Hannah Lang
(Reuters) – The cryptocurrency industry has been at odds with Democratic President Joe Biden’s administration over regulatory issues for years, but executives expect an easier journey from Washington regardless of who wins the White House next week.
Crypto asset managers including Bitwise and Canary Capital are planning recent products ahead of what many managers expect will be a more crypto-friendly administration, while others including are planning a recent push for cryptocurrency legislation in the recent Congress, executives and lawyers.
“No matter who wins, we will take a new approach to moving cryptocurrencies forward,” said Rebecca Rettig, chief legal and policy officer at crypto firm Polygon Labs.
Republican nominee Donald Trump has said he will be a “crypto president,” and executives also expect Vice President Kamala Harris, the Democratic nominee, to take a softer stance than Biden.
Harris has not yet detailed her crypto plans, but her promise encouraged executives to promote innovation in digital assets and protect crypto investors.
Harris’ surrogate and billionaire entrepreneur Mark Cuban, a cryptocurrency enthusiast, also criticized the crackdown on cryptocurrencies led by Securities and Exchange Commission Chairman Gary Gensler, a Biden appointee.
“It will absolutely be friendlier under Admin Harris,” Cuban wrote in an email to Reuters, adding that her promise to protect cryptocurrency users was “important.”
Gensler insisted that the cryptocurrency industry poses a risk to investors, pointing to the collapse of FTX and numerous other bankruptcies and frauds that have prompted calls for tighter regulation. Since Bitcoin’s debut in 2009, the cryptocurrency market has been extremely volatile.
Gensler’s SEC has brought dozens of enforcement actions against Coinbase (NASDAQ:), Kraken and others, accusing them of flouting U.S. securities laws designed to inform investors of potential risks.
Cryptocurrency players have denied the SEC’s allegations. They say cryptocurrencies, which have a global market value of about $2.5 trillion, should be regulated like commodities.
Gensler, whose term ends in 2026, did not say his views on cryptocurrencies have changed. Although Trump said he would fire Gensler, Harris did not suggest she would seek to replace him. An SEC spokesman declined to comment on the matter.
Trump’s plan to promote bitcoin has landed him several huge cryptocurrency donors, including Gemini founders Cameron and Tyler Winklevoss. At least one industry executive, Ripple CEO Chris Larsen, cut Harris a huge check, and recent Democrat-aligned crypto groups raised funds for her.
According to data from Public Citizen, Ripple, Coinbase and other companies have spent more than $119 million supporting pro-crypto congressional candidates. Among the companies’ goals is advancing legislation that would push stablecoins, or crypto tokens pegged to the U.S. dollar, into the mainstream.
“For the cryptocurrency industry, this election is not about choosing one party over another – it is about supporting candidates who recognize that the United States must support innovation,” Lauren Belive, head of U.S. policy at Ripple, said in a statement.
Coinbase, which announced an additional $25 million donation to a pro-crypto PAC on Wednesday, did not respond to a request for comment.
Influential progressive lawmakers have also pressured Gensler to be tough on cryptocurrencies, but some Democrats raised concerns to the Democratic National Committee in July that some voters were alienated by the approach, Reuters previously reported.
CRYPTO REVERSE?
Crypto executives believe the SEC, under Harris’ leadership, will review or even withdraw guidance requiring public companies to account for crypto assets held on behalf of others as liabilities due to their riskiness.
The “SAB 121” guidelines are a major mistake for the crypto industry.
As strict capital rules require banks to hold cash against liabilities, many lenders remain on the sidelines of cryptocurrencies. Executives say cryptocurrencies would become more popular if consumers could store them with trusted lenders.
In May, a bipartisan Congress voted to repeal SAB 121, but Biden vetoed the resolution.
“With recent bipartisan support… I would expect that regardless of who becomes the next president, SAB 121 will be overturned,” said David Mercer (NASDAQ:), CEO of LMAX Group, which runs the cryptocurrency exchange. “This should be an acceleration for the entire cryptocurrency market.”
in August Stanowa Street (NYSE:) announced plans to offer cryptocurrencies, expecting the SEC to eventually revise those guidelines, Reuters reported. Some managers are already seeing a thaw.
Last month, the SEC’s chief accounting officer said SAB 121 did not apply to certain companies, provided they meet certain conditions.
Shortly thereafter, the agency issued a “no objection,” allowing BNY to hold cryptocurrencies held within its exchange-traded products without having to settle them as liabilities. In an interview with Bloomberg, Gensler said that other banks could replicate this model.
“Both presidential candidates clearly acknowledge that digital assets can play a positive economic role,” said Sui Chung, CEO of CF Benchmarks, a subsidiary of Kraken, who pointed to BNY’s approval as a sign of a changing political climate.
After losing in court, the SEC this year approved bitcoin and ether ETFs. Bitwise and Canary Capital filed applications with the SEC this month to launch similar products that would track Ripple’s XRP crypto token.
“We believe that regardless of who wins on Tuesday, cryptocurrency markets will be looking to a more favorable regulatory environment under the new administration in the new year,” a Bitwise spokesman said.
Given that the SEC has until mid-2025 to make a decision on these applications, they will likely opt for a friendlier SEC, executives said. “These filings are effectively a down payment on this change in the political environment,” Chung said.
“Canary continues to see encouraging signs of a more progressive regulatory environment,” a spokesman said in a statement, adding that this has stimulated investor demand for access to cryptocurrencies other than bitcoin and ether.
