Experts weigh in on what a Trump or Harris presidency could mean for the crypto industry

adminOctober 5, 2024

With the U.S. presidential election just a month away, the crypto industry is watching closely to see how a Donald Trump or Kamala Harris administration might shape the market. In the lead-up to the vote on Nov. 5, the two candidates have taken a contrasting approach to crypto — raising questions about the industry’s future under either Commander in Chief.

Previously critical of bitcoin, Trump has repositioned himself as a pro-crypto candidate this year — accepting cryptocurrencies for campaign donations and outlining policies such as turning the U.S. into a bitcoin mining “powerhouse,” appointing a crypto-friendly SEC chair and creating a national strategic bitcoin reserve.

In contrast, Harris did not address crypto in any of her speeches or policy statements until recently. At a Wall Street fundraiser in September, the current Vice President said she’d encourage crypto business while protecting consumers. In a subsequent speech addressing The Economic Club of Pittsburgh, Harris said the U.S. should become “dominant” in blockchain, and reiterated digital assets and AI are a part of her vision of an “opportunity economy” in the publication of her 80-page economic plan.

The potential for bipartisan crypto support was encouraging to some industry players, such as the Uniswap founder Hayden Adams, who praised her progressive approach in contrast to Joe Biden’s. Others, such as Bernstein analyst Gautam Chhugani, said the crypto community needed more policy clarity from Harris, arguing that sentiment in the industry under a Trump win would be stronger.

Just a few weeks before Americans cast their ballots, The Block reached out to experts across the industry to gauge their views on what victory for either candidate could mean for crypto.

‘Crypto wins no matter what happens in November’

Asset managers willing to share their views were mixed on the election outcome’s impact on the industry. However, they generally expected crypto to fare well regardless of who ends up in the White House.

“I’m increasingly of the view that, generally speaking, crypto wins no matter what happens in November,” Bitwise CIO Matt Hougan told The Block. Hougan believes that Washington, D.C.’s “hostile attitude” toward crypto has “passed its sell-by date,” as evidenced by positive comments from both sides of the aisle in Congress and the recent softening of custody restrictions on certain banks.

Eliézer Ndinga, Head of Digital Assets Strategy and Business Development at 21Shares, agreed, suggesting that innovation would persist regardless — pointing out that digital assets have continued to grow into a $2 trillion asset class with over 500 million users through multiple political cycles and administrations.

“That said, the election still matters,” Hougan added. “There is more uncertainty around what a Harris administration would mean for crypto than a Trump administration, and markets dislike uncertainty. I imagine investors would want to see if there are leadership changes at key regulatory agencies under a Harris administration before passing judgment. The added uncertainty could put a damper on crypto markets until it’s resolved.”

However, Hougan argued that the election isn’t the biggest event impacting the crypto market at present, citing the increase in global money supply, economic stimulus in China, rate cuts in the U.S. and technological developments that “may well drown out the noise from D.C.”

While the general trajectory of the crypto market could, therefore, remain intact either way, other opinions were a little more nuanced, with bitcoin potentially benefiting more than altcoins.

“No matter who wins the presidency, expect U.S. debt ratings downgrades and a greater focus from treasury buyers on the sustainability of fiscal plans,” VanEck Head of Digital Assets Research Matthew Sigel told The Block. “We think bitcoin is a winner under those circumstances. How the rest of the market (altcoins) act will depend more on who wins, with Trump the ETH holder clearly better for proof-of-stake coins if current policies continue.”

Under a potential second term for President Trump, CoinShares Head of Research James Butterfill argued that protectionist measures and inflationary trade policies could weaken the U.S. dollar, potentially benefiting bitcoin as a hedge against currency devaluation. Trump and VP pick J.D. Vance’s pro-crypto stance could also create a more accommodating regulatory environment for cryptocurrencies, according to the analyst.

In contrast, under a potential Kamala Harris presidency, a balanced approach to cryptocurrency could distinguish her from President Biden’s more critical stance, Butterfill added. However, Harris’s unclear position on crypto might result in a less favorable environment for digital assets. “This scenario is likely to benefit bitcoin more relative to altcoins, which may suffer more from regulatory actions,” he said.

Financial analyst, investment strategist and author Lyn Alden suggested that while Trump and Republicans as a whole have shown more enthusiasm toward the bitcoin/crypto space than Harris and the Democrats, there is still a significant minority of Democrats in the House and Senate that are generally pro-bitcoin/crypto.

