voted in favor of the resolution. According to an analysis by OpenSecrets, many of these lawmakers are major recipients of political donations from the cryptocurrency industry.
04
Conclusion
Dialectically speaking, this round of elections has become a clear watershed for the development of Web3 and the crypto industry, especially since Crypto had almost no influence or presence in the 2020 and 2016 elections.
However, today, Web3 and the crypto industry have shown their undeniable power in the election, whether in terms of influencing voters’ perceptions, or the role they play in campaign strategies and fund flows, demonstrating their importance that is completely different from the past.
Starting from humble beginnings, after the dust settles from the 2024 US election, Web3 and the crypto industry may indeed enter a completely new phase.
