Analysts believe that regardless of who takes over the White House, the cryptocurrency industry will receive a growth catalyst.
The 2022 cryptocurrency crash is now a distant memory, with Bitcoin making a comeback at $73,500, up over 63% so far this year. Suspicious platforms like FTX no longer exist, while lobbying and campaign donations in the industry have become a powerful force in Washington, including $130 million in donations to congressional and White House campaigns this election cycle.
Next year's U.S. Congress may be one of the most crypto-friendly in history, with both Trump and Harris indicating a willingness to help the cryptocurrency industry achieve its long-sought goals.
Cryptocurrency companies are optimistic about this. Coinbase Global's Chief Policy Officer Faryar Shirzad said, "Regardless of who wins on November 5th, I remain optimistic about the prospects for the cryptocurrency industry, as crypto is an ideal 'candidate' in areas where the two parties are willing to cooperate."
Some analysts also believe that this year's U.S. election could be a growth catalyst for Bitcoin and cryptocurrency companies.
The "enemy" of cryptocurrencies, the SEC chairman, may be removed
B. Riley Securities analyst Hal Goetsch recently wrote in a research report that "from a regulatory perspective, the 2024 election could be one of the most important moments for cryptocurrencies." He believes that if Trump wins, he will introduce more measures to support the cryptocurrency industry. Bernstein Research earlier this year pointed out that if Trump wins, the Bitcoin price could exceed $80,000, while if Harris takes over the White House, the Bitcoin price will drop significantly, partly because she will slow the pace of deregulation.
Since many companies in the cryptocurrency industry are targets of the U.S. Securities and Exchange Commission (SEC), this year's election is particularly important for the industry. While the SEC has approved the launch of Bitcoin ETFs, SEC Chairman Gary Gensler remains staunchly opposed to cryptocurrencies.
Over the years, Gensler has not only initiated lawsuits and regulatory actions against the cryptocurrency industry, but has also opposed the formulation of relevant rules, with cryptocurrency company executives saying the SEC should establish rules that provide a clear legal path for the cryptocurrency industry. The SEC has accused companies like Coinbase, Kraken, and Binance of being unregistered securities exchanges, and these lawsuits are currently underway in federal court, with the companies stating that their operations are fully legal.
If Trump wins, the probability of Gensler's resignation is very high. Gensler's term will end in 2026, but based on past precedent, SEC chairmen typically resign when the White House changes hands, and even if Gensler chooses to break tradition and continue as SEC chairman, Trump can immediately appoint a Republican as SEC chairman after taking office.
If Harris wins, Gensler's fate is less clear. Some prominent Democratic supporters of the cryptocurrency industry, including Mark Cuban and Ripple co-founder Chris Larsen, have pressured the White House and campaign officials to remove Gensler. However, if Harris is elected president, she already has a long list of official appointments that need to be approved by the Senate, and removing Gensler would create another headache for her.
Kristin Smith, CEO of the Blockchain Association, believes that if Harris is elected president, Gensler "will continue to be the biggest risk the cryptocurrency industry faces."
During Biden's presidency, the cryptocurrency industry has faced a severe crackdown, and Harris is trying to change the industry's view that "the Democratic Party is the enemy," but Trump has already stated that he will fully support the cryptocurrency industry.
In July this year, Trump said at an important Bitcoin conference that he would "make America the global cryptocurrency capital" and that the U.S. would begin to hold Bitcoin for strategic purposes. Trump himself has also ventured into the cryptocurrency field, helping to launch the World Liberty Financial project.
Brian Hughes, a senior advisor to the Trump campaign, said in a statement, "The Harris-Biden administration has stifled innovation through more regulation and higher taxes, but the cryptocurrency industry knows that President Trump is the only candidate in this race who is prepared to encourage America to take the lead in cryptocurrencies and other emerging technologies."
According to insiders, Harris's involvement in the cryptocurrency industry is far less than Trump's, but her campaign officials frequently interact with cryptocurrency industry executives. In October, Harris launched the Opportunity Agenda project, which aims to help the black community access the cryptocurrency field and includes a project to "support a regulatory framework for cryptocurrencies and other digital assets."
The cryptocurrency industry becomes a major donor in the election
The bipartisan "green light" for cryptocurrencies is the result of extensive lobbying and donations in this election cycle. Political action committees funded by companies like Coinbase, Ripple Labs, and venture capital firm Andreessen Horowitz have spent over $134 million to support pro-crypto candidates and attack their opponents.
Even before the vote counting began, the cryptocurrency industry had already achieved some major victories. The industry-funded political action committee (PAC) spent $10 million in the California Democratic Senate primary to support pro-crypto Congressmen Adam Schiff and Katie Porter. Schiff is highly likely to win the deep blue California election. The PAC has also invested heavily to support Democratic primary candidates Emily Randall in Washington state and Shomari Figures in Alabama, both of whom have advanced to the general election.
The cryptocurrency industry hopes that Congress will pass two key proposals: one to set requirements and standards for stablecoins (cryptocurrencies pegged to the U.S. dollar); and another to remove most of the cryptocurrency market from the SEC's regulatory jurisdiction and place it under the Commodity Futures Trading Commission, which is seen by the industry as a more lenient regulator.
If Trump is elected president, the chances of these proposals being passed are higher. In May of this year, the U.S. House of Representatives passed a bill drafted by Republicans, supported by Coinbase and other crypto companies, that would establish rules for cryptocurrency exchanges, and many cryptocurrencies would not be subject to securities laws if they are sufficiently decentralized. 71 Democrats voted against Gensler's proposal along with Republicans, with Gensler saying the bill would "undermine decades of precedent." Meanwhile, stablecoin-related legislation has also gained bipartisan support.
Even if Harris wins, relevant legislation is also likely to move forward. Kristin Smith of the Blockchain Association pointed out that the "lame duck" period in Congress from November 5th to January 3rd next year is a window of opportunity, during which time legislation typically faces greater resistance, but including senior Democrats and Republicans on the House Financial Services Committee, as well as Senate Majority Leader Chuck Schumer, believe the relevant legislation has a chance of being passed by the end of this year.
One point to note is that the cryptocurrency industry may see itself somewhat neglected after the election, when politicians are no longer rushing to raise funds or seek votes, but instead engage in the more arduous task of governance. 2025 will likely see a "legislative battle," in which the passage of proposals from both parties in the U.S. will be more difficult.
Which crypto assets are worth watching?
Regulation is just one of the factors affecting the prices of cryptocurrencies and related stocks. In the medium term, the rise and fall of Bitcoin and mining company stocks often depends on macroeconomic trends, such as how quickly the Federal Reserve cuts interest rates. A Trump victory may provide a boost to the Bitcoin price in the days after the election, but election models show this year's election is a toss-up.
If the regulatory environment is relaxed, Coinbase (COIN) will be one of the beneficiaries. Mizuho Securities believes that if Gensler is replaced by a more crypto-friendly SEC head, the company's stock price will receive a boost.
However, some analysts also suggest that investors wait for the dust to settle after the election.
Gache of B. Riley Securities said: "We expect the company's stock price to remain range-bound until the election results are finalized, regulatory requirements are clarified, or a better catalyst emerges that can provide sustained growth for Coinbase's profits." Gache rated Coinbase's stock as "neutral" with a target price of $185, about 16% lower than the current level.
