The U.S. cryptocurrency industry, after years of tense relations with the Biden administration, is optimistic about a more favorable regulatory environment, regardless of who secures the presidency next week. Crypto executives and advocates are gearing up for an anticipated shift in Washington’s stance, with companies like Bitwise and Canary Capital already planning new product launches in anticipation of a crypto-friendly administration.
“Regardless of who wins, there will be a new approach to how we move forward with crypto,” remarked Rebecca Rettig, Polygon Labs’ chief legal and policy officer, underscoring a shared industry sentiment.
The Republican candidate, Donald Trump, has publicly declared himself a “crypto president,” while Democratic nominee Vice President Kamala Harris has indicated her willingness to support digital asset innovation and consumer protection, according to her campaign. Harris has yet to release specific policies on cryptocurrency, but her ally, entrepreneur Mark Cuban, a well-known crypto enthusiast, has been vocal in criticizing the regulatory approach under current SEC Chair Gary Gensler. Cuban expressed confidence that “it will be friendlier under a Harris admin,” adding that her stated commitment to crypto user protection was “important.”
Industry Concerns Over SEC Enforcement
Gensler has staunchly defended a rigorous regulatory approach to cryptocurrency, citing recent industry scandals such as the collapse of FTX and multiple bankruptcies that prompted calls for tighter regulations. Gensler’s SEC has filed numerous enforcement actions against major crypto firms, including Coinbase and Kraken, alleging non-compliance with securities laws aimed at safeguarding investors.
While the crypto industry has largely contested these actions, insisting that digital assets should be regulated as commodities rather than securities, Gensler’s term doesn’t expire until 2026. Trump has pledged to remove Gensler if elected, though Harris has not indicated any intent to replace him. An SEC spokesperson declined to comment on these developments.
Ripple chair Chris Larsen and other prominent industry leaders have backed Harris, with Democratic-aligned crypto groups stepping up fundraising efforts in her favor. The Winklevoss twins, founders of Gemini, are among Trump’s notable crypto backers. Both sides of the political aisle have seen significant campaign donations from crypto firms, which have contributed over $119 million to pro-crypto congressional candidates, as noted by Public Citizen data.
“Our focus remains to increase value generated to our shareholders by leveraging the digital transformation of capital,” added Ripple’s U.S. policy head Lauren Belive, expressing the industry’s bipartisan support for candidates open to fostering cryptocurrency innovation.
A Potential Shift in Key Regulatory Guidance
A crucial issue for crypto advocates is the SEC’s “SAB 121” guidance, which mandates that public companies list crypto assets held for clients as liabilities due to their high-risk nature. Crypto firms argue that this guidance imposes significant capital requirements on banks, limiting their ability to engage in the crypto space.
In May, Congress voted to overturn SAB 121, though President Biden vetoed the measure. David Mercer, CEO of LMAX Group, voiced optimism that SAB 121 will eventually be overturned, regardless of the election outcome. “With recent bipartisan support…I’d expect that regardless of who becomes the next president, SAB 121 is overturned,” he stated, predicting that such a move would energize the crypto market.
The regulatory landscape may already be softening. Last month, the SEC announced that SAB 121 would not apply to certain firms that meet specific conditions, and granted BNY Mellon permission to custody crypto assets for exchange-traded products without listing them as liabilities. In an interview with Bloomberg, Gensler suggested that other banks could adopt a similar approach.
The SEC recently approved applications for Bitcoin and Ether exchange-traded funds (ETFs) following a court ruling against the agency. Bitwise and Canary Capital quickly filed applications to introduce ETFs linked to Ripple’s XRP, indicating their belief in a more favorable regulatory environment on the horizon.
Sui Chung, CEO of CF Benchmarks, a Kraken subsidiary, highlighted the BNY decision as a positive indicator. “There’s clearly a recognition by both presidential candidates that digital assets can play a positive economic role,” he observed.
With a new president, the industry is hopeful for progress on stablecoin legislation and a regulatory framework that would facilitate wider adoption of digital assets. The SEC will review the pending ETF applications by mid-next year, suggesting the possibility of a friendlier climate for crypto regulation in 2025 and beyond.
