One of the biggest news items of 2020 came nearly at the end of the year, as the results of the presidential elections in the USA came out, with the incumbent President, Donald Trump, losing out to Joe Biden. This election was perhaps the most keenly followed election in decades, with many millions of people, both globally and in the USA itself, expressing relief that Donald Trump had been voted out of office. Biden’s administration is expected to be drastically different from Trump in a number of ways, but one of the surprising beneficiaries of this could be the crypto sector in the USA.
Cryptocurrencies have been all the rage over the past year. Bitcoin has risen by more than 300% in the last 12 months, recently breaching $44,000 following news of Tesla’s $1.5 billion purchase, while other tokens, while being at a lower price than Bitcoin, have grown even more. Ethereum, for example, is up by nearly 700% in the same time period. This has led to a huge amount of interest, as well as investment, into the crypto space, both in the USA and globally. The likes of Bitcoin, Ethereum, Litecoin and other crypto tokens have managed to become part of mainstream finance, and they could theoretically replace traditional fiat currencies like the dollar and euro. More and more people are beginning to make regular transactions through cryptocurrencies, and this has been possible due to the blockchain network that underpins crypto, making transactions much quicker and safer as a result. There are various businesses and industries which have moved quickly to take advantage of this as well, and so it is important that the government and regulators in the USA, the largest crypto market in the world, adopt a friendly stance towards crypto.
This looks likely to happen during the Biden presidency. He has appointed Gary Gensler as the head of the SEC, which was seen as a positive sign, since Gensler has taught a course on cryptocurrencies at MIT, and has testified on the crypto market before Congress multiple times, calling Bitcoin ‘digital gold’ in one such hearing, which shows his accommodating attitude towards crypto. He has also pushed the case for blockchain and the vast potential it has to change the way many industries operate. However, he has also called for greater regulation of crypto exchanges, and has called Ripple’s XRP and the Facebook Diem tokens as securities, and thus also to be regulated by the SEC.
Some of Biden’s other appointments have also brought cheer to the crypto community. He has appointed Reena Aggarwal, Chris Brummer, Lev Menand and Simon Johnson to his financial regulator review team, who are advising him on his appointments to various financial regulators such as the SEC. All four of these individuals have spoken and written publicly on cryptocurrencies and blockchain, with the majority of those being in favour of the sector. Finally, while new Treasury Secretary Janet Yellen has previously said that she is ‘not a fan’ of crypto, she also believed, in her previous role as chair of the Federal Reserve, that the Fed did not have the authority to supervise or control the bitcoin market, and is likely to have similar views on the power of the Treasury Department as well.
Thus, with crypto regulation in the USA being far more dependent on the SEC, it is likely that Gensler will prove to be a friend of the crypto sector, and this should help boost the sector over the next few years in the USA.