Crypto is entering electoral politics. It’s bad for bitcoin.
For the first decade-plus of Bitcoin’s existence, the crypto managed to avoid becoming a political issue, with figures from both parties warming to what they thought was a new American industry as big as the internet.
This round of presidential elections could drive a stake to the heart of this idea, and the implications for token prices will be negative.
Prior to last year’s symbolic crash, the crypto garnered growing support from Democrats and Republicans alike. The bipartisan bills sought to clarify how federal agencies should handle tokens — a goal long sought by companies like
(ticker: COIN) who say cryptocurrencies don’t have a clear set of rules to follow. While no major bills made it to President Joe Biden’s desk, it at least seemed like a coalition was building that could provide relief to the industry on tokens such as “stablecoins.”
Last week made that dream seem further.
For one, Florida Governor Ron DeSantis mentioned the token during the Twitter Spaces event officially announcing his candidacy for president.
“You have every right to do bitcoin. The only reason these people in Washington don’t like it is because they don’t control it,” DeSantis said Wednesday. “The current regime clearly has it all for Bitcoin and if it continues for another four years, you know, they’ll probably end up killing it.”
On the other, the Democrats have shown signs of toughening up. Biden at the G7 summit on Sunday said he would not support a debt ceiling agreement “that protects wealthy tax evaders and crypto traders,” apparently referring to a crypto tax loophole around the washout trade.
Longtime candidates in both parties — like Republican Vivek Ramaswamy and Democrat Robert F. Kennedy Jr. — have also voiced their support for Bitcoin.
It’s hard to imagine crypto politics becoming a relevant issue for most voters. In recent elections, all politics, not to mention crypto, took a back seat. But pro-crypto political stances have a significant audience: crypto-related donors who still have deep pockets despite last year’s crash.
Industry leaders have recently sought to raise tens of millions of dollars to spend on public relations, lobbying and campaign donations in the next election cycle.
Crypto executives want new laws to limit federal agencies’ crackdown on their industry. The Securities and Exchange Commission has filed dozens of lawsuits against companies that the agency says violate the law, even though company executives say the rules are unclear or how to follow them. Legislation, industry says, is needed to ensure crypto can thrive in the US
But the fact that crypto is becoming a political issue makes it all the more difficult to create the kinds of supermajorities currently needed to push bills through Congress.
“We are still a long way, probably 2-3 years, from seeing crypto legislation enacted, even for stablecoins,” analysts at Compass Point Research & Trading wrote in a note on Friday.
This leaves crypto firms stuck with the status quo. With the SEC on the warpath, this is not a good place to be.
Email Joe Light at [email protected]
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