Even if you care nothing about crypto, it’s important to recognize that crypto voters have mobilized into a powerful and increasingly unified political force that’s likely to significantly influence, if not outright shape, the outcome of 2024’s presidential and congressional elections.
On May 31, President Joe Biden vetoed a joint congressional resolution (easily approved by both the House and Senate) that would have repealed an onerous Securities and Exchange Commission (SEC) accounting guideline that prevents banks and other regulated financial institutions from holding digital assets such as bitcoin or ethereum (ETH) tokens in custodial accounts for their clients.
Banks asserted, and Congress agreed, that the administrative rule (it isn’t a law) has a chilling effect that inhibits financial institutions from serving the digital asset industry and working with their customers who want to interact with it.
The veto was the latest in a long series of anti-crypto actions taken by the Biden administration and the SEC; this hostile stance is now seemingly backfiring on the entire Democratic Party and its hopes for November’s elections.
It is fair to say that at the start of President Biden’s term, the crypto industry was a melting pot of political views, mostly lying somewhere between apolitical, centrist, or left-leaning, with a hearty dash of libertarianism thrown in the stew. This has fundamentally changed.
After four years of relentless attacks by President Biden and congressional ally Sen. Elizabeth Warren (D-Mass.), along with her self-described “anti-crypto army” in the Senate and House, further aided by the SEC’s practice of regulation by enforcement, crypto industry participants have decided they’ve had enough of the persecution. They are now aligning around pro-crypto candidates at every level of government.
The Democrats—apparently other than President Biden himself and Mr. Warren’s camp—have awakened to the danger. About 10 Democrats in each chamber joined House Republicans last month in passing the now-vetoed resolution. Separately, on May 22, 71 House Democrats crossed party lines to join the Republican majority in passing the Financial Innovation and Technology for the 21st Century Act (FIT21), another piece of crypto legislation that would clarify the regulation of U.S. crypto markets.
Pushing back on the SEC’s regulatory land grab, FIT21 would designate the Commodity Futures Trading Commission as the primary regulator of digital assets. FIT21 would also more clearly define what makes a digital token a security or a commodity, and set consumer protections for their use.
The SEC itself, in an apparently political maneuver, dramatically reversed course at the last minute and, on May 23, cleared the way for trading spot ethereum exchange-traded funds (ETFs) in the United States after months of opposition. This caught the markets, which were expecting a rejection, off-guard, and ETH prices rose by more than 25 percent in a week. Speculation ensued as to whether the SEC had been given instructions from somewhere on high in the Democratic Party.
Whether the shifting position of such a large number of Democrat legislators and the SEC itself reflects a true change of heart toward crypto or merely a near-term and tactical political calculation—that is, recognition that a disaster is looming—is unclear. But with President Biden’s continued resistance, it may be too little, too late for the Democratic Party.
Presumptive Republican nominee and former President Donald Trump and independent presidential candidate Robert F. Kennedy Jr. have both firmly declared their support for the digital assets industry and its beleaguered U.S. entrepreneurs and have made campaign promises accordingly to unwind the Biden administration’s policies. This has caught the attention and praise of crypto industry participants and sent warning bells ringing.
This matters, because there are believed to be somewhere between 20 million and 50 million crypto users in the United States. Demographically speaking, potential crypto voters are younger, are more likely to identify as independent, and to date haven’t been very politically involved. For many, 2024 will be their first election cycle. They are aggrieved, and many are likely to vote crypto as a single issue.
Indeed, for many voters, their previously held views are firmly cemented and won’t likely change on this or any other news. The wild-card variable is now the crypto vote. Wherever it lands, whether largely on President Trump or on Mr. Kennedy, it does not bode well for the Biden camp.
