Would you have believed it if someone told you four years ago that in this round of the US presidential election, candidates from both parties would actively promote their recognition and support for the crypto industry to the point of trying to outdo each other?
You would have thought that person was crazy.
But reality is often stranger than fiction. For the crypto industry, the 2024 US presidential election has become a starkly different political arena from the 2020 and 2016 elections. Both the election cycle's agenda and the public statements of the presidential candidates are unprecedentedly involving cryptocurrencies, with candidates even competing to showcase their open attitudes.
This article will briefly explore the undercurrents behind this significant variable. Is the US crypto policy really shifting course, and what does the change in attitude from numerous political figures and regulators in 2024 mean? How will the crypto and Web3 industries be affected?
01 Trump's and Biden's "Cryptocurrency Battle"
Although the first televised debate of the 2024 US presidential election has yet to begin, Trump and Biden have already started sparring on various issues, with their openness to cryptocurrencies being a key battleground.
First, Trump, who publicly stated five years ago that he did not like Bitcoin and other cryptocurrencies because "they are not money, their value is highly volatile, and they have no tangible basis," now has the rare distinction of being a major political figure who has launched several NFT series. Trump's strong support for cryptocurrencies is now something he can credibly claim.
Especially as the election heats up, Trump increasingly positions himself as a "crypto-friendly" candidate, claiming to be a champion of fintech innovation. On May 22, he even launched a cryptocurrency donation website, officially accepting crypto donations—not just Bitcoin and Ethereum, but also USDC, SOL, XRP, DOGE, ZRX, SHIB, and other cryptocurrencies.
He frequently makes public statements to demonstrate his inclusivity toward cryptocurrencies, calling on the "crypto army" to "lead the campaign to victory on November 5 (Election Day)."
In contrast, Biden, who has traditionally been known for his strict regulatory stance, seems to have softened his position, likely due to electoral considerations and in an attempt to garner support from younger voters. After all, people of color and young people were key to Biden's 2020 election victory, and they have the highest recognition of cryptocurrencies across all generations and demographics.
In six key swing states, over 20% of voters view cryptocurrencies as an important issue. Another nationwide survey of registered voters, commissioned by the crypto company Paradigm, found higher ownership rates of crypto assets among communities of color and younger demographics.
According to the Washington Times, because Biden's re-election campaign is struggling to attract Gen Z voters, they are now hiring a "meme manager" to handle internet content and memes.
Additionally, US presidential candidate Robert F. Kennedy Jr. (nephew of former President John F. Kennedy) is also a staunch supporter of crypto. He stated, "Cryptocurrencies are our escape from reliance on the Federal Reserve, the best way to fight inflation. They strip control from the government and monopolistic banking system, which uses printing money to transfer wealth to billionaire oligarchs while impoverishing ordinary Americans. If you agree that crypto equals freedom, please help me advance this vision as president."
Overall, the election year is undoubtedly a critical factor. In the US, the group that directly or indirectly holds crypto assets is now a significant force, especially when poll data is close. That "key minority" becomes highly coveted, as evidenced by the timing of the FIT21 bill's passage.
02 From the FIT21 Act to Regulatory Softening
Whether it's Trump's active statements or Biden's timely shift, the core purpose is to win over the crypto community's votes, similar to how both candidates opened accounts on TikTok for campaign promotion during the election year. It's just one of the many tactics to address electoral challenges.
In essence, politicians' open stance on crypto assets in 2024 appears more as a means to an end. The loosening in administrative, legislative, and regulatory levels is the more important trend to watch.
It's noteworthy that on May 22, the "21st Century Financial Innovation and Technology Act" (FIT21 Act) passed the House of Representatives with an overwhelming majority of 279 votes to 136. This act establishes a regulatory framework for digital assets and is considered one of the most impactful pieces of legislation for the crypto industry.
The core of this act for crypto regulation is the division of regulatory authority. It explicitly defines two agencies responsible for regulating crypto assets: the US Commodity Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC).
If a crypto asset is defined as a commodity, it falls under the CFTC's jurisdiction; if it is defined as a security, it is regulated by the SEC.
The criteria for determining whether a crypto asset is a commodity or a security include factors like "investment contract (The Howey Test)," "use and consumption," "degree of decentralization," "functional and technical characteristics," and "market activity."
This provides a clear regulatory framework for many crypto projects, a significant step forward from the previous uncertain state where the SEC wielded its enforcement power broadly. It's well-known that the CFTC is relatively more lenient compared to the SEC in the crypto domain.
Additionally, the regulatory attitude, especially from the SEC, has visibly softened, as evidenced by the Ethereum spot ETF news. The SEC's trading and markets division called trading platforms to inform them that they would approve 19b-4 filings this week, and approvals swiftly followed—a nearly 180-degree shift.
This political maneuvering is significant. The Democratic Party desperately needs young voters, and Biden's actions aim to position him as a "visionary elder statesman."
The FIT21 Act's passage is the most notable information. However, it has no counterpart in the Senate, so it won't become law yet. Despite taking the first step, there's still a long way to go.
Regardless, administrative and legislative loosening will inevitably lead to regulatory shifts. No matter the actual outcome, this marks a turning point for crypto assets to enter mainstream awareness and achieve a legal and regulatory framework.
03 The Rising Influence of the Crypto Community
The undercurrents driving these variables are accelerating to the forefront.
On one hand, the growing number of crypto users is becoming an increasingly important factor in elections. The recent market discussion about "50 million Americans holding crypto assets" is essentially a product of the heightened attention from both sides of the US political spectrum on crypto assets and their holders as the 2024 presidential election approaches.
Even if it's election-specific data to soften candidates' attitudes and attract crypto voters, it also indicates that more politicians and candidates have to "court" this voter segment, even if just for the election.
On the other hand, the crypto industry's lobbying and influence are starting to penetrate policy-making. According to DL News, citing data from the political donation tracking platform OpenSecrets, crypto industry lobbying expenditures hit a record high of $24.7 million in 2023. In the first quarter of 2024, the crypto industry spent another $5.6 million.
The crypto industry's lobbying peaked in 2023. Source: datawrapper.de
Beneath the surface, the number of US Congress members accepting political donations from crypto-related teams is visibly increasing, and they are starting to stand with the crypto industry's interests.
For instance, on May 8, 21 House Democrats voted to support a resolution opposing an SEC announcement. On May 16, 11 Senate Democrats also supported the resolution. According to an analysis by OpenSecrets, many of these Congress members are major recipients of political donations from the crypto industry.
The crypto industry has provided significant donations to Congress members. Source: datawrapper.de
Conclusion
The current election has become a clear watershed moment for the development of the Web3 and crypto industries. In the 2020 and 2016 elections, Crypto had virtually no influence or presence.
However, now, the Web3 and crypto industries are demonstrating their significant power in the election, influencing voter perceptions and playing crucial roles in campaign strategies and funding flows. This highlights their newfound importance compared to previous years.
The 2024 US election could indeed mark the beginning of a new era for the Web3 and crypto industries.
