Donald Trump's endorsement of cryptocurrencies at the Bitcoin 2024 conference in Nashville marks a major shift from the former U.S. president's previous skeptical stance.
Once a vocal critic, Trump is now positioning himself as a defender of digital assets, reflecting a broader convergence of politics and cryptocurrencies that is increasingly being dubbed “politify.”
But while President Trump's policy shift has garnered much attention, it's essential to explore how his stance on cryptocurrency regulation may influence some U.S. voters ahead of the 2024 presidential election.
Biden's changing stance on cryptocurrency
Historically, President Joe Biden's administration and prominent Democrats, including Senator Elizabeth Warren, have voiced concerns about cryptocurrencies, focusing on risks related to consumer protection, financial stability and the possibility of money laundering.
Gary Gensler, chairman of the U.S. Securities and Exchange Commission, has played a key role in this position, advocating for many crypto assets to be treated as securities and subject to strict regulation similar to that applied to stocks and bonds.
However, the growing influence of cryptocurrencies has brought about a shift within the Democratic Party. The Financial Innovation and Technology Act of the 21st Century (FIT21), passed in May 2024 with significant Democratic support, signals a growing recognition of the importance of digital assets.
The Biden administration initially opposed FIT21 but has now signaled its intention to work with regulators to create a balanced regulatory framework for cryptocurrencies.
Democratic presidential candidate Vice President Kamala Harris has yet to take a clear stance on crypto policy, but her campaign has been in talks with crypto representatives and she is under growing pressure from pro-crypto Democrats to take a more favorable approach.
The effort is part of a broader effort to stop Trump from gaining an advantage on the issue of cryptocurrency, which has become increasingly important in the election because of its potential impact on campaign finances and voter engagement.
Conflicting democratic perspectives
Democrats are divided over cryptocurrency regulation, with figures like Warren continuing to highlight the dangers of digital assets while others in the party advocate for a more open approach.
For example, Rep. Brad Sherman has expressed concern that FIT21 could create a competitor to the U.S. dollar and be misused by criminals, while pro-crypto Democrats have called on Harris to recognize the potential of digital assets and engage with the industry in a more constructive way.
This internal battle within the Democratic Party reflects a broader tension between innovation and regulation: As cryptocurrencies take hold, the challenge for the party will be to balance these competing interests while protecting consumers and the financial system.
Harris' stance on crypto regulation could determine whether wealthy industry leaders donate to her campaign and could help mobilize younger, tech-savvy voters who are increasingly interested in digital assets.
The creation of a group called Crypto4Harris, aimed at boosting Harris' appeal on cryptocurrency issues, underscores the importance of the issue in the upcoming election.
The group's efforts, which include hosting town hall events with prominent supporters such as billionaire Mark Cuban, are aimed at countering Trump's influence on crypto issues and strengthening Harris' ties to the digital asset community.
Harris' running mate, Tim Walz, has yet to make any public statements on crypto, but his past involvement with the industry, including returning donations from FTX executives, suggests a cautious approach.
Trump's deal-making approach
While President Trump's support for cryptocurrencies has been widely reported, it is important to consider the context of this shift: President Trump's new enthusiasm for digital assets may be more transactional than ideological, as much of his political activism is driven by opportunism.
His shift to a pro-cryptocurrency stance comes at a time when he is trying to energize his base and raise campaign funds from wealthy industry leaders who are heavily invested in the cryptocurrency sector.
The approach highlights the intersection of cryptocurrency regulation and campaign finance, as Trump seeks to garner financial support from the digital asset community.
However, it is worth noting that Trump is still facing legal challenges and his approval ratings are declining, raising questions about the sustainability of his political strategy, although his emphasis on cryptocurrencies may appeal to younger voters interested in digital assets.
Long-term effects
The 2024 election is poised to be a pivotal moment for the future of cryptocurrencies in the United States.
President Trump's embrace of digital assets has brought the issue to the forefront, but there are broader political dynamics at play, as Biden, Harris and other key figures all grapple with how to approach the rapidly evolving industry.
As the lines between technology and politics continue to blur, decisions made in the coming months are likely to have far-reaching implications for the future of digital assets and their role in the global economy.
Dennis Schweitzer is Professor of Finance at Concordia University, and Julian Proels is Associate Professor of Finance at Concordia University.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
