As the US presidential election inches closer, both Donald Trump and Kamala Harris have turned their attention to an increasingly prominent and controversial sector: cryptocurrency. While their approaches differ, both candidates are appealing to the growing digital asset community, raising questions about the future of crypto regulation and innovation in the country.
Trump, known for his penchant for bold, often controversial moves, has gone all in on digital assets. He has promoted non-fungible tokens (NFTs) and backed a crypto-lending platform that has raised eyebrows due to its connections with past failed ventures. However, Harris has taken a more cautious approach, advocating for consumer and investor protection when discussing cryptocurrency and its role in the broader tech ecosystem. Despite their contrasting stances, both candidates have praised the concept of digital-asset “innovation,” often linking it with artificial intelligence.
Cryptocurrency, a technology designed to function outside the traditional banking system, has indeed revolutionized wealth creation for some. Notably, over 110,000 Bitcoin wallet holders currently possess more than $1 million in assets. Yet, for the majority of people, the promise of cryptocurrency has not delivered a life-altering transformation. The European Central Bank’s 2022 survey found that only between 2% and 8% of Europeans owned crypto, with most of them not using it for everyday purchases. Instead, the primary motivation for crypto ownership was investment, suggesting that these volatile tokens—lacking intrinsic value—are far from becoming mainstream alternatives to traditional currency.
As an investment vehicle, cryptocurrency has displayed wild swings, drawing comparisons to the Nasdaq stock exchange rather than the “digital gold” it’s sometimes touted to be. The total crypto market surged by 300% to a value of $2.8 trillion in 2021, only to lose over half that value in 2022 due to the collapse of NFTs, unstable “stablecoins,” and financial bets eerily reminiscent of traditional banking crises. While Bitcoin has since recovered, gaining 45% in 2024, much of that recovery is tied to the approval of spot exchange-traded funds (ETFs) and favorable interest rate cuts.
“Crypto is just another way that people like to speculate, because they like to speculate,” said portfolio manager Steve Eisman during an April interview on the Odd Lots podcast. Trump’s involvement in promoting a highly speculative crypto-lending platform has drawn criticism due to its shaky background and questionable ties to past unsuccessful projects.
Despite Bitcoin’s increasing acceptance, its environmental impact has become a growing concern, with Bitcoin mining consuming significant energy resources. Moreover, the crypto industry has seen its fair share of high-profile bankruptcies and fraud cases. In 2023 alone, crypto-related scams accounted for $5.6 billion in reported losses, underscoring the risky nature of this emerging sector. Trump’s comparisons of cryptocurrency to transformative innovations like the lightbulb, airplanes, or artificial intelligence have also been met with skepticism.
Corporate blockchain technology, once considered a game-changer, has also faced diminishing enthusiasm. Wise, a global fintech company, stated that while it heavily relies on machine learning, it has no need for blockchain to move money efficiently across borders. Ironically, traditional financial institutions, such as JPMorgan Chase, remain some of the strongest proponents of blockchain experimentation.
The push for crypto innovation, however, is not just about technology—it’s also about regulation. The crypto industry is ramping up its lobbying efforts to shape favorable regulations. Coinbase, one of the largest crypto exchanges, is currently engaged in a legal battle with the Securities and Exchange Commission (SEC), with around 30% of its revenue at stake. The company recently hired George Osborne, the former UK finance minister, as part of its efforts to navigate the regulatory landscape. With approximately 200 former government officials now working in the crypto sector as lobbyists or investors, the push for a more relaxed regulatory environment is in full swing.
At the heart of the matter lies the need for a compelling narrative to attract fresh capital into the crypto market. Deutsche Bank senior strategist Marion Laboure likened the marketing of Bitcoin to that of diamonds—a product that gained significant value only after De Beers associated it with romance. A similar strategy, blending AI with crypto and promoting a less stringent regulatory environment, could potentially reignite enthusiasm for digital assets.
With central banks worldwide contemplating their responses to the rise of private digital currencies, the debate surrounding financial innovation is set to become even more politicized. While Harris advocates for safeguards, Trump’s approach appears more focused on pushing the boundaries, raising concerns about the potential fallout of his unregulated embrace of the crypto space.
As the election draws near, the contrasting visions of Trump and Harris on crypto could influence not only the future of digital currencies but also the broader financial landscape.
