The 2020 U.S. presidential election will shape crypto policy for the next four years – even if no one’s actually pitching crypto-specific positions.
While presidential candidates aren’t campaigning on their blockchain savvy – and, indeed, have barely mentioned cryptocurrency – the individuals they appoint to lead and serve in federal agencies, will shape the agenda on issues ranging from central bank digital currencies to the legal status of various tokens.
The election is important, said Kristin Smith, executive director of the Blockchain Association, an industry lobbyist group. “We have major regulatory issues, major legislative issues [and] the people who are going to be in place will play an outsize role in that.”
Still, it’s clear that neither major U.S. presidential candidate is proposing any immediately applicable policies. John Collins, a partner at advisory group FS Vector, told CoinDesk that “crypto is just going to be low on the priorities, which is not surprising.”
On the ballot this year are President Donald Trump (R), former Vice President Joe Biden (D), Jo Jorgenson (Libertarian Party), crypto entrepreneur Brock Pierce (independent) and musician Kanye West (also independent). Most major polls agree the race is between Trump and Biden, with some of the third-party candidates not even making it to all 50 ballots.
Trump has publicly bashed bitcoin, tweeting that he is "not a fan" of the cryptocurrency. Biden hasn't made any public statements on it, though his campaign joked it would not ask for bitcoin donations after his Twitter account was hacked in July alongside numerous other crypto exchanges, influencers and media sites.
Neither candidate has made crypto and blockchain a campaign issue.
The election’s most direct impact on crypto policy will likely come through the federal regulators the President will appoint and the Senate will confirm. The chairs of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), the head of the Office of the Comptroller of the Currency (OCC) and the secretaries of Treasury and State are just a few individuals who shape the U.S. government’s approach to crypto.
At present, the SEC is run by Chair Jay Clayton, who Trump nominated as the U.S. Attorney for the Southern District of New York. In the event Trump wins and Clayton is confirmed to head the prosecutor’s office, Commissioner Hester Peirce could potentially take over the securities regulator, at least temporarily.
This would be a big deal. Peirce has advocated for cryptocurrency development and regulatory leniency in the past, earning the nickname “Crypto Mom” for her positions, which include a safe harbor designed to let token projects get off the ground before facing regulatory burdens.
It’s unclear who Biden might tap to lead the agency should he win the election, but Democratic Commissioners Caroline Crenshaw and Allison Herren Lee are potential candidates, at least initially.
Ron Hammond, an industry lobbyist and former aide to Rep. Warren Davidson (R-Ohio) expects the agency to take more enforcement actions next year, particularly if Biden wins.
“There’s a lot of enforcement staff who want to make sure they have a job next [year] regardless of who wins,” he said. “They want to show they’re engaged and not asleep at the wheel.”
Overall the securities regulator appears to be leaning more toward “regulation by enforcement” rather than developing clear frameworks, he said.
The CFTC is more likely to create these regulatory frameworks, and current Chair Heath Tarbert only took office in 2019, giving him a few more years to helm the commodities regulator.
“I haven’t heard any names, Republican or Democrat,” he said.
Whether or not the U.S. issues its own central bank digital currency is another open question. The Federal Reserve has indicated it is researching different technologies that could support a digital dollar, with Boston Fed Governor Lael Brainard discussing the issue in a speech earlier this year. Brainard is also rumored to be Biden’s top pick for Treasury Secretary.
On the other hand, it’s unclear if current Treasury Secretary Steven Mnuchin will stay on in a Trump victory, though Hammond believes Fed Chair Jerome Powell would be likely to continue in the event of a Trump victory.
Not everyone, of course, thinks the election will bring big changes to the crypto industry.
“I think regardless of who wins this election I don't see there being a huge difference in terms of cryptocurrency regulation,” said John Sedunov, an assistant professor of finance at Villanova University’s School of Business.
In his view, regulators are most likely to continue treating cryptocurrencies much as they already have: as a financial asset.
“As far as technology, Big Tech, goes or financial regulation, I would think in a Biden administration it’s pretty clear there would be more scrutiny on financial institutions or banking,” he said. “But I don’t think anyone in the crypto space right now needs to worry about being considered ‘too big to fail.’”
Smith noted that a potential Biden administration is “mostly unknown,” while a second Trump term could be more familiar to the crypto space.
The next president might also help set the tone for crypto-adjacent issues like data privacy, antitrust/big tech and consumer protection.
Current Attorney General William Barr has come out against encryption in both a cryptocurrency enforcement framework and through a statement made with other intelligence agencies. It’s unclear whether a Biden nominee to the role would have similar views.
Consumer protection is more likely to be an issue that Biden’s team would pay attention to, however, Sedunov said.
“I think the crypto space and participants in the crypto space’s best bet in thinking about a potential Biden win is to sell people on the idea this is pro-consumer and healthy for the economy,” he said.
It is unlikely that existing rules or guidance will be immediately overturned should Biden win, Collins said, at least in part because it’s not going to be a major priority.
What does seem likely is either future administration will probably have more staffers who come from a cryptocurrency-related background, he said.
Given the increasing amount of interest from European and Asian regulators in central bank digital currencies and other blockchain rules, with China in particular moving rapidly to develop a digital yuan, it’s likely that the next administration will have to do more work in this area, Collins said.
“I don’t think the federal government is going to give bitcoin to people but the idea around more open trustable payment networks is going to be a huge part of the conversation,” he said.
While the President might set the tone for crypto regulation next year, a large part of the government’s approach will be decided by Congress. The House of Representatives is expected to remain in the hands of the Democratic Party, and the Democrats are currently favored to win the Senate, according to statistical analysis site FiveThirtyEight.
This means the Senate Banking Committee will change heads, with Sen. Sherrod Brown (D-Ohio) expected to take the reigns of the committee, Hammond said.
Collins said he can see both Democrats and Republicans agreeing on certain regulations around spot markets and which agency should be responsible for them.
Smith said she expects to see more lawmakers start looking at crypto next year.
“On the Senate side just in the past couple months we’ve had a couple Senate offices approach us and say this is a priority next year and they want to start having a dialogue.”