After pouring record sums into the 2024 US elections, the cryptocurrency industry is hoping – if not certain – for a newly friendly reception from DC policymakers after what it perceived as a hostile environment in the Biden administration.
Crypto-adjusted interests have spurred millions of dollars into campaigns for President Donald Trump and pro-Crypto candidates, hoping that he and a supportive Congress would pass friendly regulations after dealing with dozens of crypto enforcement actions. the Securities and Exchange Commission (SEC) under Biden.
On the potential political priority menu is legislation that would provide clarity on Crypto’s place in the markets, a “U.S.-backed strategic bitcoin reserve, and legislation on stablecoins, which are cryptocurrencies whose the value is linked to another asset.
Even with the Republican majority, Congress could end up thwarting new legislation. But crypto advocates still welcome new leadership at key regulatory agencies like the SEC, which they have criticized for being heavy-handed in targeting the industry.
“I think we’re going to see movement from both the executive branch and Congress,” said Zack Shapiro with the Bitcoin Policy Institute, adding that he would be very surprised if there wasn’t at least one or two full bills passed.
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The Fairshake PAC, an outside political group that has received major crypto key donations from platform company Coinbase, has been one of the most active of these groups in 2024.
Shapiro noted “the effect that crypto (as) a political force appears to have moved up and down the ballot in the 2024 election,” including what he called the “astonishing impact” of groups like the FairShake PAC.
“I think it was not lost on the legislators,” he said.
For its part, Trump’s team has suggested that a new day will dawn on how the industry is governed.
“There has been an effort in the bureaucratic swamp of Washington to stifle innovation with more regulation and higher taxes, but President Trump will keep his promise to encourage American leadership in crypto and other emerging technologies President Donald Trump’s transition team spokesman Brian Hughes told Context days before Trump was sworn into office.
Trump was expected to sign an executive order creating a crypto advisory council, Reuters reported.
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Stifling innovation?
At or near the top of the priority list or, a legislative decision on how digital assets are classified – an important distinction that could determine whether tokens are regulated by an entity like the Commodity Futures Trading Commission (CFTC) or the SEC .
Crypto enthusiasts have long sought definition of what coins and tokens should be classified as commodities, the jurisdiction of the CFTC, or securities, which would fall to the SEC and the reporting and registration requirements more strict.
“Right now, if you were to try to do a token registered offering, it’s really clear where and how these tokens can trade and what disclosures you need to make,” Shapiro said.
Trump allies and congressional crypto contributors like Sen. Cynthia Lummis of Wyoming also want to create a U.S. strategic Bitcoin reserve — an idea Trump seemed open to during a recent appearance at the New York Stock Exchange.
Supporters say the reserve would help cement the United States as a leader in the sector and help strengthen the country’s finances in the long term.
“Bitcoin is transforming not only our country, but the world and becoming the first developed nation to use Bitcoin as a savings technology secures our position as a global leader in financial innovation,” Lummis said in a statement when she unveiled the Bitcoin reserve bill.
Another issue is legislation that would provide a regulatory framework on how to treat tiers or cryptocurrencies whose value is tied to another asset.
Shapiro said how much Congress is able to pass “is very up in the air and is probably subject to a certain amount of jockeying within the industry based on different people’s different priorities.”
‘House of Cards’
While the industry might be happy to move on from Bide-appointed officials like former SEC Chairman Gary Gensler, consumer advocacy groups warn that a swing toward a more laissez-faire environment could opening the door for scammers to flourish.
“I’m not apocalyptic, but I lived through the first administration of this type (Trump), and I’m not optimistic about anything friendly,” said Ira Rheingold, executive director of the National Association of Consumer Advocates (NACA).
“I view crypto as a house of cards that the bad wind will bring down.”
Rheingold’s group was part of a team that sued crypto platform Gemini last year, alleging that Gemini’s user agreement shifts losses to its customers in violation of federal and DC law.
Gemini did not respond to requests for comment on the lawsuit.
“If I were a legitimate cryptocurrency business, I would want regulation because I think regulation actually legitimizes the business and gives people some protection,” Rheingold said.
Still, it’s unclear how DC’s decision-makers will approach things.
“From a cynical point of view, I can see how the crypto industry is flocking to Washington, so you would think they have a chance of doing something. But I honestly don’t know,” a- he declared.
“Something should be done? Yes. But I would rather have nothing done than regulations that will legitimize an industry that worries me deeply.”
Alex Gladstein, with the Human Rights Foundation, said he is looking for specific policies when it comes to making bitcoin — which comprises most of the crypto market — more accessible to economies, for making payments and for Bitcoin mining.
“I think it’s very simple: Is America in 2028 going to be a better place to save and buy Bitcoin and join Bitcoin businesses than it is today?” said Gladstein, whose nonprofit group, among other things, operates a fund to promote the use of bitcoin for human rights defenders in politically hostile countries.
“Or are you going to be debaned and are we going to worry about censorship and travel and things like that to be in the Bitcoin community? We’re going to go one of two ways here.”
Reporting by David Sherfinski; Editing by Anastasia Moloney and Ellen Wulfhorst; The Thomson Reuters Foundation is the charitable arm of Thomson Reuters.
