The outcome of the 2024 U.S. presidential election is expected to influence the cryptocurrency market significantly, with impacts likely depending on the regulatory approaches of the winning candidate. Broadly, there are two scenarios that could play out based on the two leading candidates: Donald Trump and Kamala Harris.
Trump’s Impact:
Deregulation and Incentives If Donald Trump wins, his deregulatory stance could lead to relaxed SEC oversight on the crypto sector, particularly in areas like decentralized finance (DeFi) and blockchain innovation.
For example, the SEC under a Trump administration might reduce enforcement actions against crypto exchanges, a shift from the current administration’s aggressive regulatory posture. This could encourage growth in projects like Uniswap, a leading DeFi platform, as well as in other areas of blockchain that have faced SEC scrutiny for not complying with traditional securities laws.
Trump has also signaled interest in reducing capital gains taxes, which could drive retail and institutional investors alike toward crypto assets as a more attractive investment class.
In 2020, for example, Trump proposed cutting capital gains taxes from 20% to 15%. If similar policies were implemented, assets like Bitcoin might see a surge, as investors would benefit more from long-term holdings. During Trump’s 2024 campaign, hints at capital gains reform have already spurred market interest in cryptocurrencies, with some price gains in Bitcoin attributed to rising speculation of a Trump win.
Additionally, Trump’s firm stance on U.S.-China relations could drive more domestic efforts in crypto mining, as rising tensions with China have pushed some miners to relocate to friendlier territories, such as the U.S. A Trump administration may incentivize mining operations within the U.S., which would reduce American dependence on China for crypto production and could also spur job creation in energy-intensive states like Texas.
Harris’ Impact:
Structured Regulation and Environmental Focus On the other hand, if Kamala Harris wins, her policies are likely to introduce stricter regulations, particularly targeting crypto exchanges, stablecoins, and potentially high-energy mining operations.
For instance, the Harris administration would likely continue the current administration’s scrutiny of stablecoins like Tether (USDT) and USD Coin (USDC), focusing on transparency and reserve backing. This could lead to requirements for stablecoin issuers to maintain more stringent reporting and possibly even register as banking institutions, bringing more stability but potentially limiting some aspects of the market. Furthermore, Harris has shown support for the development of a central bank digital currency (CBDC), which would represent a regulated, government-backed alternative to private digital assets.
If implemented, the digital dollar could increase mainstream adoption of digital currencies for transactions, but it could also reduce the appeal of decentralized assets like Bitcoin and Ethereum for everyday payments. In a recent example, countries like China have introduced CBDCs, influencing retail transactions without replacing Bitcoin as an investment, but altering how people think of digital money.
A Harris administration might also bring new environmental regulations, specifically aimed at high-energy Bitcoin mining operations. The Biden administration has already voiced concerns over the carbon footprint of Bitcoin mining, and Harris would likely build on this. If enforced, these policies could shift miners toward states with renewable energy incentives, or they could encourage the industry to adopt less energy-intensive proof-of-stake models, as seen with Ethereum’s recent shift from proof-of-work.
Real-World Implications for Investors The 2024 election has already led to noticeable market responses. For instance, speculation around Trump’s return to office contributed to a Bitcoin price surge earlier in the year, as investors anticipated a more favorable regulatory environment for cryptocurrencies. Such market shifts are often observed during U.S. elections, where investor sentiment swings based on anticipated policies and regulatory changes. In contrast, some institutional investors have positioned for a Harris win, looking to benefit from a more stable regulatory landscape that would reduce compliance risks and appeal to mainstream financial institutions.
Conclusion
In summary, a Trump victory might bring rapid growth and deregulation, encouraging more speculative crypto activity, while a Harris administration would likely provide regulatory clarity, encouraging institutional adoption and potentially stabilizing the market long-term. Investors are thus preparing for volatility and may capitalize on price fluctuations as election outcomes become clearer. This election season has thus underscored the market’s sensitivity to regulatory change and highlighted the potential for policy shifts to shape the future of cryptocurrency.
The Impact of the 2024 US Election on Crypto Market was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.