The 2024 elections hold the potential to reshape the future of the US and the rules of many sectors of the economy, including crypto. While the crypto sector has seen progress under President Joe Biden, the regulatory atmosphere has not always been favorable, marked by a growing partisan divide on the issue. As the political tides shift, the upcoming elections may bring about a crucial turning point for the crypto industry.
Industry Outlook and The 2024 Elections
The crypto industry has become increasingly entangled in partisan politics, with Democrats generally favoring a more robust regulatory approach. However, the 2024 elections could mark a significant shift in the industry outlook. While the Senate is anticipated to shift back to Republican control, uncertainties surround the White House and the House of Representatives. The likely outcomes include either unified Republican control or a divided government with a Democratic president and House, alongside a GOP-controlled Senate.
The Potential Upside of Unified Republican Control
A unified Republican control in the government presents a favorable scenario for the crypto industry, despite past clashes between President Donald Trump and the sector during his first term. Trump’s personal exploration of the crypto space, including ventures into non-fungible tokens, coupled with optimistic tones from industry advocates in Congress, suggests a potential shift in approach during a second term.
The impact of Trump’s return on crypto will hinge on his choice of agency heads, as they will play a pivotal role in shaping regulatory policies. Advocates in Congress will likely rally behind nominees supportive of the industry, aiming for regulatory clarity. Even if not as fervently supportive as some, a nominee less skeptical than current counterparts would represent a significant improvement.
Legislative Opportunities and Challenges
A unified Republican government offers the best chance for major crypto regulation to pass. While the 60-vote threshold in the Senate poses challenges, this scenario presents the industry’s most promising opportunity since its surge during the pandemic. Success in the Senate relies on finding influential allies within the industry, a task yet to be fully realized. Although supportive Republicans exist, few hold leadership positions.
The leadership of the House Financial Services Committee will be a decisive factor in the fate of future crypto-related bills. The departure of Rep. Patrick McHenry leaves a void, and the choice of his successor will significantly impact the industry’s standing. Rep. French Hill emerges as a likely ally, having demonstrated support as the current chair of the House Financial Services Committee’s digital assets subcommittee.
Challenges under Divided Government
In the event of a divided government with President Biden remaining in the White House, the status quo is expected to persist. SEC Chair Gary Gensler, known for his skepticism toward the industry, may continue to influence regulatory decisions until his potential departure. The dynamics within the Biden administration will determine the extent of skepticism towards the crypto sector.
Despite a change in control of both chambers, legislative proposals may encounter familiar challenges in becoming law. The relationship between the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee chairs will be crucial. Rep. Maxine Waters and Senator Tim Scott are likely candidates, with Waters having previous experience with crypto legislation and Scott reflecting a general Republican concern about regulation stifling innovation.
The Path Ahead
While divided government may hinder significant crypto legislation without White House backing, the industry’s future remains uncertain. The 2024 elections could usher in a pivotal moment for crypto in the U.S., influencing regulations, legislation, and the overall trajectory of the sector. As the political landscape evolves, the crypto community watches closely, anticipating the potential impact of these elections on the industry’s journey.
