The Role of Cryptocurrency in the United States Election of 2024
Presidential candidates Joe Biden and Donald Trump illustrate the Democratic and Republican parties’ divide over crypto.
The U.S. will hold its 60th presidential elections in 2024. Joe Biden and Donald Trump are presumptive nominees for the Democratic and Republican parties.
Crypto is often considered a political issue. Though there is some evidence of non-partisan treatment of crypto, it is widely held that the Republican party is in favor of an open crypto industry while the Democratic party is in favor of regulation.
Accordingly, the divide is reflected in each presidential candidate’s actions and stances. These are the most important crypto issues this year.
Trump has recently begun to advocate for pro-cryptocurrency policies. At a May 8 event, he urged crypto supporters to vote for him, and at a June 6 event, he pledged to counter restrictive Democratic policies.
Trump’s latest pro-crypto statements reverse his earlier anti-crypto position. In 2019, Trump said he was “not a fan of Bitcoin” and other cryptocurrencies and called the assets’ value “highly volatile and based on thin air.”
Meanwhile, Biden’s re-election campaign appears to be moving toward a more industry-friendly crypto platform despite his arguably strict policies. The Block reported the campaign is seeking input from the industry on “crypto community and crypto policy moving forward,” citing individuals familiar with the matter.
Biden’s 2022 executive order represents his current treatment of crypto and describes responsible development through policy and regulation.
Trump began to accept crypto campaign donations on May 21 through Coinbase Commerce, a first for any U.S. Presidential candidate. The decision could provide additional funding and strengthen his campaign.
The Biden campaign could also begin to accept donations via Coinbase, according to a report from The Block on June 12, though this is unconfirmed.
Trump has earned proceeds from a series of cryptocollectibles or non-fungible tokens (NFTs). In April 2023, Trump reported between $100,001 and $1 million in income from those sales in a 2022 financial disclosure.
Arkham Intelligence suggests a Trump-controlled wallet held $14 million of crypto as of June 2024. Though the balance includes tokens that Trump has no direct involvement in and may not have asked to receive, Trump appears to control the wallet and seemingly sold $2.4 million of Ethereum (ETH) from it in late 2023.
Biden said in 2020 that he held no Bitcoin.
Central bank digital currencies (CDBCs) are digital versions of a country’s currency, usually represented on a distributed ledger. While CBDCs arguably provide advantages, they are controversial because they allow for greater government control than public cryptocurrencies like Bitcoin (BTC) or regular cash.
Trump has pledged to stop the U.S. from issuing a CBDC as recently as January 2024, stating that he would “never allow” the technology.
Biden is neutral on the matter. His 2022 executive order suggests exploring a CBDC, promotes participation in international experiments, and encourages the Federal Reserve to continue its research. It does not order the creation of a CBDC.
The Federal Reserve, which is independent, has made no decision on whether to create a CBDC and will not issue one without congressional approval.
The Biden administration has proposed a 30% tax on cryptocurrency mining due to its high energy consumption. The administration first proposed the plan in May 2023 for the 2024 budget, and it remains in the 2025 budget proposal.
Trump has stated that he wants all Bitcoin mining to occur in the U.S. and called mining “the last line of defense” against a central bank digital currency (CBDC).
While Trump may find it challenging to completely dominate mining due to competition from other countries, Biden may find it difficult to counter the U.S. industry’s recent rapid growth. The Energy Information Administration said the U.S. controlled 38% of Bitcoin mining from 2022 to 2024, up from 3.5% in 2020.
Currently, U.S. crypto mining is largely regulated at the state and county level.
The U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin exchange-traded funds (ETFs) in January 2024 — in part due to earlier legal action from one applicant, Grayscale.
The agency seemed prepared to reject spot Ethereum ETFs months later, but suddenly shifted course and approved the funds in May.
The SEC reversed course on Ethereum ETFs amidst Trump’s pro-crypto statements. The agency also delegated the decision without conducting a vote among its five voting members, which would have shown whether Democratic SEC chair Gary Gensler and commissioners in both parties voted along party lines.
Accordingly, some have speculated that the decision was a politically motivated attempt to appeal to pro-crypto voters. Others have discounted a political explanation and suggested the SEC aimed to avoid another legal challenge.
Trump has made few if any comments on crypto ETFs. Currently, there are no other pending spot crypto ETFs that Trump could support immediately upon election, meaning that the issue may not become part of his campaign.
On May 31, Biden vetoed a bill that would have overturned a controversial SEC staff bulletin called SAB 121. The bulletin set strict custodianship rules for banks and other institutions working with customers’ crypto assets.
Biden branded the bill that challenged SAB 121 a Republican effort and said it would undermine the SEC’s efforts to protect consumers and investors.
While Trump has not commented on SAB 121, the Republican majority House continues to challenge it through a rider in a proposed budget.
There is plenty of current legislation that could reshape the crypto sector. Democratic Senator Elizabeth Warren’s Digital Asset Anti-Money Laundering Act (DAAMLA) aims to impose broad requirements on members of the industry to prevent crime and money laundering. Warren reintroduced the bill in the Senate in 2023; it has remained highly visible despite not advancing since its reintroduction.
Meanwhile, the Financial Innovation and Technology for the 21st Century (FIT21) Act, largely sponsored by Republican lawmakers, has seen progress. It aims to create new CFTC duties around crypto, clarify SEC powers, and establish clearer compliance for crypto companies. The bill passed the House with bipartisan support in May 2024 but has not passed the Senate or become law.
Both bills are broad and could reshape the crypto sector. The party holding the presidential office, and Congress’ makeup, could impact the success of each.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.
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