“Overall, I consider the election to likely be more impactful to the crypto side of things, as that’s mainly around securities laws and their interpretation by the Securities and Exchange Commission,” Alden told The Block. “With bitcoin considered to be a commodity for most intents and purposes, things like a sizable strategic reserve, an elimination of capital gains taxes up to a certain threshold per year, or changes to privacy laws or interpretations could greatly affect it, but those are harder to change and probably require broader buy-in among politicians than what currently exists.”

Meanwhile, this election will be remembered as the first influenced by crypto voters, according to Samir Kerbage. The Hashdex CIO said the outcome of the U.S. election will “without a doubt impact the immediate future of the crypto asset class,” though that had more to do with ending the overhang of market uncertainty. “We believe the shift from the current administration to the next will be a net positive for investors in this space,” Kerbage said.

Eliminating market uncertainty

The idea that the election outcome impact was more about eliminating market uncertainty than who gets to enter the Oval Office is a view echoed by the CEO of bitcoin miner CleanSpark, Zach Bradford.

In a recent interview with analysts at research and brokerage firm Bernstein, Bradford said the election would impact price — predicting bitcoin to peak near $200,000 this cycle — but it was less about who wins and more about the election being over. Bradford added that he thought the Federal Reserve had been a bit late in cutting rates and expected the central bank to be more aggressive in the next 15 to 16 months, regardless of who’s president, which bodes well for bitcoin.

Kyle Schneps, VP of Public Policy at bitcoin mining service provider and pool operator Foundry Digital, told The Block that bitcoin and crypto will succeed under either President, but it’s just a matter of whether they do so with the U.S. at the forefront of the industry.

“Trump has surrounded himself with advisers who are all unabashedly pro-crypto and this has shown great promise for the industry in the U.S. should he win. On the other hand, single-issue crypto voters and industry trade groups are eagerly awaiting some substantive sign from the Harris campaign that she will reverse course on Biden-era anti-crypto policies,” Schneps said. “Since crypto is not a partisan issue but rather a generational one, this is a great opportunity for Harris to show she is truly ‘turning the page’ by embracing this new technology.”

On the same theme, Sanjay Gupta, Chief Strategy Officer at bitcoin mining manufacturer Auradine, said the presidential campaign had highlighted the urgent need for U.S. leadership in technology. Gupta argued that both the Republican and Democrat camps recognized the strategic importance of bitcoin mining for its role in cutting-edge semiconductor technology, national security and the risks posed by China’s dominance in this sector. However, beyond the election, the U.S. should commit to long-term development and a secure, self-reliant semiconductor infrastructure rather than continuing to rely on foreign imports, he added.

Away from the mining space, Joe Kelly, co-founder and CEO of bitcoin financial services firm Unchained, told The Block it generally considers bitcoin to be non-partisan. “I believe bitcoin to be aligned with the core values of this country and something our founders would have fought for should it have existed then,” Kelly said. “Based on my trust and belief in the long-term future for the United States, I believe the election will be but a blip in the development and ultimate success of bitcoin.”

Meanwhile, Jameson Lopp, co-founder and CTO at Bitcoin BTC
+1.45%
security provider Casa, said he did not place much weight on campaign promises from any politician, and people should simply look at the facts when trying to gauge the election’s impact.

“Bitcoin and the wider crypto industry has never been an election issue in previous cycles, and it probably wouldn’t be an issue this time around if the current administration had not spent so much time attacking us,” Lopp told The Block. “Although Harris is promising to be pro innovation, nothing has changed with regard to how regulatory agencies are treating the industry, and it’s expected that many who participated in Operation Choke Point 2.0 will remain in positions of power if Harris wins.”

“On the other hand, Trump has fully embraced the industry, taken the time to show up at multiple Bitcoin events, and is even launching his own (albeit questionable) DeFi project. Our industry does not need any help from politicians, we’d just like to stop being attacked. As far as I can tell, there’s only one administration that is likely to call off future attacks against us,” he said.

‘If Trump wins, the speed at which bitcoin clears $100,000 dramatically accelerates’

Many crypto venture capital firms weren’t willing to express their views on the post-election outlook. Of those that were, opinions were again generally aligned that the crypto industry’s positive trend would remain regardless of the outcome, though it could affect the short-term amplitude.

Joe McCann, founder of crypto venture capital firm Asymmetric, told The Block that it doesn’t really matter who wins as the sector’s direction remains the same regardless. However, the speed at which the industry accelerates is what will be impacted by the election result, in his view.

