The cryptocurrency industry is under intense scrutiny, with the chair of the US Securities and Exchange Commission (SEC), Gary Gensler, calling it “rife with fraud and hucksters.” Gensler warned that the investing public has suffered significant losses due to crypto companies not adhering to existing laws.
As the November elections approach, the crypto sector is spending millions on political donations, hoping to sway outcomes in favor of more lenient regulations. The elections feature a key presidential race between Donald Trump and Kamala Harris, alongside all 435 House seats and 33 Senate seats.
Trump is actively courting crypto enthusiasts, promising to transform America into “the crypto capital of the planet” and even proposing a “strategic national bitcoin stockpile.” This marks a significant shift from his previous stance, where he referred to Bitcoin as a potential threat to the US dollar.
In contrast, the Biden administration, which includes Harris as vice president, has taken a hardline approach to crypto regulation. Recent high-profile cases include the jailing of Sam Bankman-Fried, founder of FTX, for fraud, and penalties against Binance, the world’s largest crypto exchange, for facilitating money laundering.
Gensler emphasized that while crypto represents a small portion of capital markets, its potential to undermine investor trust is significant. Despite proponents arguing that crypto offers fast and secure transactions, a Federal Reserve survey revealed a drop in American crypto users from 12% in 2021 to just 7% last year.
Harris has been relatively quiet on crypto, but her advisors hint at support for policies that promote the growth of emerging technologies. Recent discussions between her team and industry executives have generated cautious optimism for the future of crypto, regardless of the election outcome.
Paul Grewal, Coinbase’s chief legal officer, stressed the importance of US regulatory clarity, noting that the global market is watching. He emphasized that every vote, including those from crypto enthusiasts, could be crucial in this tightly contested election.
While the US has taken steps toward regulation, Europe is also tightening its grip on crypto with new laws to combat criminal use. Meanwhile, the G20 is working on non-binding minimum standards for the sector.
A bill to regulate cryptocurrencies has passed the House but stalled in the Senate, with critics arguing it may reduce consumer protections. Grewal supports the bill, asserting that the crypto industry is not opposed to regulation, but seeks parity with other financial assets.
As the elections draw near, the crypto industry has seized the moment to back lawmakers who support their agenda. By last month, the sector had already contributed an unprecedented $119 million to political campaigns, outpacing all other industries in corporate donations. Critics argue that this funding aims to reduce oversight and consumer protections.
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