Biden’s Regulatory Crackdown May Ease, Sparking Optimism Among Crypto Executives
The U.S. cryptocurrency industry, after years of regulatory strife under the Biden administration, is now anticipating a friendlier approach from Washington, regardless of who wins the presidential election this week. As major players prepare for a possible regulatory shift, crypto asset managers like Bitwise and Canary Capital are developing new products, hopeful that a new administration will open doors for digital assets and encourage innovation.
“Regardless who wins, there will be a new approach to how we move forward with crypto,” said Rebecca Rettig, chief legal and policy officer at Polygon Labs. Industry executives expect either Republican candidate Donald Trump or Democratic candidate Vice-President Kamala Harris to bring a different tone to crypto regulation, compared to the stance of President Joe Biden’s administration.
Trump has openly committed to being a “crypto president,” while Harris has yet to detail her specific plans. Nonetheless, her campaign has shown signs of supporting digital asset innovation, and industry insiders have found her statements encouraging.
Industry Seeks Relief from SEC’s Strict Oversight
The Biden administration’s Securities and Exchange Commission (SEC), led by Chair Gary Gensler, has imposed a series of enforcement actions on major players like Coinbase and Kraken, accusing them of sidestepping U.S. securities laws meant to protect investors. Gensler, appointed by Biden, has consistently called the crypto industry a significant risk, citing major scandals such as the collapse of FTX and other bankruptcies. The regulatory crackdown has sparked frustration among crypto companies, which argue that digital assets should be regulated like commodities, not securities.
Billionaire entrepreneur and Harris supporter Mark Cuban has also criticized the SEC’s approach, labeling it a “crypto crackdown” that has stifled growth. “Absolutely it will be friendlier under a Harris admin,” Cuban wrote in an email, noting her promise to protect crypto investors as “important.”
Yet Gensler, whose term runs until 2026, has shown no signs of shifting his stance on crypto regulation. Trump, if elected, has vowed to fire Gensler, but Harris has made no such pledge.
Growing Influence of Pro-Crypto Donors and Legislators
The crypto industry has become a significant player in the political sphere, contributing millions to pro-crypto candidates across both parties. Ripple chairman Chris Larsen, for example, has made major contributions to a super PAC supporting Harris, while new Democratic-aligned crypto groups have bolstered her campaign’s funding. In total, Ripple, Coinbase, and others have collectively spent over $119 million on pro-crypto congressional candidates, according to Public Citizen data.
“For the crypto industry, this election isn’t about choosing one party over another – this is about supporting candidates who recognise that the US needs to support innovation,” said Lauren Belive, Ripple’s head of U.S. policy. Coinbase recently announced an additional $25 million donation to a pro-crypto political action committee (PAC), though it declined to comment further.
Key Regulatory Change in SAB 121 Could Boost Crypto Adoption
A top priority for the crypto industry is the repeal of the SEC’s SAB 121 guidance, which requires public companies to classify crypto assets held for customers as liabilities. This rule has discouraged banks from offering crypto storage, given the strict capital requirements it imposes. In May, a bipartisan majority in Congress voted to overturn the rule, but Biden used his veto power to block the resolution.
“With recent bipartisan support … I’d expect that regardless of who becomes the next president, SAB 121 is overturned,” said David Mercer, CEO of LMAX Group, a crypto exchange operator. “That should be an accelerant for the whole crypto market.”
This August, State Street announced plans to enter the crypto custody business, expecting the SEC to eventually revise the guidance. Since then, signs of flexibility have emerged, as the SEC granted BNY Mellon permission to store crypto assets without listing them as liabilities, provided certain conditions are met.
“There’s clearly a recognition by both presidential candidates that digital assets can play a positive economic role,” noted Sui Chung, CEO of CF Benchmarks, a Kraken subsidiary. Chung cited recent regulatory approvals, including bitcoin and ether exchange-traded funds (ETFs), as evidence of a political climate more favorable toward digital assets.
With Tuesday’s election looming, the crypto industry is watching closely, hopeful that a shift in leadership will bring the regulatory relief needed to foster further innovation and growth in the digital asset space.