“If Trump wins, the speed at which bitcoin clears $100,000 dramatically accelerates given his clear and repeated stance on enabling a crypto-friendly environment for entrepreneurs, investors and advocates for bitcoin and crypto more broadly,” McCann said. “With Harris as the winner, it is likely that the speed to $100,000 is slower as her campaign is yet to lay out a detailed plan for empowering the growth and adoption of crypto in the U.S. so it’s more ‘status quo’ than anything.”

Hack VC Managing Partner Alex Pack agreed that under either outcome, the firm anticipated a positive shift in U.S. crypto policy post-election, with Off the Chain Capital CEO Brian Dixon adding that bitcoin and cryptocurrencies have generally experienced rallies post-election regardless of the winner due to increased liquidity and market anticipation.

If the Republican Party’s crypto platform were implemented, the U.S. would become one of the most crypto-friendly jurisdictions in the world, with broad implications for global adoption, Pack told The Block. On the Democratic Party side, while Vice President Harris’s recent remarks on digital assets and blockchain were a positive step, the real test would be in concrete action, he added.

Crypto is ‘purple’

Jeremy Allaire, co-founder and CEO of stablecoin issuer Circle, also recently touched on the topic, expressing his stance in interviews with CNBC that crypto is a “purple,” bipartisan issue but that “no matter who wins the White House, Congress itself is set to act.”

“What’s interesting is that if you look at what happened over the past year, you actually saw a lot of bipartisan work getting done,” Allaire said. “You saw major bills in stablecoin, major bills in market structure advancing and so it looked like this was a purple issue.”

Lauren Belive, Head of U.S. Policy at Ripple, took a similar view, arguing it was about backing candidates who recognize that the U.S. needs to support innovation rather than choosing one party over another to avoid continuing to fall behind other global financial centers.

“Both candidates have shown support for the U.S. crypto industry, but regardless of who wins the election, crypto and the blockchain technology that underpins it are here to stay,” eToro crypto analyst Simon Peters said, adding that crypto asset regulatory frameworks similar to those in the UK and Europe are likely to be implemented in the U.S. soon, no matter the election outcome.

Halborn CEO Jacques Boschung argued that whether it’s Trump’s ambition to position the U.S. as the bitcoin and crypto capital of the world or Harris’s more measured stance on digital assets, both candidates acknowledge the transformative power of crypto.

“The outcome of the 2024 election could be a turning point for the crypto industry, determining whether we see rapid adoption driven by favorable policies or a more cautious but structured approach to regulation,” Boschung said.

Crossing the regulatory rubicon

Josh Riezman, Head of U.S. Legal at crypto trading firm GSR, argued that the crypto landscape would likely improve post-election, given the growing bipartisan support for providing long-awaited regulatory clarity. However, he said it’s objectively clear that Trump has been more vocal about his support for the industry compared to Harris’ cautious stance.

“While we can remain hopeful for a positive shift under a Harris administration, there’s no clear reason yet to believe that the enforcement landscape would radically change, which could potentially accelerate the exodus of projects and capital abroad,” Riezman noted. “That said, we wouldn’t expect much long-term negative impact on Bitcoin or Ethereum, as both have already crossed the regulatory rubicon. So, while a Harris win wouldn’t be catastrophic for crypto, it likely wouldn’t offer the same level of opportunity and acceleration that a Trump administration could.”

Reflecting on the impact for developers in the space, Rob Viglione, CEO of web3 technology company Horizen Labs argued that Trump is now pushing for clearer regulation of the industry, while Kamala’s recent endorsement of blockchain feels “rushed and unconvincing.” Ultimately, any meaningful change will likely come from allowing projects to build and innovate without unnecessary barriers, he said.

Market volatility warning

While BitMEX does not cater to the U.S. market, its CEO Stephan Lutz pointed out that the country’s elections often trigger market volatility, and crypto, as a high-risk asset, is likely to face similar turbulence during the period.

“The current administration’s inflation policies have impacted the crypto market, with bitcoin acting as a hedge. A Democrat win could lead to tighter monetary policies, higher tax and short-term bitcoin dips, especially under Harris, with SEC oversight remaining cautious post-FTX,” Lutz told The Block. “Republicans would favor low taxes and capital investments, supporting the economy through stimulus packages, which would help bitcoin prices. But a Trump win won’t spark a crypto boom because significant legal initiatives (e.g. stablecoin regulation) requires bi-partisan agreement.”

Due to crypto’s sensitivity to macroeconomic factors, the full impact on the market could take six months post-election to become apparent, with increased volatility expected over the next year, Lutz warned.

Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

adminOctober 5, 2024