The US election may become a turning point for the regulation of the encryption industry

As Bitcoin has become a key issue in the U.S. elections after experiencing three election cycles, the 2024 elections are expected to be a turning point for the encryption industry, shifting from strict regulation to supporting innovation. This article analyzes the background factors contributing to the increasing importance of Bitcoin and cryptocurrencies in elections, discusses the policy positions of major candidates, and predicts the potential impact of election results on the encryption industry.

Cryptocurrency Becomes an Important Election Issue Background

The significance of Bitcoin to the United States

The demand for hedging against inflation is strengthening.

Since the financial crisis of 2008, Bitcoin has increasingly been seen as a tool to combat inflation and economic uncertainty, especially providing hope for the middle class to achieve economic independence. The long stagnation of real wage levels in the United States has exacerbated the wealth gap, and the scarcity of Bitcoin makes it an alternative asset under government and central bank intervention.

In the next 10 years, the U.S. federal budget deficit is expected to continue rising, potentially triggering the so-called "Minsky moment." Regardless of which candidate is elected, the U.S. fiscal situation faces severe challenges. Diluting debt through inflation may become an option for the government, but this will further squeeze the purchasing power of the working class.

Strengthen the international influence of the US dollar

Stablecoins have become the focus of policy discussions, with the U.S. Congress reviewing multiple related bills. Over 99% of stablecoins are denominated in USD, helping to continue strengthening its international influence amid challenges to the dollar's status as the global reserve currency. Stablecoins have also become important holders of U.S. Treasury securities, providing additional liquidity support to the economy.

Voter interest in encryption is on the rise.

Surveys show that about half of potential voters in the United States are more inclined to support candidates who hold a positive attitude towards encryption. The attention of voters in key swing states towards encryption has also significantly increased.

The Biden administration's regulation of encryption companies

The Biden administration has strengthened its regulation of cryptocurrency, taking a series of measures including filing a lawsuit against Ripple and reinforcing tax reporting requirements. After the collapse of FTX, the government further increased accountability for large encryption companies.

impact of encryption on corporate donations

In 2024, cryptocurrency companies have become a major force in political donations in the United States. Coinbase and Ripple are now the largest corporate political donors of the year. The Fairshake Super Political Action Committee (PAC) has raised substantial funds to support candidates who favor encryption, significantly influencing election policies.

The Impact of the Election

Policy proposals of both candidates

Harris

Harris's statements on cryptocurrency policy are relatively limited, only expressing that he will "encourage innovative technologies such as artificial intelligence and digital assets, while protecting consumers and investors." The current government's regulatory stance towards the cryptocurrency industry is quite antagonistic, having adopted several restrictive measures.

Trump

Trump has shown a strong interest in the encryption industry, promising to make the United States the "capital of global cryptocurrency and Bitcoin." He has proposed a series of policy suggestions, including establishing a government reserve of Bitcoin, forming a cryptocurrency advisory committee, and preventing the Federal Reserve from launching a digital currency.

the possibility of "splitting the government"

Currently, it seems very likely that a "divided government" situation will occur, where the presidency and the Senate are controlled by different parties. This political situation could lead to a policy deadlock. If the Republican Party wins decisively, there is hope for new legislation to be passed in the short term, which would be beneficial for the encryption market.

The SEC leadership is likely to be replaced.

Regardless of which candidate is elected, there may be significant changes in the leadership of the SEC, which could impact future cryptocurrency regulation policies.

macro liquidity impact

Trump promised that if elected again, he would significantly lower interest rates, which could drive up the prices of cryptocurrency assets like Bitcoin, especially against the backdrop of further liquidity enhancement.

The Impact of Elections on Encryption Startups

The development of Web3 prediction markets

Polymarket and other prediction market platforms play an important role in the U.S. elections, providing new financial tools and sources of information. These platforms are gradually entering mainstream society and are widely adopted as alternative news sources.

cryptocurrency company incubated and listed in the United States

Trump's victory could mean a clearer regulatory framework and a more relaxed regulatory environment, beneficial for encryption-related companies to go public in the U.S. and improve the financing environment.

The development of DeFi and BTCFi

The Trump administration may accelerate the development of DeFi and BTCFi. BTCFi is expected to show a growth trend that multiplies the value of BTC itself, with a total scale potentially reaching more than ten times the current market value of BTC.

The future Bitcoin upgrade (, such as OP_CAT), is expected to achieve more complex on-chain functionalities, driving a series of groundbreaking applications based on Bitcoin's programmability. Multiple projects are already in discussion to develop around OP_CAT to achieve complete decentralization and more complex on-chain functionalities.

The 2024 U.S. presidential election will have a profound impact on the encryption industry. Regardless of the outcome, this election could become a significant turning point for the encryption sector, transitioning from stringent regulation to supporting innovation, and is worth close attention.